Railroads & Clearcuts

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Corporations in the News: 2009

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WEYERHAEUSER - OREGON

Wal-Mart’s $11M Profit From Oregon’s Renewable Energy Loophole Spurs Critics

Environmentalleader.com, December 30, 2009

Critics of Oregon’s generous renewable energy incentives are pointing to how corporate giants are profiting at the expense of taxpayers.

For instance, Wal-Mart Stores Inc. last year paid $22.6 million for the right to claim $33.6 million in tax benefits under Oregon’s Business Energy Tax Credit, reports OregonLive.

The tax credit, which has many critics in the public and politcal realms, encourages investment in alternative energy, recycling and energy conservation.

It is estimated to cost the state $168 million over the next two years, which is about $100 million more than it cost the state in the last two-year budget cycle. Such high figures have prompted state legislators to consider limiting the tax credit.

In the case of Wal-Mart, critics say that the retail giant was able to pocket $11 million, while the the state’s general fund is out the full $33.6 million in lost tax revenues.

Other major companies such as Costco and U.S. Bank have taken advantage of the tax loophole as well.

Critics say the so-called "pass through" program has made it possible for corporations and high wage-earners to avoid paying state taxes.

A lack of accountability and foresight in drawing up the program has led to other problems.

For instance, a Weyerhaeuser Paper Mill in Albany, Ore., in 2008 received $3.3 million in energy tax credits for rehabbing a biomass cogeneration plant that burned waste wood to create energy and simultaneously captured the heat to dry paper. Weyerhaeuser didn’t need the credits and sold them to Wal-Mart for $2.3 million, reports OregonLive.

Weyerhaeuser, however, sold the Albany mill to International Paper, which subsequently shut it down. Now, the renewable energy that the taxes credits paid for is no longer in service, and critics of the program are using it as an example of why the program is a failure.

During the past eight years, the state incentive has drawn $300 million in applications. The credit provides up to 50 percent of a project’s cost (up to $11 million, including cost overruns).

Oregon has the nation’s fifth-best renewable energy incentives, according to Ernst & Young.

Oregon’s rule currently allows third parties to buy renewable energy tax credits for about 67 cents on the dollar, taking the tax breaks over five years, resulting in an average annualized rate of return of about 10 percent.

Acting state Energy Department Director Mark Long instead wants the state to adopt a rate of about 3.5 percent a year. He said that mean more of the investment goes into the renewable energy project, rather than into investors’ pockets.

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AG’s office rejects Plum Creek probe

Mainebiz.com, December 30, 2009

The Attorney General's Office has rejected a request to investigate contributions made by Plum Creek Timber Co. to supporters of its proposed development in the Moosehead region.

The Native Forest Network and the Forest Ecology Network sent a letter Tuesday to Attorney General Janet Mills requesting an investigation into Plum Creek's financial contributions to groups that supported it during its review process with the Land Use Regulation Commission, according to the Bangor Daily News. But Kate Simmons, a spokeswoman for the Attorney General's Office, said there is "no information ... which would warrant an investigation into this matter," according to Maine Public Broadcasting Network. Plum Creek's payments were legal, she said, and state law does not require the company to specify who it provides payments to or the amount of those payments. Emily Posener of the Native Forest Network said the AG's decision was "a disappointment."

Earlier this month, Plum Creek's contributions -- including $1.7 million paid to LURC directly -- came under scrutiny as opponents argued the tens of thousands it paid in legal fees to supporters were never disclosed and swayed LURC's approval of the project. The payments to LURC are required by a 2005 state law, but Posener said those payments should also come under scrutiny, according to the Daily News.

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Groups question legal fee payments of Plum Creek

By Kevin Miller, Bangor Daily News, December 30, 2009

AUGUSTA, Maine — Two organizations are calling for an investigation into whether Plum Creek violated any rules or laws by paying the legal fees of groups testifying in support of the company’s Moosehead Lake development plan.

But the staff director of the Land Use Regulation Commission said there are no rules prohibiting such payments or requiring Plum Creek to disclose them to regulators. And the Attorney General’s Office indicated that an investigation is unlikely.

"The office has not been provided with any new information that would warrant an investigation," said Kate Simmons, spokeswoman with the Attorney General’s Office.

In an open letter to Attorney General Janet Mills released Tuesday, the Native Forest Network and the Forest Ecology Network requested an independent investigation into the payments and whether groups had an obligation to notify LURC about the money.

Both the Native Forest Network and the Forest Ecology Network opposed Plum Creek’s housing and resort concept plan, which LURC approved in September.

"We believe the investigation should include a thorough accounting of the payments Plum Creek made to its supporters, including the timing of these payments, how the money was spent and … whether or not representatives of these groups answered truthfully when questioned on the record about receiving funds from Plum Creek," the letter reads.

Plum Creek has acknowledged helping cover the legal expenses of several supportive groups, including the Maine State Chamber of Commerce, the Piscataquis County Economic Development Council and the Somerset County Economic Development Council.

A Plum Creek representative could not be reached for comment Tuesday.

In past media reports, company officials and representatives of some of the organizations said the payments were not in return for favorable testimony before LURC. Instead, the groups had already come out in support of Plum Creek’s plan before any the payments were made.

Plum Creek’s rezoning request for 975 house lots and two large resorts spawned the largest regulatory review in LURC history, involving more than 300 hours of public hearings and workshops plus thousands of public comments.

To win regulatory approval, Plum Creek also negotiated a series of conservation deals that will permanently protect from development more than 400,000 acres in the Moosehead region.

The Forest Ecology Network and two other organizations are appealing LURC’s decision.

LURC director Catherine Carroll said she and other staff never knew that Plum Creek was helping cover the legal expenses of some supporters. Carroll pointed out that there are no rules specifically allowing or prohibiting such payments or requiring disclosure.

"The rules do not address it whatsoever," Carroll said Tuesday afternoon.

Simmons with the Attorney General’s Office said it had not received the letter from the two organizations or any new information about the payments first detailed in radio and newspaper reports earlier this month.

Emily Posner, a volunteer with the Native Forest Network, said she also would like to see some scrutiny of the estimated $1.7 million that Plum Creek paid to LURC to cover the costs of reviewing its historic application.

Those payments were required under a state law allowing LURC to be reimbursed for the costs of processing "extraordinary" applications. In Plum Creek’s case, the money was used to hire several consultants who assisted with the review and to cover the costs of public hearings, workshops, transcripts, commissioners’ per diem and travel costs related to the case and other expenses.

"We want to make sure this is a fair and balanced decision," Posner said.

Carroll said the commission has maintained a detailed, itemized accounting of all fees or reimbursements paid by Plum Creek, and that information is available to the public.

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PLUM CREEK - MAINE

AG's Office: No Plans to Investigate Plum Creek Payments

By Josie Huang, Maine Public Broadcasting Network, December 29, 2009

Environmental groups fighting Plum Creek's plans to develop the Moosehead Lake area say the timberland company used its largesse to win approval for its project. Plum Creek paid tens of thousands of dollars in legal fees for allies so they could participate in an years-long review process by the Maine Land Use Regulation Commission. And environmentalists say this warrants a state investigation.

The Maine Attorney General's Office, however, has declined the request. "The Office of the Attorney General has been provided with no information, nor is aware of any information, which would warrant an investigation into this matter," says Kate Simmons, a spokeswoman for the Attorney General's Office. Simmons says that state law allows Plum Creek to make such payments. And, she says, the law does not require the company to divulge to whom they were made, or for how much.

Simmons says that during the review process, Plum Creek opponents had the opportunity to ask project supporters whether they got financial help from the company. "Expert witnesses are routinely cross-examined about fees they may have been paid, and this cross examination also happened during the LURC proceeding. The office has been provided with no information, nor is aware of any information, that would warrant investigation into this manner."

The AG's response comes as a disappointment to members of the Native Forest Network and the Forest Ecology Network. "That's a disappointment and I think the people of Maine deserve better than that," says Emily Posener of the Native Forest Network, which questions how truthful some Plum Creek supporters were about getting financial help.

The Attorney General's Office says there is no reason to think that supporters lied under oath, but Posener disagrees. "At this point, there is a lot of red flags that exist, and it requires, I would think, more than them thinking about it for five minutes before they make a decision. I think they really need to look over and make sure that none of the witnesses perjured themselves on the stand, that there was no political favoritism or corruption."

Posener says the Native Forest Network, as a volunteer orgranization, does not have the money to fight the LURC decision in the courts. So it will be looking to three other groups that have filed appeals: the Forest Ecology Network, the Natural Resources Council and RESTORE: The North Woods.

Jym St. Pierre, Maine Director of RESTORE, supported the other groups in their quest for an investigation. But he says that perhaps the best way to tackle the issue is by changing policy. "I this whole incident raises a very significant question that legislators ought to take a look at," he says. "When a developer can come in and pay significant money to organizations that become intervenors in the process, it skews the process seriously."

It's not clear whether Plum Creek plans to start construction on its planned resort and homes. LURC says that Plum Creek is allowed to seek permits during the appeals processs. Plum Creek did not respond by air time as to whether it would.

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PLUM CREEK - MONTANA

Flathead Business Year in Review.

Flathead Beacon, December 29, 2009

Plum Creek Timber Co., long synonymous with the Flathead Valley, closed three of its facilities in Pablo, Evergreen and Fortine. Hundreds lost their jobs, leaving the company with only four operating facilities in Montana, a far cry from its heyday. Plum Creek hopes to reopen its Evergreen mill.

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PLUM CREEK - MONTANA

$14M, 41,000-acre land deal could create second-largest Montana state park

By ROB CHANEY, The Missoulian, December 24, 2009

SUPERIOR - A massive land deal south of Alberton could produce Montana's second-largest state park.

The paperwork could close as early as March in the $14 million transaction between Montana's Department of Fish, Wildlife and Parks and the Nature Conservancy for most of the Fish Creek drainage. The property comprises about 41,000 acres stretching from Alberton Gorge south to Lolo Hot Springs.

FWP plans to spend between $2.5 million and $3 million in state park funds and another $11 million in federal wildlife conservation dollars to buy the land from the Nature Conservancy. That group, in turn, bought it from Plum Creek Timber Co. last year as part of the Montana Legacy Project.

"We usually take a year and a half or two years to do a project this size," said FWP regional supervisor Mack Long. "We're doing this in six months."

The purchase makes all kinds of sense for FWP, according to Long.True, it has been heavily logged and much of it burned in a 2003 forest fire. But its location and long-term potential are rich.

On the wildlife side, the drainage forms an animal travel corridor between the Mission Mountains and Bob Marshall wilderness areas to the east and the proposed Great Burn Wilderness to the west. It harbors a number of Montana's rarest carnivores, including wolverine, fisher and marten. The creek is a spawning site for bull and westslope cutthroat trout. In 2008, game wardens logged 31,988 hunter days there. It has at least seven regular elk winter ranges.

FWP already has two popular but small fishing access sites along Fish Creek. The southern Forks site at Bear Creek might be expanded to become a horse facility, with hitching posts, corrals and space for trailers.

But the big project would be a 6,864-acre state park with links to Alberton Gorge and a sizable public campground a few miles south of Interstate 90. FWP parks manager Lee Bastian said if completed, it would be the second-largest state park in Montana. Makoshika State Park near Glendive is the biggest at 11,531 acres.

"It's got the potential to be a real economic driver for Mineral County," Bastian said. While the area gets lots of use now, most visitors arrive with their coolers full and leave with enough gas to make it home at the end of the day. Creating enticements that make them stay overnight or longer would put more of those tourists in Mineral County businesses.

Several people in the audience at a public meeting Wednesday morning wondered about the other side of the business coin - the cost of maintaining, protecting and improving all the new amenities. Rancher Ollie St. Clair said local law enforcement is already challenged to patrol Fish Creek for keggers and other trouble.

"We pick up a dump-truck load of garbage every year, just on our property," St. Clair said. As a building contractor who has built similar parks in surrounding states, he wanted assurance the new projects would have a budget for long-term operation.

Long agreed that many of the dream projects still need lots of wide-awake research and public buy-in. One big factor in FWP's favor was its requirement to pay local property taxes - something greatly on the minds of the Mineral County commissioners, who attended the meeting as well.

"About 87 percent of this county is Forest Service, 5 percent is state and what little bit that's left - Plum Creek was the biggest private landowner," said Commissioner B.J. McComb. "We didn't want it going to the Forest Service, and we didn't want to see it developed into private parcels where it could be locked up. I think this will be a positive thing."

FWP officials hope to have more concrete details about the land management and park design at a public hearing on the project Feb. 2 in Superior.

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Montana aims to complete big land deal by March

Great Falls Tribune, December 24, 2009

SUPERIOR (AP) — A big land deal south of Alberton could produce Montana’s second-largest state park.

State officials say a $14 million transaction between Montana’s Department of Fish, Wildlife & Parks and the Nature Conservancy for most of the Fish Creek drainage could be completed by March.

The property comprises about 41,000 acres, stretching from Alberton Gorge south to Lolo Hot Springs.

FWP regional supervisor Mack Long says a project this size usually takes up to two years, but this could be completed in six months.

His agency plans to spend between $2.5 million and $3 million in state park funds and another $11 million in federal wildlife conservation dollars to buy the land from the Nature Conservancy, which bought it from Plum Creek Timber Co. last year.

Makoshika State Park near Glendive is Montana’s largest state park.

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CATELLUS - CALIFORNIA

Feinstein to introduce legislation to establish 2 national monuments in Mojave Desert

By Louis Sahagun Los Angeles Times, December 21, 2009

The protected areas would encompass 1 million acres containing wildlife, extinct volcanoes, sand dunes and ancient petroglyphs. The senator says the bill could be enacted in late 2010.

Map: Mojave proposals

Reporting from Barstow - Sen. Dianne Feinstein (D-Calif.) says she plans to introduce legislation today to establish two national monuments on roughly 1 million acres of Mojave Desert outback that is home to bighorn sheep and desert tortoises, extinct volcanoes, sand dunes and ancient petroglyphs.

Its centerpiece, Mojave Trails National Monument, would prohibit development on 941,000 acres of federal land and former railroad company property along a 105-mile stretch of old Route 66, between Ludlow and Needles.

The smaller Sand to Snow National Monument, about 45 miles east of Riverside, would cover about 134,000 acres of federal land between Joshua Tree National Park and the San Bernardino National Forest in San Bernardino and Riverside counties. Its diverse habitats range from desert scrub to yellow pine forests 9,000 feet above sea level.

The legislation, which had been delayed by efforts to resolve conflicts among environmentalists, off-roaders and renewable energy interests, would also designate 250,000 acres of public land near the Army's training center at Ft. Irwin as wilderness; add 41,000 acres to the southern boundary of Death Valley National Park and add 2,900 acres to northern portions of Joshua Tree National Park.

In addition, it would designate as permanent five existing off-highway vehicle areas in San Bernardino County covering 314,000 acres.

Feinstein, author of the 1994 California Desert Protection Act, vowed to make the legislation a priority. "In the best-case scenario, this legislation could be approved by late 2010," she said in an interview.

"This magnificent land and its lonely beauty are a significant part of our history, and we shouldn't give it up," Feinstein said, adding that private donors helped acquire the former railroad parcels "with the belief they would be protected from development. We have an obligation to keep them that way."

The railroad land was purchased between 1999 and 2003 with $45 million in private donations collected by the nonprofit Wildlands Conservancy and $18 million in federal funds, then donated to the Department of the Interior.

The Bureau of Land Management is reviewing 130 applications for solar and wind-energy development in the California desert, covering more than 1 million acres of public land.

At least 19 renewable-energy projects have been suggested within the boundaries of the proposed Mojave Trails monument, according to Feinstein, who has discussed her concerns with Interior Secretary Ken Salazar.

Feinstein's legislation would assist companies with projects currently proposed inside monument boundaries in relocating to federal energy zones being developed elsewhere. It would also permit construction of transmission lines within existing utility rights of way to facilitate the transfer of renewable energy generated in the Southern California desert and adjacent states.

Some congressional Republicans accused Feinstein of engaging in a not-in-my-back-yard campaign when her plans for legislation restricting renewable energy projects in California deserts surfaced earlier this year.

The senator countered that she "strongly" supports such projects, but only if they are built on "suitable" lands.

In an effort to avoid conflicts, BrightSource Energy Inc. and Stirling Energy Systems recently scrapped plans to build massive solar and wind farms on a panoramic stretch of the proposed Mojave Trails monument known as Sleeping Beauty Valley.

"We had a project within what we understand to be the boundaries of the monument, but we recently decided to withdraw it," said Sean Gallagher, Stirling's vice president of marketing strategies and regulatory issues. "We're trying to be respectful of what Sen. Feinstein has been doing in that area of the desert."

Environmentalists, hunters and off-road vehicle enthusiasts expressed support for Feinstein's legislation.

Elden Hughes, an honorary vice president of the Sierra Club, described it as "good news -- and darned important because it means this land would never be built on or fenced off."

James Conkle, founder of the Route 66 Alliance, which seeks to protect the historic route linking Chicago with Southern California, said the bill would "open up the desert to more travelers, sparking interest in fascinating, out-of-the-way places like Ludlow, Amboy and Essex."

Megan Grossglass, spokeswoman for the Off-Road Business Assn., was more cautious in her appraisal. Her group "has not had a chance to fully analyze the bill," she said, "so we cannot give it our endorsement, but we are supportive of the balanced approach it seems to take."

Mojave Trail, a four-hour drive from Los Angeles, includes such environmentally sensitive areas as Afton Canyon, a four-mile ribbon of green wetlands wedged between weathered rock walls, and Amboy Crater, a dormant volcano.

Then there is Sleeping Beauty Valley, a 150-square-mile expanse roughly 60 miles east of Barstow. It contains bighorn sheep, a newly discovered species of lupine that features showy purple blossoms in the spring, and unusually dark lizards that appear to have genetically adapted to the volcanic terrain.

During a tour of the area Sunday, David Myers, executive director of the Wildlands Conservancy, scrambled up a rocky hill at the base of a row of snaggletoothed mountains freckled with clumps of brittlebush.

"Heroic country, isn't it?" he said. "Just a few months ago, there were plans to cover this entire landscape with solar and wind farms. Instead, with this legislation, we are striking a balance with the insatiable demands of population growth."

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Chopped Down Weyerhaeuser Could Be Ready to Regrow

by Gene Marcial, Dailyfinance.com, Dec 22, 2009

Paper and forest-products stocks have been among the most unpopular, if not disliked, sectors in the past two years. The housing meltdown and the related decline of the construction industry paralyzed demand for paper, lumber and building products. And that has hammered paper and forest-products stocks. But some bold and contrarian pros think these crumpled stocks are poised for a comeback.

Among the companies that have felt the sector's pains is Weyerhaeuser (WY), one of the world's largest integrated forest-products giants. It engages in producing timber, paper and wood products, and real estate construction and development.

Weyerhaeuser's stock plunged from an all-time high of $87 a share in 2007 all the way down to an all-time low of $18.67 on Mar. 6, 2009, when the entire stock market also crashed. That would have been the precise time, if anybody had the prescience and guts, to scoop up wads of the shares. Since then, Weyerhaeuser has bounced about halfway back to its former high and is now around $43.

A Long-Term Play on Housing

Some investors argue that it has achieved much of its potential already, considering the continued weakness of the economy. But looking at both technical and fundamental grounds, the stock still looks inexpensive. And some savvy pros believe that it's very much underpriced based on a sum-of-the-parts, or breakup, valuation. So as harrowing and cloudy the economy and the industry's future may appear to some, some emboldened pros have been buying in.

These investors believe Weyerhaeuser, which lost money in 2008 and is expected to stay in the red this year and next, is a long-term play on housing. They believe the company will be back in the black by 2011. Analysts' consensus estimates, according to Bloomberg, see it earning $1.11 a share for 2011.

"Weyerhaeuser's timberland alone is worth $40 a share," says Kent G. Croft, president of Croft and co-portfolio manager at Croft Investment Management, which owns shares. Weyerhaeuser has sold some of its ancillary businesses, including its packaging unit, which International Paper (IP) bought in August 2008. That's part of Weyerhaeuser's effort to become more "timber heavy," notes Croft.

Converting to a REIT Structure

He believes much of the troubles that plagued the company are already reflected in its stock, particularly after it cut its yearly dividend twice in 12 months, from $2.40 a share to 20 cents.

Croft's long-term approach aims to hold a stock for three to five years. So far, the strategy has worked well: Croft Value Fund has delivered average annual gains of 5.3% in the past five years, vs. the Standard & Poor's 500-stock index's 1%. And year to date, the fund is up a whopping 31%, compared with the S&P 500's 19.3%.

The Weyerhaeuser bulls got another argument for their position when the company's board announced on Dec. 15 that converting to a real estate investment trust (REIT) would best support Weyerhaeuser's strategic direction. The company says the likely date for conversion would be next year.

"That Weyerhaeuser is electing REIT status suggests that the profit cycle in wood and timber is beginning to improve," says George L. Staphos, analyst at Bank of America Merrill Lynch, who upgraded the stock to a buy from neutral and raised his 12-month target to $50 to $60 a share based on REIT valuation, from $47. (Bank of America Merrill Lynch has done banking for Weyerhaeuser).

Attractive to Dividend-Hungry Investors

Weyerhaeuser will be able to convert to a REIT with its existing business mix of timberlands, wood products, cellulose fibers and real estate, Staphos says in a note to clients. "We view these announcements as positive and supportive of our buy rating," he says. As a REIT, Weyerhaeuser must issue a special taxable dividend to stockholders of its undistributed earnings and profits, which he estimates at just below $6 billion as of the beginning of 2010.

Operating in 10 countries, Weyerhaeuser is now focusing on its timberland roots, notes Staphos. In all, the company owns about 6.4 million acres in the U.S. "We believe Weyerhaeuser's markets are gradually improving," he adds, although most analysts are still wary. Nine rate the stock a hold, seven recommend buying the stock and two tag it a sell.

Indeed, paper and forest products stocks are still risky. But for dividend-hungry investors, Weyerhaeuser is a stock to consider. A REIT "is an effective public structure for timberlands, as the vast majority of dividend distributions are treated as return of capital for investors, rather than ordinary income, explains Peter Ruschmeier, analyst at Barclays Capital, which has done business with Weyerhaeuser and owns shares. He rates the stock overweight, with a 12-month target of $55 a share.

Apart from the REIT factor which he considers a positive, Ruschmeier also expects a cyclical upturn for wood products, homebuilding and timber. Plus, the stock has a "very compelling valuation," he says. If these contrarians are seeing the forest and the trees correctly, Weyerhaeuser could be a stock worth loading up on.

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Corporations test the norm in digital age

by Bill Virgin, Tacoma News Tribune, Dec 20, 2009

In the least surprising news event of the year, Weyerhaeuser Co. last week said its board has authorized conversion to a real estate investment trust. The timing of the conversion still has to be worked out.

Real estate investment trusts get huge federal tax breaks, provided they derive at least 75 percent of their income from real estate-related activities (of which timberlands count) and distribute at least 90 percent of their income annually. They can own what are known as taxable REIT subsidiaries, which is where the company’s current manufacturing operations would go.

Consumers and investors have long been told that making tax consequences the prime motivation for a financial decision is a poor idea. Getting a tax break from the mortgage interest deduction is a nice perk of buying a home, but shouldn’t be the deciding factor to do so.

Yet that’s what Wall Street has been leaning on Weyerhaeuser to do for years. The tax-advantaged status of a REIT will magically unlock millions of dollars in unrecognized value for the company’s timberlands, which in turn will flow to the stock price.

Or so says the theory. Even if that’s true, is that the only way Weyerhaeuser can gig its stock price? Will this new corporate structure limit Weyerhaeuser’s ability to capitalize on new markets and opportunities in the forest products business that don’t meet the real estate-related criterion?

Perhaps so, and perhaps the owners of the new Weyerhaeuser will be perfectly content with that. But don’t be shocked if, in a decade or so, the message that Weyerhaeuser is getting from Wall Street is, "Look at all the money you’re leaving on the table. What you need to do is convert from a REIT."

Bill Virgin’s column on business and economics appears Sunday in The Tacoma News Tribune. He is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News.

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Weyerhaeuser conversion to REIT negative but priced

By Karen Brettell, Reuters, December 17, 2009

Weyerhaeuser Co's (WY.N) decision to convert into a real estate investment trust is likely to be negative for the company's credit profile, though this weakness may have already been priced into its debt.

The company said on Tuesday it would convert into a REIT, likely in 2010, and pay a special dividend, bowing to pressure from shareholders who have been seeking the new financial structure for years. For details, see [ID:nN15213387]

Credit default swaps spreads insuring Weyerhaeuser's debt widened to 177 basis points on Thursday, from 168 basis points on Monday, before the news, according to data vendor Markit.

The company's 7.375 percent bond due 2019 rose to 104.75 cents on the dollar, in relatively illiquid trade, from 103.5cents before the announcement, according to MarketAxess.

"Weyerhaeuser's decision to elect REIT status was well telegraphed and should have been largely priced in by the market," analysts at Barclays Capital said in a report.

"That said, we do view a REIT transformation as negative for credit, given the more onerous distribution requirements and the fact that Weyerhaeuser will no longer be able to retain a meaningful portion of its earnings to increase book equity value," they said.

The conversion to a REIT will slash Weyerhaeuser's tax burden, though the company would be required to pay 90 percent of profit to shareholders. This will make its ability to deleverage reliant on additional equity issuance rather than earnings power, Barclays said.

Standard & Poor's changed its outlook on the company to negative, from stable, citing uncertainty over tax rules and policies of its conversion.

Also, there are risks around how the conversion will take place and how it will finance the cash portion of the distribution it makes the year it converts to a REIT, S&P said.

Weyerhaeuser expects the payout to total just under $6 billion, with up to 90 percent possibly coming in the form of stock and the rest in cash.

However, S&P, which ranks Weyerhaeuser BBB-minus, its lowest investment grade, added that it expects the company toexecute its conversion in a way that will minimize the impact on its liquidity and credit quality.

Moody's Investors Service, which rates Weyerhaeuser Ba1, one step below investment grade, changed its outlook on the company to "developing." from stable, and said its rating will be influenced by factors including how it funds the cash portion of its distribution.

Lower taxes from becoming a REIT will be offset by the negative impact of its initial cash distribution and requirements to distribute 90 percent of its taxable income to shareholders, Moody's said.

CreditSights, meanwhile, said a large issue for bondholders will be the potential for structural changes in the company's capital structure as a result of the conversion.

"Longer term, bondholders may also need to consider how a REIT conversion could increase the potential for spin-off's down the road or whether Weyerhaeuser will maintain its current business mix," CreditSights said.

"It is difficult to fully assess consequences for bondholders without more disclosure from the company," they added.

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Weyerhaeuser makes its own history, but will the plan fly?

by Jon Talton, Seattle Times, December 15, 2009

Top of the News: Amid the wall-to-wall Dreamliner coverage, another Seattle-area business icon is making news. Weyerhaeuser says it will convert to a real estate investment trust next year.

The move has been expected for some time. On the surface, it's straight-forward: A REIT distributes some 90 percent of its income directly to shareholders, in exchange for a corporate tax rate of zero (Weyerhaeuser's is currently 35 percent).

Wall Street has been pressuring Weyerhaeuser to make the move based on the success, in Wall Street's mind, of Plum Creek Timber Co., based in Seattle. In both cases, the companies are primarily focused on their real estate and timber holdings. Weyerhaeuser's story, of course, is more complicated.

This was one of the companies, along with the Northern Pacific and Great Northern railroads, that built the Northwest. The inter-generational wealth created by the company helped seed countless businesses and charities. As one of the largest integrated forest product companies in the world, with a headquarters in the Puget Sound region, it drew talent and capital, and made decisions affecting investments around the world.

Weyerhaeuser made a big bet on the housing bubble, especially with its house-building subsidiaries. When the bubble popped, nearly all of the company's units suffered. But even before the severity of the crash set in, Weyerhaeuser was backing away from its old integrated ambitions, cutting back, selling off business lines. The Federal Way headquarters staff has been decimated.

So a REIT, it will be. Pre-crash it made a certain creative-destruction sense beyond the tax benefits. That was an economy dominated by house-building and pushing development ever farther into the exurbs and rural areas. Not only was this profitable for the timber business, but some landholdings could conceivably be sold at a high profit for suburbanization of spectacular wilderness. CEO Dan Fulton comes from the real-estate arm.

It's a gamble, however, whether that old model can restart itself, certainly whether it can do so at the volume and profitability of the old days. Wall Street may be looking in a rear-view mirror. The Plum Creek success may not be replicated. It's especially not clear how Weyerheauser will fare in the great reset?

Now the company talks about research and development efforts and other forward-leaning projects. But it's difficult to see how these will be funded by a REIT, which exists for the quick profit of shareholders rather than the decades-long process that built Weyerhaeuser. REITs don't exist to make productive, value-added things. They don't exist to spend decades building a major company. Like much on Wall Street, they are primarily a short-term financial play, taking the profits out of assets that in some cases it took generations to build.

It's not a stretch to see the eclipse of Weyerhaeuser as the story of the American economy.

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Weyerhaeuser to Become REIT, Pay Special Dividend

Reuters, New York Times, December 15, 2009

Weyerhaeuser Co <WY.N> said it would convert into a real estate investment trust and pay a special dividend, bowing to pressure from shareholders who have been seeking the new financial structure for years.

Investors cheered the news, sending shares of the forest products company up more than 10 percent at one point on Tuesday. By afternoon, however, the stock was up about 2 percent.

The conversion to a real estate investment trust, or REIT, probably will take place in 2010, depending on the economy, Chairman Chuck Wilson said in a statement on Tuesday.

The move will slash Weyerhaeuser's tax burden and give its investors higher returns. The company would still trade on an exchange and would be required to pay 90 percent of profit to shareholders.

A REIT, in essence, is like a mutual fund in that it allows multiple investors to pool resources to control assets.

Weyerhaeuser has large timberland holdings in North and South America, builds homes, and produces packaging and various timber products.

Investors had been clamoring for years to have the company convert into a REIT, saying it is more of a real estate manager than a timber products maker or homebuilder.

Moving Assets

Federal Way, Washington-based Weyerhaeuser will place its timber business into the REIT and fold its remaining businesses and all of its debt into a taxable REIT subsidiary, or TRS.

To become a REIT, a company must make most of its income from real estate-related activity. The TRS designation lets Weyerhaeuser retain its non-real estate assets while still enjoying the financial benefits of a REIT.

However, the company will probably find its non-timber businesses will perform poorly in TRS status and start to sell them in coming years, Sterne Agee analyst Mark Connelly said.

"You can't have a packaging company being part of a REIT," said Daniel Perlman, a real estate lawyer with Paul Hastings, Janofsky & Walker in Chicago.

Special Dividend

Weyerhaeuser said that by the end of the year it converts to a REIT, it must pay a special taxable dividend.

For 2010, the company expects that payout to total just under $6 billion, with up to 90 percent possibly coming in the form of stock and the rest in cash.

Executives declined to discuss the exact payout ratio on a conference call with investors and media.

The payout will probably break down to $28 per share, with about $2.80 to $5.60 cash and the rest in stock, Credit Suisse analyst C.A. Dillon said.

Dillon cut his rating on the company to "underperform" from "neutral," saying the "full benefit" of the REIT status is already priced into shares.

Also on Tuesday, Weyerhaeuser said it would ask shareholders to eliminate its supermajority voting structure and remove a staggered system for board elections.

In afternoon trading, the company's stock was up 2.1 percent at $43.42.

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Weyerhaeuser board OKs conversion to REIT status

The Associated Press, Dec 15, 2009

Weyerhaeuser said Tuesday its board has approved a conversion of the forest products giant into a real estate investment trust, letting the company take advantage of certain tax benefits.

The Federal Way, Wash., company said the conversion may occur as soon as next year, depending on the economic recovery and changes in tax policy.

"This conversion will position us to be more competitive in our timberlands business," Dan Fulton, president and CEO, said in a statement. "In addition, we are able to convert with our existing business mix of timberlands, wood products, cellulose fibers and real estate."

Weyerhaeuser has been under pressure for years to lower its taxes by becoming a REIT. It said it plans to pay a significant portion of dividends in stock.

REITs distribute at least 90 percent of their taxable income to shareholders as dividends each year. The company then can deduct those dividends from its corporate taxable income. In many cases, REITS will pay out all of their taxable income and owe no corporate tax.

Weyerhaeuser now pays a 35 percent tax on income.

Under its conversion into a REIT, the company must issue shareholders a special, taxable dividend of its earnings by the end of the year of conversion. Weyerhaeuser pegged its 2010 profit at just under $6billion.

The company also announced it will ask shareholders at its annual meeting in April to approve changes in its structure, eliminating its classified board and removing super majority voting provisions.

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Weyerhaeuser To Convert To REIT Next Year

Dow Jones, December 15, 2009

Shares of forest-products company Weyerhaeuser Co. (WY) jumped almost 7% in early trading, following an announcement that it will convert to a real-estate investment trust next year, a move it says will "best support the company's strategic direction."

There has been speculation for some time whether Weyerhaeuser, whose most valuable asset is some 2 million acres of forest in the Pacific Northwest, would change to a REIT. Doing so would slash Weyerhaeuser's tax rate from the current 35% to zero, a competitive decision because rival timber companies that are REITs pay no income tax.

Chief Executive Dan Fulton said Tuesday that move "will position us to be more competitive in our timberlands business." He added the company will be able to convert with its current business mix, which also includes wood products, cellulose fibers and real estate.

In October, Weyerhaeuser reported break-even third-quarter results as the company's cost-cutting efforts appeared to be working. All of Weyerhauser's segments have been hurt by the housing downturn, so it has been shedding manufacturing plants and other assets not considered crucial to its core forest products operations. The company expanded its real-estate operations at the peak of the housing bubble and has since recorded substantial write-offs.

Without a firm date set for the conversion, the company said it would most likely occur sometime next year, depending on the state of the economy and tax policies like shareholder tax rates and REIT laws governing profit distribution.

But at the end of the year of the conversion, the company will issue a special dividend to holders, mostly in stock, of its undistributed earnings. As of the beginning of 2010, Weyerhaeuser expects that figure to total just under $6 billion.

Shareholders will need to vote to authorize the increase in the number of shares because of the dividend; holders will receive information on the proposal in February ahead of a vote at its April annual meeting.

Shares recently traded up 6.7% at $45.35.

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Plum Creek contributions under scrutiny

Mainebiz, December 11, 2009

Opponents of a massive development in the Moosehead Lake region are questioning the developer's contributions to supporters and land use regulators.

Plum Creek Timber Co., whose development was approved in September by the Land Use Regulation Commission, paid tens of thousands of dollars in legal fees to groups that supported its plan, Maine Public Broadcasting Network and the Portland Press Herald reported. Groups that received money for attorney fees in order to participate in legal hearings include the Piscataquis County Economic Development Council, which received $75,000, the Maine Snowmobile Association, which received over $100,000, and the Maine State Chamber of Commerce.

Representatives of those groups told the publications the money allowed them to afford to participate in the hearings, but opponents of the development argued the funds were never disclosed, and that they swayed the commission's approval of the project. "It's the applicant paying to get testimony that's purporting to be independent but in fact isn't," Cathy Johnson of the Natural Resources Council of Maine told the Press Herald.

Plum Creek also paid $1.7 million to LURC to cover expenses for the technical review, legal costs, court reporters, hotels and meeting rooms, as well as the $55-per-day compensation for each of the commission's appointed members, Catherine Carroll, director of the commission, told the paper. Some of those payments are required by state law to keep taxpayers from footing the bill for large development proposals, and Caroll said the contributions did not influence the commission's decision, according to the paper.

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PLUM CREEK - MAINE

Plum Creek paid legal fees of supporters

The money helped its allies be part of the Moosehead plan review, the company says, but critics say it unfairly influenced the process.

By John Richardson, Portland press Herald, December 11, 2009

Maine's Land Use Regulation Commission voted in late September to approve Plum Creek Timber Co.'s rezoning proposal for the Moosehead Lake region. It sets aside about 400,000 acres for commercial forestry and conservation, and makes room to develop two resorts and 975 house lots.

The vote ended four years of contentious debate and led three environmental groups to file appeals in Superior Court. State officials and conservation advocates are now preparing written arguments in the case, and Plum Creek is waiting for that process to move forward before filing applications for specific pieces of development.

Plum Creek Timber Co. paid tens of thousands of dollars in legal fees for groups that supported its development plan in the Moosehead Lake region, according to the company and some of its supporters.

The company also paid about $1.7 million to the Maine Land Use Regulation Commission, which used the money to cover other costs of the four-year review that ended with final approval of the plan in September.

While unprecedented in scale, the payments did not violate any laws or rules, according to an assistant attorney general. Plum Creek's payments to the state commission, in fact, were required by a 2005 state law that protected taxpayers from the cost of handling such large development proposals.

Representatives of the company and the commission said they wish the process had been shorter and less expensive. But Plum Creek's grants and fee payments, they said, did not improperly influence the process or the outcome.

"There's nothing in the rule that requires them to tell us if they're giving money to anybody," said Catherine Carroll, director of the commission.

Opponents of the plan, including some who have appealed the approval in court, disagree. The nation's largest timberland owner effectively used its wealth to manipulate the review, they say.

"This gave Plum Creek and Plum Creek-funded organizations an inordinate amount of time to dominate the hearings and ask their questions," said Hillary Lister, a volunteer with Native Forest Network, which opposed the project.

The payments to groups such as the Piscataquis County Economic Development Council, the Maine Snowmobile Association and the Maine State Chamber of Commerce should have been disclosed to the land use commission, said Cathy Johnson, north woods project director for the Natural Resources Council of Maine, one of a few groups that have filed court appeals to block the project.

"It's the applicant paying to get testimony that's purporting to be independent but in fact isn't," she said.

Opponents also say they have misgivings about Plum Creek's $1.7 million payment to the state agency that reviewed the plan. They also acknowledge the state may have no alternative, given the agency's small staff and the lack of money to expand it.

"It's a problem when agencies like LURC are not adequately funded," Johnson said.

Seattle-based Plum Creek was the first developer to pay the land use commission's extraordinary review costs under a law passed in 2005 with little or no opposition. Three wind farm developers have since covered review costs, although the bills have been nowhere near as big.

The $1.7 million from Plum Creek paid for two consultants who led the technical review, and for legal costs, court reporters and transcripts, hotels and meeting rooms. Plum Creek didn't pay for the agency's staff time, but it did pick up the per-meeting compensation – $55 – for the commission's appointed members, Carroll said.

The commission periodically presented Plum Creek with budget updates, and the company never objected, she said.

The process also was expensive for the various groups that were allowed to participate in several weeks of legal hearings on the project. Those daily sessions involved legal testimony and cross-examination, mostly by attorneys.

"There were a lot of groups like ours that certainly wanted to intervene and support what (Plum Creek was) doing, and the way the system was set up it would have been impossible for us to afford it," said Bob Meyers, director of the Maine Snowmobile Association.

Plum Creek agreed to pay the attorney fees for a group that included the snowmobile association and organizations representing ATV riders, outdoor guides and bow hunters. The fees ended up exceeding $100,000, Meyers said, although he didn't know the exact amount.

Meyers denied that Plum Creek bought the group's support. The association supported the company's plan long before the hearings, and Plum Creek didn't tell the association's lawyers what to say or what questions to ask, he said.

It's not clear what Plum Creek paid in total for the legal fees of its supporters.

Kathy Budinick, a company spokeswoman, said the contribution amounts are private information, but money was given to the economic development councils of Piscataquis and Somerset counties, the Maine State Chamber of Commerce, the Maine Snowmobile Association, the Professional Logging Contractors of Maine and the Coalition to Preserve and Grow Northern Maine. Some of those organizations led coalitions with similar groups.

"A few of the supporters, long-term supporters for years, really needed some budget resources to complete the process. We were really happy to help a few of them out," Budinick said.

The company often contributes money to community groups or outdoors organizations, although it doesn't typically pay legal fees in cases like this, she said. "No, it's not real typical, but neither is a project of this size," Budinick said.

Dana Connors, president of the Maine State Chamber of Commerce, said he didn't know how much Plum Creek contributed toward his organization's costs. But, he said, it's not the first time the chamber has solicited financial help from a member that it was speaking for in a legislative or regulatory process.

"I was very proud and pleased to be able to stand up and represent a business proposal and what that business proposal meant for the state," he said. "I consider that part of my responsibility."

While it was widely known that Plum Creek was paying some of the land commission's costs, many of those involved say the financial support for supporters wasn't so public.

Jerry Reid, an assistant attorney general, said he remembers financial support being disclosed under cross-examination during the commission's legal hearings. "So this has been part of the public record for at least a couple of years," Reid said.

Many participants said they didn't know the extent of the contributions.

"We looked at that bank of lawyers and we wondered, but we had no information," said Johnson, of the Natural Resources Council.

Lister, who participated in the hearings at her own expense, said Native Forest Network repeatedly asked witnesses if they were receiving money from Plum Creek. In a couple of cases, the answer was "no" or "not that I know of," she said.

Jym St. Pierre, a former planner for the commission who is now Maine director of RESTORE: The North Woods, said the payments could become an issue in the appeal, or in the Legislature.

"It definitely raises some legal questions because it sets a precedent. If you've got deep enough pockets to buy support, you can manipulate the process," he said.

Carroll, the commission's director, said she didn't know about all of the contributions at the time, but doesn't consider that a problem.

"Even if I was aware of it, it's irrelevant or moot to the (commission) process," Carroll said. The payments to the supporters and the agency had no influence on the outcome, she said.

"This commission based (its) decision solely on the relevant rules and regulations that were in place," she said, "and I'm confident that a judge (in the appeal case) is going to make that same decision."

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BURLINGTON NORTHERN SANTA FE RAILROAD

Buffett Bets Big That Railroads Have a Future

By Michael J. de la Merced and Andrew Ross Sorkin, New York Times, November 4, 2009

America’s best-known investor, Warren E. Buffett, is making his biggest bet yet on the nation’s economic future by buying, of all things, a railroad.

After deftly capitalizing on the financial crisis with a series of bold deals, Mr. Buffett on Tuesday agreed to buy the 131-year-old Burlington Northern Santa Fe Corporation.

A railroad might strike many people as a bit old-fashioned — more 19th century than 21st. But Mr. Buffett is wagering that as the economy revives, so will the demand for goods to be shipped by train. Burlington Northern carries coal and timber from the West, grain from the Midwest and imports arriving directly from Mexico and Canada, as well as through California ports.

And railroads, Mr. Buffett contends, are transportation for a fossil fuel-challenged future, since trains are generally more efficient and greener than trucks.

But for Mr. Buffett, the deal is also the fulfillment of a dream denied in childhood.

"This is all happening because my father didn’t buy me a train set as a kid," Mr. Buffett joked in an interview.

His new toy will not come cheap. Berkshire Hathaway, the conglomerate he runs, will spend roughly $26 billion for the 77.4 percent of the railroad that it does not already own, paying $100 a share in cash and stock. As part of the bid, Mr. Buffett is splitting Berkshire’s class B shares 50-for-1 to pay Burlington Northern shareholders, breaking his rule of never splitting Berkshire’s stock. The split increases the total number of class B shares while avoiding fractional stock ownership for Burlington Northern shareholders.

"I stretched on this one," he said in an interview. "I went to the last nickel."

Burlington Northern investors responded wildly to the news, pushing the company’s stock price up nearly 28 percent to $97 a share. While other transportation stocks also gained, the deal did not light a fire under the broader stock market. The Dow Jones industrial average fell 17.53 to 9,771.91.

Buying Burlington Northern is of a piece with the investments Mr. Buffett has made over the past year. He has positioned himself to profit from the mayhem in the markets and secure a legacy as one of the greatest investors of all time. While others were running scared last fall, Mr. Buffett invested billions in Goldman Sachs — and reached a far richer deal than Washington. He staked billions more in other blue-chip companies like General Electric and Wrigley.

The acquisition of Burlington Northern, based in Fort Worth, most likely concludes the investor’s search for an "elephant" acquisition, which he first described in one of his famed letters to Berkshire investors two years ago. His last major deal was in late 2007, when he agreed to buy a majority stake in Marmon Holdings, the conglomerate controlled by the Pritzker family.

"From my standpoint, it’s a lot easier to make a $32 billion investment than 10 $3 billion investments," he said.

Even as the credit markets have improved and banks have become less skittish about lending, few companies can muster Mr. Buffett’s financial firepower. Berkshire will borrow $8 billion to supplement $8 billion in cash from its books, paying off the debt in three annual installments.

Investors big and small hang on Mr. Buffett’s pronouncements, and with good reason: if you had invested $1,000 in the stock of Berkshire in 1965, you would have amassed millions of dollars by 2007. He bases his philosophy on stable, reliable investments. "We’ll make a good return, not a great return," he said of the Burlington Northern deal.

Mr. Buffett heeded his own rules of investing in making his latest acquisition.

One is to invest in companies that you understand. For Mr. Buffett, Burlington Northern fits the bill. He first bought a stake in the company in 2006, adding to shares held in two other railroad operators, Union Pacific and Norfolk Southern. Burlington Northern emerged as his choice, and he eventually built up a stake of 76 million shares in the company.

Another of his rules is to buy quality products at bargain prices. Burlington Northern’s stock price has stayed nearly flat over the past year, as its cargo load fell alongside the economy as a whole.

A third maxim is to move quickly — and Mr. Buffett did. On Oct. 22, Mr. Buffett arrived in Fort Worth as part of a visit to Berkshire’s portfolio companies. There, he met with Matthew K. Rose, the chairman and chief executive of Burlington Northern, who practiced an investor presentation with him.

Before he left, Mr. Buffett turned to Mr. Rose and said, "If you ever want a good home for Burlington, think of Berkshire." Later, he spoke with Charles T. Munger, his trusted lieutenant at Berkshire, and began discussing a price for Burlington Northern.

The next night, Mr. Rose dropped by Mr. Buffett’s hotel, and within 15 minutes, the billionaire had delivered his bid. "There wasn’t much to say," Mr. Buffett recalled on Tuesday.

By Sunday, Burlington Northern had retained advisers at Goldman Sachs and the boutique investment bank Evercore Partners, and the two sides began negotiating. Few issues emerged, other than Burlington Northern’s desire for a stock component to the bid, to allow its shareholders to choose a tax-free alternative to cash. By Thursday, lawyers from Munger, Tolles & Olson for Berkshire and from Cravath, Swaine & Moore for Burlington Northern began drafting deal documents.

Mr. Buffett said his goal was to have the deal sealed by Sunday at noon, when he was scheduled to have a root canal.

"I wanted to go into that with a mind that was at ease," he said.

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BURLINGTON NORTHERN SANTA FE RAILROAD

Berkshire Bets on U.S. With Purchase of Railroad

New York Times, November 3, 2009

The deal, which including Berkshire’s previous investment and the assumption of $10 billion in Burlington Northern debt brings the total value to $44 billion, represents what Mr. Buffett said was a big bet on the United States. He told CNBC in an interview that railroad operators cannot do well unless American businesses were producing goods and customers were buying them.

"It’s an all-in wager on the economic future of the United States," he said in a written statement. "I love these bets."

In the interview with CNBC, Mr. Buffett said that the deal came together quickly. He made a proposal to Matthew K. Rose, BurlingtonNorthern’s chairman and chief executive. Mr. Rose took the proposal to his board — and got an answer in about 15 minutes.

"We are thrilled to have the opportunity to become a part of the Berkshire Hathaway family," Mr. Rose said in a statement. "We admire Warren’s leadership philosophy supporting long-term investment that will allow BNSF to focus on future needs of our railroad, our customers and the U.S. transportation infrastructure."

During the financial crisis of last year, Mr. Buffett spent $14.5 billion to buy preferred shares of three blue-chip American companies, Wrigley, General Electric and Goldman Sachs. These companies didn’t get Mr. Buffett’s seal of approval for free, however; the preferred stock carries hefty dividend payments.

Burlington Northern was created in June of 1994 with the merger of Burlington Northern Inc. and the Santa Fe Pacific Corporation in a stock swap valued at $2.7 billion. The merger was seen as complementary, giving it access to the coal fields of the West as well as West Coasts ports and Mexico and Canada. Santa Fe specialized in intermodal services, which involves moving goods by rail to be delivered locally by truck. Burlington Northern carried heavy commodities like coal, grain and timber.

Under the terms of Tuesday’s deal, Berkshire will pay about $100 for each Burlington Northern share, a price comprised of about 60 percent in cash and 40 percent in stock. Berkshire deals historically have almost never used stock, but Mr. Buffett told CNBC that Burlington Northern wanted a tax-free component for their shareholders.

Shares in Burlington Northern, which closed Monday at $76.07, jumped nearly 30 percent in premarket trading on Tuesday to $98.15. Class A shares in Berkshire were up slightly in premarket trading at $98,971.57.

As part of the deal, Berkshire will split its class B shares 50-to-1 to help pay for the acquisition. It’s an unusual move for Mr. Buffett, who has long said he did not like stock splits. Most of the stock component in the deal, however, will be in Berkshire class A shares.

Of the $16 billion in cash for the deal, Berkshire plans to use $8 billion on its books and $8 billion borrowed from banks, which will be repaid in three annual installments. After the deal, Berkshire will have $20 billion in cash on hand.

"I like cash," Mr. Buffett said.

The Burlington deal is the largest for Mr. Buffett since he agreed nearly two years ago to acquire control of Marmon Holdings, the industrial holding company of the Pritzker family, for an initial price of $4.5 billion.

Burlington Northern was advised by Goldman Sachs, Evercore Partners and the law firm Cravath Swaine & Moore. Berkshire was advised by the law firm Munger, Tolles & Olson.

Update: Berkshire Hathaway, the investment vehicle of Warren E. Buffett, said on Tuesday that it planned to buy the 77.4 percent of Burlington Northern Santa Fe it did not already own for $26 billion in cash and stock, in the largest deal in Berkshire history.

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Buffett buying BURLINGTON NORTHERN RAILROAD

Billionaire investor makes $34 billion bet on the U.S. economy's future

MSNBC, November 3, 2009

Warren Buffett's Berkshire Hathaway Inc. on Tuesday agreed to buy Burlington Northern Santa Fe Corp., making a $34 billion bet on the future of the U.S. economy.

Burlington Northern, the nation's second-largest railroad, is the biggest hauler of food products like corn and coal for electricity, making it an indicator of the country's economic health. The railroad also ships a large amount of goods from Western ports including everyday items such as refrigerators, clothing and TVs.

Analysts say Buffett is planting both feet in an industry that is poised to grow as the economy gets back on solid ground. If approved, it would be the biggest acquisition ever for Berkshire Hathaway Inc.

Berkshire Hathaway already owns about 22 percent of Burlington Northern, and said it will pay $100 a share in cash and stock for the rest of the company, a 31.5 percent premium on Burlington Northern's Monday closing price. Shareholders have the option to convert their stock for a cash payment of $100 per share or receive Berkshire Class A or Class B common stock. Up to 60 percent of the deal is cash and 40 percent is in stock.

"Berkshire's $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry," Buffett said in a statement.

"Most important of all, however, it's an all-in wager on the economic future of the United States. I love these bets," he said.

The majority of the stock in the deal will be Berkshire's "A" shares, but Berkshire's board also approved a 50-for-1 split of its Class B common stock for holders of smaller amounts of Burlington shares who opt for a share exchange rather than cash. Berkshire's Class B shares closed Monday at $3,265. With the split, each share will be worth $65.30. Burlington shares shot up $21.33, or 28 percent to $97.40 in morning trading. Shares of other major rails, including Burlington's larger rival Union Pacific Corp., rose as well.

Berkshire also owns stock in two other major U.S. railroads — 9.56 million shares of Union Pacific Corp. and 1.93 million shares of Norfolk Southern Corp., as of June 30.

The deal for Burlington Northern has been approved by the boards of both companies, but still needs two-thirds approval of Burlington's shareholders and antitrust clearance. The railroad expects to clear those hurdles in the first three months of next year.

Last week the railroad reported third-quarter profit dropped 30 percent to $488 million, or $1.42 per share, as consumers continued to hold back on buying retail goods and industrial production struggled.

Burlington was one of the least optimistic among major railroads about the pace of economic recovery. CEO Matt Rose said consumers are going to be the driver of any improvement in the economy, but no one is buying yet.

Analysts say Buffett is looking for an investment that will reap rewards for many years into the future, and isn't so concerned about immediate gains.

"(Buffett is) buying at the trough — things aren't going to get much worse. He's getting in at a good time," said Art Hatfield, an analyst with investment firm Morgan Keegan.

Hatfield said he believes Buffett went for Burlington Northern in part because of its good management team, an important aspect in any of the billionaire's deals.

Hatfield also said that Burlington Northern has been more progressive than its peers in developing new technology, allowing to be more profitable. Major railroads have been able to slash costs during the recession by cutting jobs, parking railcars and making strides to improve train speeds and other metrics that improved efficiency.

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BURLINGTON NORTHERN SANTA FE RAILROAD

Warren Buffett Buys A Railroad?

Huffingtonpost.com, November 3, 2009

Warren Buffett's Berkshire Hathaway Inc. on Tuesday agreed to buy Burlington Northern Santa Fe Corp., making a $34 billion bet on the future of the U.S. economy.

Burlington Northern, the nation's second-largest railroad, is the biggest hauler of food products like corn and coal for electricity, making it an indicator of the country's economic health. The railroad also ships a large amount of goods from Western ports including everyday items such as refrigerators, clothing and TVs.

Analysts say Buffett is planting both feet in an industry that is poised to grow as the economy gets back on solid ground. If approved, it would be the biggest acquisition ever for Berkshire Hathaway Inc.

Berkshire Hathaway already owns about 22 percent of Burlington Northern, and said it will pay $100 a share in cash and stock for the rest of the company, a 31.5 percent premium on Burlington Northern's Monday closing price. Shareholders have the option to convert their stock for a cash payment of $100 per share or receive Berkshire Class A or Class B common stock. Up to 60 percent of the deal is cash and 40 percent is in stock.

"Berkshire's $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry," Buffett said in a statement.

"Most important of all, however, it's an all-in wager on the economic future of the United States. I love these bets," he said.

The majority of the stock in the deal will be Berkshire's "A" shares, but Berkshire's board also approved a 50-for-1 split of its Class B common stock for holders of smaller amounts of Burlington shares who opt for a share exchange rather than cash. Berkshire's Class B shares closed Monday at $3,265. With the split, each share will be worth $65.30. Burlington shares shot up $21.33, or 28 percent to $97.40 in morning trading. Shares of other major rails, including Burlington's larger rival Union Pacific Corp., rose as well.

Berkshire also owns stock in two other major U.S. railroads – 9.56 million shares of Union Pacific Corp. and 1.93 million shares of Norfolk Southern Corp., as of June 30.

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Berkshire buying BURLINGTON NORTHERN RAILROAD

Associated Press, November 3, 2009

Making a $34 billion bet on the future of the U.S. economy, Warren Buffett's Berkshire Hathaway Inc. on Tuesday agreed to buy Burlington Northern Santa Fe Corp.

"Berkshire's $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry," Buffett said in a statement.

"Most important of all, however, it's an all-in wager on the economic future of the United States. I love these bets," he said.

Berkshire Hathaway already owns about 22 percent of Burlington Northern, and said it will pay $100 a share in cash and stock for the rest of the company, a 31.5 percent premium on Burlington Northern's Monday closing price. Shareholders have the option to convert their stock for a cash payment of $100 per share or receive Berkshire Class A or Class B common stock. Up to 60 percent of the deal is cash and 40 percent is in stock.

The majority of the stock in the deal will be Berkshire's "A" shares, but Berkshire's board also approved a 50-for-1 split of its Class B common stock for holders of smaller amounts of Burlington shares who opt for a share exchange rather than cash. Berkshire's Class B shares closed Monday at $3,265. With the split, each share will be worth $65.30. Burlington shares closed Monday at $76.07. Burlington shares shot up $21.56, or 28.4 percent, to $97.63 in morning trading. Shares of other major rails rose as well.

The deal has been approved by the boards of both companies. It would be the biggest acquisition ever for Berkshire Hathaway Inc.

Berkshire also owns MidAmerican Energy Holdings, which controls power companies in the Midwest and Pacific Northwest. The railroad could be a strategic acquisition because its tracks run right through both regions, a major coal supply route for power plants.

The chairman of MidAmerican Energy has come out vocally against climate change legislation which targets coal-fired power plants.

Burlington Northern Santa Fe is the country's second-largest railroad with a market capitalization -- the market value of the company's outstanding shares -- of about $25.9 billion.

Last month the company reported third-quarter profit dropped 30 percent to $488 million, or $1.42 per share, as people continued to hold back on purchasing goods from stores and industrial production continued to struggle.

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Buffett's firm to buy BURLINGTON NORTHERN

CNNMoney.com, November 3, 2009

Berkshire Hathaway will acquire unowned stake of railroad in a cash-and-stock deal worth $44 billion.

Buffett called Berkshire's acquisition of Burlington Northern an "all-in wager" on the United States.

Warren Buffett's Berkshire Hathaway said Tuesday it will buy railroad operator Burlington Northern Santa Fe for $44 billion.

Berkshire, which already has major stake in Burlington Northern, said it would acquire the remaining 77.4% of the company in a cash-and-stock offer worth $100 per share.

Widely regarded as both one of the world's richest men and the investment community's more brilliant minds, Buffett called his firm's investment an "all-in wager on the economic future of the United States."

"Our country's future prosperity depends on its having an efficient and well-maintained rail system," Buffett said in a statement.

Burlington Northern shares soared 28% in morning trading on the news.

Separately, Berkshire said it was announcing a 50-for-1 split of its Class B common stock. The majority of stock issued by the company in its purchase of Burlington Northern will be its pricier Class A shares, the company said.

The deal, which would rank as the largest acquisition in Berkshire Hathaway's history, would also include $10 billion of Burlington Northern debt.

It would also expand the already massive portfolio of companies Berkshire already owns. Brand-name businesses such as auto insurer Geico, See's Candy and Fruit of the Loom are all subsidiaries of the Omaha, Neb.-based firm.

Matthew Rose, Burlington Northern's chairman and CEO, said the sale of the Fort Worth, Texas-based firm was a "strategic fit" for both the company's customers and employees, during a conference call with investors Tuesday.

No management changes are expected at Burlington Northern as a result of the deal, which is expected to close sometime in early 2010.

Berkshire's purchase, of course, will require the approval of shareholders and will have to undergo regulatory review by the Justice Department.

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Buffett Bets Billions on Burlington Northern

Portfolio.com, November 3, 2009

Warren Buffett's Berkshire Hathaway Inc. will pay $26 billion to buy out railroad Burlington Northern Santa Fe Corp. in what the billionaire investor called a bet on the U.S. economy.

The deal, Buffett's biggest-ever acquisition, is priced at a premium of 31.5 percent over BNSF's closing stock price on Monday and values the railroad at $34 billion. It's a sign that the Oracle of Omaha, at least, is bullish on the basic building blocks of the American economy.

Analysts say it's also a shrewd bet on a business that could add to Berkshire Hathaway's bottom line over time.

"It's an all-in wager on the economic future of the United States," Buffett said in a statement, adding that railroads are key to the U.S. economy and will benefit as recovery takes hold. "I love these bets."

Berkshire Hathaway will pay $100 per share in cash and stock for the 77.4 percent of BNSF shares it does not already own. Berkshire will also assume $10 billion of BNSF debt. The deal is expected to close in the first quarter of 2010.

"For the market, it can be seen as a sign of confidence [about the economy]," said Peter Boockvar, equity strategist at Miller Tabak & Co. in New York, adding it was logical for Buffett to buy the rest of the railroad. "Berkshire is seeing way past some impending economic recovery signs now and looking into the future."

The railroad carries such basic necessities for the American economy as coal, and demand for rail service will go up as the economy recovers and with it, demand for energy for such activities as manufacturing. But Buffett is well known as a long-term investor, so that demand might not be an immediate thing.

Still, Buffett's gamble comes at a time when signs are more positive for the U.S. economy. GDP numbers show the economy grew in the third quarter, and the Institute of Supply Management's measurement showed manufacturing grew for the third straight month in October.

Berkshire's board approved a 50-for-1 split of the company's Class B common stock to help ease the way for the deal.

"We'll have more people moving more goods 10, 20, 30 years from now," Buffett, Berkshire chairman and CEO, said on CNBC television. "I just believe this country will prosper."

Analysts called the planned purchase a shrewd one for the sage of Omaha, the Dallas Business Journal reports

"We think it's a logical fit," said Keith Schoonmaker, senior equity analyst at Chicago's Morningstar. "We think it's a rational price. (Buffett) is not thinking about the next quarter. He's thinking about the next decade."

According to Schoonmaker, Buffett was probably attracted to Burlington Northern's strong competitive advantage through proverbial "barriers to entry" to would-be rivals. "The challenges of acquiring new rights of way and laying thousands of miles" of track gives Burlington Northern an "economic moat" that is hard for competitors to match, Schoonmaker said.

Buffett also probably likes the predictability of Burlington Northern's business, Schoonmaker said. "Coke will stay coke, and railroads will stay railroads. It's not a business that's speculative. They're hauling freight in North America."

Beyond that, Burlington Northern generates a healthy amount of cash that Buffett could redeploy into other areas of his business, according to Schoonmaker.

With 2008 revenue of slightly more than $18 billion, Burlington Northern is the biggest player in its industry. In the quarter ended September 30, Burlington Northern posted net income of $488 million on revenue of about $3.6 billion, compared with net income of $695 million and revenue of $4.9 billion in the same period a year ago.

Schoonmaker also noted that Burlington Northern has strong management, another trait that Buffett likes. Though the railroad industry has a number of top-notch CEOs in its ranks, "none of them is better than Matt Rose," who is Burlington Northern's chairman, president, and chief executive. Schoonmaker said "He's an outstanding CEO, in our opinion."

Buffett said he was not interested in buying the rest of BNSF rival Union Pacific Corp., whose shares he also owns. He said he expected the companies to remain rivals for the next half century.

"We won't be making any huge deals for a while," he told CNBC. "I made [BNSF CEO Matt Rose] an offer, he said he would take it to his board, and it took about 15 minutes."

The BNSF deal is, by billions, the biggest ever for Berkshire Hathaway. In 1998, Berkshire Hathaway bought reinsurer General Re for $16.1 billion.

Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said the deal was a bet on the future of coal as a source of energy.

"Because Burlington Northern moves coal around the country, I think Buffett is trying to get into coal but doing it in a cheaper way," he said. "It's leveraged against coal's demand without actually having to buy the commodity itself."

Some analysts said the deal did not necessarily signal a wave of mergers and acquisitions in railroads.

"For an outsider to make an acquisition of a railroad or invest a significant amount in a railroad—you may see more people get interested in that possibility," said George Van Horn, senior analyst with market research firm IBISWorld.

"But as far as seeing railroad themselves merging, I wouldn't expect that right away," he said.

Shares of BNSF rivals rose on news of the deal. Union Pacific gained 8 percent to $59.40, Norfolk Southern Corp. jumped 8 percent to $50.40, and CSX Corp. was up 8 percent to $46.20.

Berkshire said the 50-for-1 split of its Class B shares would make it easier for smaller BNSF shareholders to swap their shares for Berkshire stock. Class B shares were up 2 percent, to $3,343, in premarket trade.

Buffett, one of the world's richest men and one of its most revered investors, is known for making big long-term bets. He wrote in the New York Times in October 2008 that he had been buying American stocks in his personal account—a few weeks after the collapse of Lehman Brothers set off worldwide selling.

"Fears regarding the long-term prosperity of the nation's many sound companies make no sense," Buffett wrote at the time.

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PLUM CREEK - MAINE

Plum Creek critic won't appeal decision

By John Richardson, Portland Press Herald, October 1, 2009

FALMOUTH -- Maine Audubon announced today it will work to reform land use policy in northern Maine but will not appeal a state panel’s approval of Plum Creek Timber Co.’s development plans in the Moosehead Lake region.

The organization was a vocal opponent of the rezoning plan approved last week by the Land Use Regulation Commission. The plan sets aside about 400,000 acres for commercial forestry and makes room to develop two resorts and 975 house lots throughout the region.

Maine Audubon’s executive director, Ted Koffman, issued a statement today saying the group decided against an appeal and will instead focus on "serious flaws in the deliberation and decision-making process that led to the plan’s approval." Koffman singled out the commission’s acceptance of a conservation deal in which Plum Creek will be paid more than $20 million for development rights on its forestlands.

Developers are usually required to donate, not sell, conservation lands that are offered as compensation for development projects, he said.

"If that precedent is left as is, we fear Maine will come to regret it," Koffman said in the announcement.

Although Maine Audubon has decided against legal action, two other organizations -- the Forest Ecology Network and RESTORE: The North Woods -- have announced plans to appeal the decision to Superior Court.

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PLUM CREEK - MAINE

Large-scale development OKed for Maine woods

By Glenn Adams, Associated Press, September 23, 2009

BANGOR, Maine — A sprawling resort and residential development at the gateway to Maine's North Woods that would be the largest of its kind in the state won a state planning board's unanimous approval Wednesday.

Plum Creek Timber Co.'s proposal was approved nearly five years after the Seattle-based company announced plans to build two resorts and more than 2,000 housing units near Moosehead Lake.

Critics said the development will bring traffic and congestion and threaten the character of the North Woods, a region made famous by writer Henry David Thoreau. Supporters said it will give an economic boost to the region and result in hundreds of thousands of acres of forest lands being preserved.

Even with the state Land Use Regulation Commission's approval, it could be years before construction begins. Plum Creek would need to win permits for construction, and opponents said they intend to file a lawsuit to stop the development.

James Kraft, an attorney for Plum Creek, said the company went through an exhaustive process to win final state approval, making several changes and downsizing the plans over the years.

"It may not be the perfect plan, but everybody up there agreed it was a good plan," Kraft said.

Plum Creek first announced in 2004 that it planned to subdivide its holdings in the Moosehead region and build a development that would include nearly 1,000 house lots, two resorts, three recreational-vehicle parks, a golf course and a marina.

To gain approval, Plum Creek petitioned the land-use commission to rezone nearly 400,000 acres of land. Plum Creek officials say development will be limited to an area spread out over 16,900 acres, with the company donating or selling conservation easements on 363,000 acres where public access would be guaranteed and future residential development prohibited.

The final development now calls for 821 house lots as well as two resorts with more than 1,200 housing units — houses, hotel rooms or condominiums — at Big Moose Mountain and Lilly Bay.

From the start, opponents said the plan was inappropriate for what they say is the largest undeveloped tract east of the Mississippi River. Thoreau wrote about the area 150 years ago after traveling the waterways and forests that shaped many of his ideas about nature.

Opponents also claimed the regulatory process was flawed, with the commission taking on an advocacy role for Plum Creek.

Two Maine-based conservation groups, the Forest Ecology Network and RESTORE: The North Woods, said Wednesday they intend to file a lawsuit in state court seeking to overturn the commission's decision.

Jonathan Carter, executive director of the Forest Ecology Network, said the commission "switched sides" as it considered the Plum Creek application.

"Rather than being an advocate for the unorganized townships, it became the architect and advocate for Plum Creek development," Carter said.

But other conservation groups said the plan creates conservation easements that will prevent future haphazard development over hundreds of thousands of acres. The plan also preserves public access, guarantees selective tree cutting to preserve the area's forest, and provides ecological protections, said Alan Hutchinson, executive director of the Forest Society of Maine, a Bangor-based land trust.

"This concept plan puts all those guarantees in place that you wouldn't have otherwise," Hutchinson said.

Prior to the vote, police arrested several protesters who disrupted the meeting, yelled at board members and accused them of selling out.

The protesters were identified as members of the Native Forest Network, a grass-roots organization that has been vocal in its opposition to the development.

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PLUM CREEK - MONTANA

Environmental groups log former Plum Creek lands for sake of preservation, access

By Rob Chaney, The Missoulian, September 20, 2009

LOLO HOT SPRINGS - The bugle of elk and the howl of chain saws mingle along Fish Creek Road, where one of the nation's biggest private-public land deals is under way.

The summer has been traumatic for some rock climbers, who've found one of their favorite outcrops scarred with logging cuts. It's been a relief for loggers who are back at work in tough economic times. And it's been a conundrum for conservation groups, whose "protecting nature, preserving life" motto now involves becoming a timber company.

The land is part of a checkerboarded mix that once belonged to Plum Creek Timber Co. Last year, the company agreed to sell 310,000 acres of its forest holdings to The Nature Conservancy and the Trust for Public Lands in a three-phase deal known as the Legacy Project.

"I can understand why people who treasure a place would be upset to see it logged," said Chris Bryant, outreach director for The Nature Conservancy. "But it's not a question of what Elk Rock will look like in 10 years. It's not the first time it's been logged. We should be asking: What is the potential for the landscape in 20, 30, even 50 years? This is not a project for short-term thinkers."

The deal also includes an option for Plum Creek to buy 92 million board feet of timber off its former lands over the next 10 years. In addition, the company retained the right to honor previous logging contracts.

That was a relief for loggers like Dave Swartz of Lolo Creek, who was working alongside Fish Creek Road last week.

"We're going to get about 20 loads out of this project," Swartz said, standing alongside his log skidder a little north of Lolo Hot Springs. "We had it under contract last year, before the land was sold, but we were shut down last winter because of the economy. Mainly what we're taking is beetle-killed lodgepole. It's mostly for pulp. We're getting a few fir and larch."

But the wood work has left some observers of the deal concerned that millions of public dollars are going to buy clear-cuts. While The Nature Conservancy and Trust for Public Lands are actively planning and bidding out their own timber sales, their representatives maintain that's only a small part of the bigger picture.

"It's our belief this is a relatively light harvest plan," said TPL's Rocky Mountain program director, Eric Love. "The growth rate far exceeds the take rate. And the fiber supply agreement was part of the transaction. We were trying to do our best for the jobs and the mills. We never had any intention of having these lands have a big fence put around them. It's a working forest, and it's remaining a working forest."

Plum Creek spokeswoman Kathy Budinick said the company passed on the first three quarters' offerings, but has accepted its fourth-quarter allotment to log on 69,500 acres. Most of that work will be in the Mill Creek drainage above Frenchtown and in the Seeley Lake area.

The project has essentially turned the Nature Conservancy into a logging company. It has hired a forester to inventory the acreage and design timber sales. The closure of Plum Creek's Pablo mill has cut into the finances. Now the Fish Creek logs must be trucked all the way to Columbia Falls.

What profit the Nature Conservancy sees from logging goes to its interest payments on the land or to stewardship work. It has already been actively spraying weeds along forest roads in Mineral County, ripping out some 35 miles of closed roads, removing or replacing more than 35 culverts and rebuilding streambeds.

The two conservation groups paid about $465 million for the Plum Creek land. About half of that came from a federal allocation, with the rest raised through loans within the groups.

The groups expect to sell the land as quickly as possible to owners who will maintain public access and preserve habitat. In large part, that means the U.S. Forest Service, which is picking up most of Phase 2's 111,720 acres.

"Our eyes are very open on what we're getting, and we're fine with what we're getting," said Forest Service Region 1 spokeswoman Elizabeth Slown. "Our due-diligence effort looks to see if these are good lands for the future, not what they look like today. The value is not based on the value of standing timber, or cost of restoration that might need to be done. It gets down to location - filling in checkerboard, creating connectivity in terms of wildlife, making sure there's public access in place."

The conservation groups initially planned to sell some land to private buyers - with conservation easements. But TPL's Love said the collapse of the housing market has put that piece "on the back burner." He added the finances for next year's Phase 3 closing were still on track, but would not reveal how the money was being replaced.

Another important player may be the Montana Department of Fish, Wildlife and Parks. Region 2 Supervisor Mack Long has a proposal to buy 41,000 acres of the Fish Creek land, plus about 24,000 acres around Marshall Lake northeast of Missoula. That deal could be worked out over the next couple years.

The Fish Creek drainage has many Mineral County residents pulled in different directions. On one hand, it's been a favorite playground for hunting, fishing, mushroom picking and access into larger wilderness areas. On the other, Plum Creek paid property taxes in a county where only 8 percent of the land is on the tax rolls. Selling the land to private buyers could mean loss of access. Selling to government buyers could mean loss of tax revenues.

In Superior, Kevin Chamberlain of the Mineral County Extension Office has kept an eye on the land deal through the volunteer Fish Creek Working Group. He said much of the dilemma was resolved when the Nature Conservancy brokered the deal with Fish, Wildlife and Parks. FWP has pledged to keep the land open and maintained for natural benefit, but is also required by state law to pay property taxes.

"They (TNC) are hanging way out there in terms of buying these lands, and hopefully holding them for a use that's proper as perceived by the locals and the community at large," Chamberlain said. "I really respect them for that. And it's been fun to work with them. It's like almost for the first time, our input has some value."

- - - - -

The Legacy Project Update

Montana's largest public-private land sale nears its completion.

Last year, Plum Creek Timber Co. agreed to sell 310,000 acres of its forest holdings to The Nature Conservancy and the Trust for Public Lands in a three-phase deal known as the Legacy Project.

Phase 1 of the Legacy Project closed Dec. 15, 2008. It delivered 129,343 acres, primarily in the Fish Creek, Petty Creek and Nemote Creek drainages in Mineral County, and around Potomac between Interstate 90 and Highway 200. There are also a few smaller parcels around Missoula in Milltown, Mount Jumbo, Deer Creek and Woodchuck. TNC and the Trust for Public Lands took out approximately $138 million in loans to cover that transaction.

Phase 2 came together in February with $250 million in federal dollars in the 2009 Farm Bill. That bought another 111,720 acres. The large blocks are north of Lolo Hot Springs, south of Interstate 90 around Welcome Creek, and lots of checkerboard holdings in the Seeley-Swan drainage along Highway 83.

Phase 3 is scheduled to close in December 2010

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PLUM CREEK - MAINE

Plum Creek plan approval likely this week

But the need for permits, possible appeals and a weak real estate market may delay construction for several years.

By John Richardson, Portland Maine Press Herald, September 20, 2009

Plum Creek Timber Co.'s historic development plan for the Moosehead Lake region is expected to win final approval Wednesday, closing the book on more than four years of public debate.

But don't expect to see houses and resorts rising in the woods there anytime too soon.

Potential court appeals, a weak real estate market and the need to win permits for individual pieces of the project all mean it may be several more years before any homes or resorts are actually built.

"It's been a long road," said Catherine Carroll, director of the Maine Land Use Regulation Commission, whose staff began reviewing the plan more than five years ago.

"It's final approval, but it's still conceptual. There's still much more to do here in terms of getting down to the details."

The seven members of the land use commission are scheduled to vote during a meeting Wednesday afternoon in Bangor. The commission's staff is recommending approval based on a preliminary vote last spring, when commission members indicated they were satisfied with the latest version of Plum Creek's plan.

While Plum Creek's plan for two resorts and 975 house lots is considered the largest development proposal in Maine history, the plan also is historic as a conservation deal.

If approved Wednesday, future development would be restricted on about 400,000 acres of forestland around Moosehead. It would be one of the largest tracts of protected forest in the state and would connect about 2 million acres of conservation land from Baxter State Park to the Canadian border.

While any appeals of the commission's approval could delay development of the resorts and homes, the conservation deal will take effect – at least temporarily – whether there is an appeal or not. Plum Creek could eventually back out of the conservation plan if an appeal is successful or if it decides to drop the development plan.

DEVELOPER PLANS 'BABY STEPS'

It's unclear when Plum Creek plans to begin development, or which pieces of the development plan would be pursued first. But the company would have 30 years to carry out the plan, and it doesn't appear to be in a big rush.

"We want to get the approvals, then we want to have a good, thoughtful plan on how to go forward into the future," said Luke Muzzy, the company's project manager. "It's going to be done in baby steps, at least in the beginning. We want to do it right. We may partner with others. We may do it ourselves."

Land owners such as Plum Creek typically bring in a specialized company to develop and manage resorts. Plum Creek, however, has already completed one residential subdivision in the area and may create and sell the house lots on its own.

Muzzy acknowledged the real estate market could slow the development but said it has not changed the ultimate plan.

"The economy certainly is different than it was when we started," he said. "But we've always said it's going to be a long-term plan. We knew there was going to be ups and downs, and we accounted for that with a 30-year plan."

The plan about to be approved is a far different one from the plan publicly unveiled by Seattle-based Plum Creek in 2005.

That one also had two resorts and 975 house lots, but the lots have since been moved away from more remote ponds and closer to existing homes and roads. The amount of permanent conservation land, meanwhile, has increased from 11,000 acres in the initial plan to about 400,000 acres, most of which will be protected by an easements that Plum Creek will sell to The Nature Conservancy.

"This is the crucial piece, like a jigsaw puzzle piece that connects 2 million acres of conservation land into the future," said Bruce Kidman, director of external affairs for The Nature Conservancy in Maine.

Without the conservation deal, Kidman said, the 400,000 acres could see gradual, haphazard development in the form of summer homes and small subdivisions.

Protecting the land also will keep development from creeping north of Moosehead Lake into more remote areas, said Alan Hutchinson, executive director of the Forest Society of Maine, which helped negotiate the deal and is designated as the easement holder.

"It's an incredible buffer between the populated southern areas of Maine and the core of the North Woods," Hutchinson said.

'SERIOUSLY CONSIDERING' AN APPEAL

Thomas Kittredge, executive director of Piscataquis County Economic Development Council, said a final approval Wednesday would be long-awaited good news for the residents and the economy in the area. And while the weak real estate market and legal appeals will delay those benefits, they won't stop the project in the long run, he said.

"I think this is something that the Moosehead region needs. I think it's going to be a draw to the community, but it's not going to be built out overnight," Kittredge said.

Several conservation groups continue to oppose the plan, saying there is still too much development in the wrong places.

"There definitely have been a lot of changes and some of them have been for the better. However, we're still disappointed in the approval of the plan," said Cathy Johnson of the Natural Resources Council of Maine.

"What we have now is not a good plan, but just a better version of a bad plan," said Wendy Weiger, a Greenville resident and member of the Moosehead Region Futures Committee.

A planned resort in Lily Bay was the focus of especially intense opposition. Development there and near Brassua Lake is sure to generate another round of protests when, or if, specific construction plans are presented to the land use commission.

An appeal of the commission decision is widely expected to come first, however.

"We certainly are seriously considering the possibility of an appeal," said Ken Spalding, project coordinator for RESTORE: The North Woods. "We will want to see the LURC decision before we make our decision."

Spalding said the development areas are not appropriate, and the conservation agreements are weak.

Carroll, the commission's director, said the likelihood of an appeal doesn't worry her. After four years of formal review and more than 300 hours of hearings, she said, the plan has been thoroughly vetted.

"If it does get appealed, I'm confident that the Attorney General's Office would be able to defend it."

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WEYERHAEUSER - OREGON

Weyerhaeuser to sell 140,000 acres

Portland Business Journal, August 13, 2009

Weyerhaeuser Co. will sell approximately 140,000 acres of timberlands in northwestern Oregon for about $300 million to an entity affiliated with The Campbell Group LLC

The transaction, which should close in 2009’s third quarter, is expected to contribute approximately $100 million, after taxes, to Weyerhaeuser’s earnings.

Portland-based Campbell Group is an investment firm that acquires and manages timberland for investors. It manages more than 2.85 million acres and $5.3 billion in timberland assets.

Weyerhaeuser (NYSE:WY), based in Federal Way, Wash., will continue to own or manage nearly 1 million acres of timberland in Oregon.

The company, whose 2008 sales were $8 billion, is also looking to sell up to 82,000 acres in Southwest Washington.

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Plum Creek, AMB Property Shares Drop On Outlooks

By Katherine E. Wegert, Wall Street Journal, Dow Jones, July 29, 2009

The weak housing market continued taking a toll on timberland company Plum Creek Timber Co. (PCL) and real estate investment trust AMB Property Corp. (AMB) in the second quarter as shares of both companies dropped after lowering their 2009 targets.

Plum Creek fell as much as 11% in the session, a day after the company said earnings for the just-ended period were in line with its expectations while cutting its 2009 target amid weak market conditions. The company also projected third-quarter earnings well below Wall Street's estimates.

Lumber companies have taken a beating in the last year as the downturn in housing resulted in record-low timber prices and shrinking demand. For its part, Plum Creek, which sells land and wood products, has cut employees and closed mills to cope with the recession.

But, Chief Executive Rick Holley was relatively upbeat about the company's latest results.

"Our second-quarter results were better than we initially anticipated, although market conditions remained difficult," he said in a release. "Our bottom line reflects some benefit from downsizing our manufacturing operations and slightly better sales activity for higher and better use rural lands."

The company said it continues to defer timber harvests amid weak pricing and lower demand, cutting its 2009 forecast to $1.25 a share to $1.40 a share from its February estimate of $1.38 a share to $1.63 a share.

It also projected third-quarter profit of 5 cents to 10 cents a share. Analysts predicted 14 cents a share, according to Thomson Reuters.

BMO Capital Markets analyst Stephen Atkinson isn't worried about the company's outlook, however.

"If you can make money at record low timber prices, you're in a good place," he told Dow Jones Newswires. "They have quite a bit of cash and the flexibility to do many things, like buy stock, retire debt or acquire undervalued assets."

Plum Creek stock fell 8.92% to $30.21 in recent trading after dropping as low as $29.50 earlier in the day. Shares are down 13% so far this year.

The company posted second-quarter earnings late Monday of $32 million, or 19 cents a share, up from $31 million, or 18 cents a share, a year earlier. The latest results included a 14 cents-a-share gain from Wisconsin timberland sales while year-ago figures were hurt by a $6 million impairment charge related to the company's lumber manufacturing business.

Revenue tumbled 28% to $272 million as sales in the timber division, the company's largest, dropped by more than a third...

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PLUM CREEK - WISCONSIN

Downsizing buoys Plum Creek results

TTJ Timber Trades Journal Online, July 29, 2009

Plum Creek Timber Co has reported better than expected second quarter earnings of US$32m.

The results, from revenues of US$272m, were buoyed by a US23m gain from the sale of 59,000 acres of Wisconsin timberland.

The figures compare with earnings of US$31m on revenues of US$376m in the second quarter of 2008.

President and chief executive Rick Holley said the results were better than expected, although market conditions remained difficult.

"Our bottom line reflects some benefit from downsizing our manufacturing operations and slightly better sales activity for higher and better use of rural lands," he said.

He added that, in response to low log prices, harvesting had been adjusted to preserve the most valuable sawlogs, and the sale of the Wisconsin timberland had enabled the company to reduce its debt.

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PLUM CREEK - MONTANA

Weak Economy Challenges Montana Legacy Project

The purchase of 500 square miles of Plum Creek Timber lands is one of the most important land deals in Montana history, but the real estate economy is not cooperating.

By Travis Koch, The New West, July 29, 2009

When The Nature Conservancy and the Trust for Public Lands announced in June of 2008 their commitment to purchase 500 square miles of Plum Creek Timber Company lands in the state of Montana for more than $500 million, they knew that many challenges that awaited them.

What they didn’t anticipate was a severe global recession.

Now, in the midst of an economic downturn that has been particularly unkind to the real estate and financial markets, The Nature Conservancy and The Trust for Public Lands are struggling to find the money to complete the massive deal, known as the Montana Legacy Project. The federal government has ponied up its share - $250 million – and about two-thirds of the acreage has already been purchased from Plum Creek. But The Nature Conservancy and The Trust for Public Lands need to find buyers for the portion of the lands that they bought on credit – and still need to raise the money to fund the final phase of the project.

Supporters continue to praise the Montana Legacy Project as a once-in-a-lifetime opportunity to transfer private lands into public ownership. The conservation groups say they’ll ultimately find the money they need. But the dramatic shift in the real estate market has renewed criticism that the Legacy Project partners—The Nature Conservancy, The Trust for Public Lands, the U.S. Forest Service, the Montana Department of Natural Resources and Conservation and the Department of Fish Wildlife and Parks – are paying too much for logging-scarred landscapes. And a year after the deal was announced, there are not only financial hurdles still to clear, but political and bureaucratic ones as well.

The Project, To Date

The original contract called for the purchase of 320,000 acres for $510 million, but it has since been modified, with 13,000 acres north of Libby dropped due to asbestos contamination and some other small parcels added or subtracted as the process moved forward. Now The Nature Conservancy and The Trust for Public Lands are committed to purchasing 312,000 acres scattered across western Montana for $490 million. The deadline for completing the purchase is December 2010.

The transaction was divided into three phases and spread out over two and half years. The first phase - 130,000 acres with a $150 million price tag - was funded by The Nature Conservancy through a combination of internal and external loans, and was completed on schedule in December 2008. But The Nature Conservancy ultimately needs to sell the lands – either to the state or to developers or conservation buyers – to pay back the loans, and in the meantime has to shoulder a heavy interest burden.

The second large chunk of land - 112,000 acres - was purchased in February of this year using $250 million from Qualified Conservation Forestry Bonds, the federal funding source that Senator Max Baucus successfully worked to include in the 2008 Farm bill. Those lands will be transferred to the U.S. Forest Service in April of 2010.

"That source of funding was great for us," said Caroline Byrd, the Western Montana Program Director for The Nature Conservancy. "It was really an innovative new tool, and we need those tools."

Funding for the third and final purchase – 70,000 acres of prime land located in the Mill Creek area and around Seeley and Swan lakes – is not yet secure.

"We’re looking under every stone we can turn over," Byrd said.

Part of the remaining money may come from the state. This spring, the Montana state legislature approved the sale of $21 million of general obligation bonds, which the Department of Natural Resources and Conservation (DNRC) has committed to using to purchase 26,000 acres from the Legacy Project when the funds become available in two years.

A potential complication, though, is a provision in the bill that prohibits the state from increasing its overall in land holdings. That means the state must sell as much land as it buys - and the state, like everyone else, faces a very weak market for such sales. While the state has room for the 26,000 acres, it may not be able to make room for more, despite its declared intentions.

What’s an Acre of Forestland Worth?

A key question in all these current and future transactions, of course, is what the land actually worth.

Over the years, Plum Creek Timber (and other timber companies from which Plum Creek acquired the land) heavily logged many of the sections that are included in project. Some of the areas were burned off in recent fires.

Matthew Koehler of the Wild West Institute, a fierce critic of all things Plum Creek, described the Legacy Project as "a color-coded map of the most depleted land in the state."

A visit to some Legacy Project lands West of Lolo - Township 11 North Range 23 West, to be precise – illustrates the issue. The property is in a checkerboard pattern, intermixed with federal land—a remnant of the vast land grants the federal government gave to railroad companies in the late nineteenth century. (Plum Creek was originally a subsidiary of the Southern Pacific Railroad). [SIC - the Northern Pacific]

On a bare hillside on one of the sections, there are straight walls of mature trees on all four sides of the 640-acre section and a web of sandy, weed-infested roads cut into the sides of the mountains. Two-foot tall trees are scattered over the open areas, giving the appearance of a miniature model forest. These sections were logged about 10 years ago.

The average purchase price of the Legacy Project lands is $1570 an acre, and that’s far above what a section like this would be worth as timberland. But as conservation habitat … well, what is the value of healthy habitat? How do you place a price on the preservation of wildlife corridors? And what is the value of recreational lands?

The environmental groups and the Forest Service are convinced that their long-term value is very high indeed; a few decades from now, no one will care whether the price per acre was a few hundred dollars more or less.

Debbie Austin, Supervisor of the Lolo National Forest, is one who isn’t worried about the present appearance of the land. "I look at what this land is going to look like in 100 years," she said. "100 years from now it’ll all be reforested." The Lolo National Forest will get about 67,000 acres from the project.

"It’s an amazing landscape that needs time to come back," added Chris Bryant.

But there is also the question of precedent. Plum Creek still holds more than 800,000 acres of land in Montana. Since Plum Creek converted to a real estate investment trust in 1999, more of its real estate is being put on the market. If it were to put another chunk of clear-cut land up for sale, it’s not clear whether the state or a conservation buyer could match the price paid by the Montana Legacy Project.

The state of Montana, moreover, uses its land holdings to generate revenue for public education. It cannot invest large sums of money in land that won’t produce a dime’s worth of timber for 40 or 50 years.

Price, though, may not be the most important question in considering whether the project is a good deal for Montana. At an informational meeting last month at the Seeley Lake Community Hall, a dozen residents sat in an open room while Bryant, who does community outreach for The Nature Conservancy, answered questions about the local impact of the Legacy Project. The question that comes up at every meeting is, "Will we still have the same access to the land we’ve been using for generations?"

Plum Creek has long allowed the public to hunt, fish, camp and gather firewood on its land, so long as people didn’t mess with the trees. The Nature Conservancy plans to maintain the same level of accessibility while they hold the land, but whoever acquires the land in the end will manage it according to their own plan.

Debbie Austin said that there were no plans to reduce access on the lands the Forest Service acquired but she did say the Forest Service doesn’t intend to maintain the web of logging roads that cover Plum Creek’s land.

Bryant said most of the community members he talks with favor eventual state ownership of Legacy Project lands. Under state ownership, land would be managed by elected officials whose decisions are subject to public desires for access and use, which could be a good thing for locals, who believe that federal and private land management plans might be less responsive to local interests.

How the ultimate owners of the land choose to manage it will likely be the biggest factor in shaping the legacy of the Legacy Project. Despite all the financial and other challenges, the political and ecological importance of the project makes it likely that The Nature Conservancy will find a way to get it completed.

And how it plays out will be watched closely across the West, as the fate of other railroad legacy lands in the region hangs in a similar balance.

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WEYERHAEUSER - OREGON

Logging cuts topple North Coast economy: County revenue projections look bleak for the next few years

By Cassandra Profita, The Daily Astorian, July 29, 2009

The North Coast's timber industry is still scraping by as the national housing market struggles to recover.

Oregon Department of Forestry is projecting grim timber sales through mid-2010. This month, the state slashed its expectations for Clatsop County's next 12 months of timber revenue by another $500,000.

Revenue projections are constantly changing based on market conditions. In the past six months, the county's expected share of timber revenues from the Clatsop State Forest for this fiscal year dropped from $11 million to $9 million. If the current projection is on target, that's about half the timber revenue the county received the past two years.

And for 2011? It gets worse.

Right now, Ron Zilli, assistant Astoria district forester for ODF, is predicting only $6.7 million in timber revenues to Clatsop County for fiscal year 2011, a 20 percent drop from the already dismal 2010 numbers.

For the immediate future, log prices at lumber mills are still at 20-year lows, and hard times for loggers and millworkers will stay hard.

With slumping demand for lumber, local logging companies have cut staff and many are scrambling for work to stay afloat. Lumber mills are still curtailing production across the region.

But the Weyerhaeuser Mill in Warrenton is still employing 93 people, according to company spokesman Greg Miller. And local logging companies report after making layoffs they are still hanging on.

Since announcing the July revenue forecast, Zilli said he's seen a bright spot on the horizon for the industry.

Last week, three timber sales on state forest land drew several bids apiece - and at prices much higher than the minimum bid. Zilli concluded that the timber industry sees a light at the end of the tunnel, and they're buying timber now so they can sell it at a higher price within two or three years.

"Although prices aren't what we like to get, they were bid up from the minimum," Zilli said. "They were a lot better. Because our contract terms are for two to three years and log prices are a little low now, they're paying a little more for them now. And they'll wait maybe a year to log them. It's buy low, sell high."

Zilli said just adding the recent sales to his projections for 2011 will bump up the expected revenue.

On one sale of high-quality timber, some of which can be used for utility poles, the appraised price on the stand was $173 per thousand board-feet of Douglas fir. Bighorn Logging Corp. of Banks bid $275, and Olympic Forest Products, Stimson Lumber Co. and Hampton Tree Farms also put in bids.

"We had four bidders. That's a good sign," he said. "That means, one, it sold. Then, it was bid up by almost 50 percent. That's almost starting to get respectable."

Zilli said three or four years ago, when the lumber markets were booming, the state would have collected $475 per thousand board-feet for the same stand.

"The value the mills are paying for wood being delivered right now is the worst we've seen in 20 years," he said. "The sales that are being sold now have contract dates out to calendar year 2011. They're speculating things are going to get better, and they'll be able to get more than this for these trees by the time the contract is over."

Some of the state's older contracts will expire in October of this year, so timber companies will have to harvest some trees before then. But Zilli said the companies will likely choose the cheapest sales to cut first while they wait for the markets to turn around. Meanwhile, the revenue delivered to counties from the sales will probably stay near the 20-year lows for awhile yet.

Logging companies scale back

Mark Gustafson, co-owner of Astoria's Gustafson Logging, said his company is operating at about 60 percent capacity since December. Only recently did he pick up enough work to boost that number temporarily to 80-90 percent. A year ago, Gustafson had 25 employees on its logging crews. Now he has 16.

"Fortunately, one of the companies we work for has a short-term market for export hemlock, which has created some temporary demand," he said.

"We're hearing this market is not going to last for more than a few months. It's likely just a glimmer for us. ... We're very fortunate to be working at all."

Local logging companies that do most of their work on Weyerhaeuser timberland have seen jobs come to a near standstill.

Rumors have flooded the industry that Weyerhaeuser has sold its timberland holdings in Clatsop County, but all lips are sealed within the company. Earlier this year, Weyerhaeuser transferred a long list of its assets in the county to a subsidiary, Weyerhaeuser NR.

Similar moves triggered speculation across the country about whether the company was preparing to sell its timberland to a real estate investment trust, which would manage the land for its highest and best use and cut down associated corporate income taxes. For the past month, the company has not answered questions about its future plans.

"We've made no recent announcements about timberland sales in Oregon," Shannon Hughes of Weyerhaeuser's public affairs office told The Daily Astorian. "And as a matter of policy, the company does not comment on rumors and speculation."

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Plum Creek Timber Declines as Analyst Cuts Rating

By Christopher Donville, Bloomberg, July 28, 2009

Plum Creek Timber Co. declined the most in 19 weeks after an analyst said earnings quality has fallen as the largest non-government owner of U.S. timberlands relies on land sales to reduce debt and pay dividends.

Seattle-based Plum Creek fell $2.67, or 8 percent, to $30.50 at 4:15 p.m. in New York Stock Exchange composite trading. The drop was the biggest for the shares since March 16. The stock has fallen 12 percent this year.

"In 2002, the company plowed all of its land sales proceeds into timberland acquisitions," wrote Credit Suisse analyst Chip Dillon, who reduced his rating on the stock to "underperform" from "neutral," in a note to investors yesterday. "This year, we see Plum Creek’s land sales proceeds being used to fund all distributions to shareholders, and most of the expected modest ($110 million) net debt reduction."

Plum Creek yesterday said second-quarter net income increased 3.2 percent to $32 million, or 19 cents a share, from $31 million, or 18 cents, a year earlier. Excluding a gain on a sale of land in Wisconsin, profit was 5 cents. The average of 13 analysts’ estimates compiled by Bloomberg was for earnings of 2 cents.

The company forecasts third-quarter adjusted profit of 5 cents to 10 cents and full-year profit of $1.25 to $1.40, according to a statement. Analysts, on average, expect profit in the current quarter of 10 cents a share and 2009 profit of $1.34.

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PLUM CREEK - WASHINGTON

Land swap protects wildlife, preserves public access

By Rich Landers, Spokane WA Spokesman-Review, July 26, 2009

Tags: elk outdoors Plum Creek Rocky Mountain Elk Foundation The Nature Conservancy Washington Department of Fish and Wildlife wildlife

A days-old calf elk was spotted and photographed by Rocky Mountain Elk Foundation field representative Rance Block of Spokane around Memorial Day as he was touring forest land in the Naches River drainage.Courtesy of Rance Block

The Rocky Mountain Elk Foundation teamed with The Nature Conservancy and several state and federal agencies recently to secure 2,675-acres in the first phase of a three-year project to protect wildlife habitat and public access in the Cascade Mountains near the Naches River in Washington.

By 2011, the project is on track to transfer more than 10,000 acres in Kittitas County from Plum Creek Timber Co. to the Washington Department of Fish and Wildlife.

The land is within or adjacent to the Wenatchee National Forest.

The deal is part of a continuing effort to consolidate public lands in areas of "checkerboard" ownership, where private timber company lands could be sold piecemeal and developed to the detriment of habitat and public access, said Jeff Tayer, WDFW regional director.

"The first phase of this project has moved a significant piece of critical elk range and calving grounds into public ownership," said David Allen, Elk Foundation president in Missoula.

The habitat includes alpine areas home to mountain goats, shrub-steppe and basalt cliffs for elk, mule deer and bighorn sheep, and streams used by bull, cutthroat and rainbow trout as well as salmon, said Rance Block of Spokane Valley, a foundation field representative.

"There are existing trails and roads for public access," he said.

The land was purchase for $3.27 million provided in grants from the Washington Wildlife and Recreation Program and a U.S. Fish and Wildlife Service fund designed to protect habitat for endangered species. The area will be managed as part of WDFW’s Oak Creek Wildlife Area.

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PLUM CREEK - GEORGIA

Plum Creek zoning OK'd: Restricted permit approved for massive development

By Alena Parker, Hinesville GA Coastalcourier.com, July 10, 2009

Plum Creek’s request for a 7,800-unit development was approved at Tuesday’s Liberty County Commission meeting, but not without a few jabs from Riceboro residents.

Commissioners approved the zoning permit with restrictions. Commissioner Marion Stevens made the motion and it carried unanimously.

The board tabled the decision in June when the developer didn’t detail the expected impact of 10,000 acres of residential and commercial units in a planned unit development south of Riceboro.

The Liberty Consolidated Planning Commission approved Plum Creek’s massive development in May, after also tabling it.

Despite the county OK and promise of jobs, the giant landowner’s plan has yet to get approval from soon-to-be neighbors.

Former Riceboro City Councilman Modibo Kadalie said Plum Creek just wants to exploit the land.

"These people really are in the best tradition of land speculation," Kadalie said. "What they want to do is make money. That’s what this is all about."

He and other opponents said Plum Creek has not given enough detail about the project, which is expected to take up to 30 years to develop.

But the company has moved to protect hammocks in the marsh and exceeded the county’s requirement for unused space, according to local attorney Tom Ratcliffe.

"We think this has been a good, balanced and sustainable plan," Ratcliffe said. "I can say honestly I think Plum Creek has reached out… This stage in the plan has been as specific as they can be."

And the part of the development with the lowest density is planned for along the marsh and a neighboring development.

A planned unit development permit allows for more flexibility than other permits.

"If you let this go through unrestricted…you abnegate responsibility to control development in the area," Kadalie said.

Ronald Leventhal, who manages Hampton Island south of the proposed site, echoed the concern that not enough details were being given.

"If you can’t answer the questions, it’s really a dangerous precedent," Allan Pulaski said, representing Levanthal.

He was worried a seemingly limitless flexibility may allow Plum Creek to change plans to allow more houses on the site.

But the PUD is only the "first cut," LCPC Director Sonny Timmerman told commissioners. "There’s no blank check here," he said of approving a multi-step development plan. "Every action, assuming we get by this one tonight, from here forward will come back to you through the planning commission."

Kadalie also questioned what may happen with tourism in the area and Jim Bacote of Geeche Kunda cultural center took up that theme.

"I’m very, very concerned that maybe the homework of Plum Creek has not been done…because it can very well end up in federal court," he said.

"The decision you make today will alter what I thought we were planning to do with this area," Kadalie said. "So I’m just begging you to be true to your obligation of the people."

Commissioner Pat Bowen asked if Plum Creek could be required to fund improvements on Retreat Road.

Timmerman said there is no specific impact requirement.

"But you are within your legal right, in my opinion to ask for them to participate," Timmerman said of the development.

He doesn’t think taxpayers should bear the burden of road damage or expansion.

"It shouldn’t be on the back of, at least my tax [bill]," Timmerman said.

The restrictions commissioners imposed include not allowing more than one and half units per acre and improvements to Retreat Road as the project develops. Commissioners also want an archeological study done and presented before the board.

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Weyerhaeuser Slices Dividend 80%

By Veronica Dagher and Tess Stynes, Wall Street Journal, July 7, 2009

Forest-products company Weyerhaeuser Co. slashed its dividend 80% and again said it might become a real-estate investment trust.

The Federal Way, Wash., company has posted a series of quarterly losses amid a slumping U.S. housing market. Weyerhaeuser has subsequently moved to cut costs, but not enough to offset the red ink.

Many investors and analysts have been calling for the company to convert to a REIT for years, citing potential tax efficiencies.

"It's the right way to go from a tax-efficiency point of view," said Joshua Zaret, an analyst at Longbow Research. Mr. Zaret said ultimately the tax burden is much lighter for a REIT than it is for a C-Corp, Weyerhaeuser's current organizational status. Still, analysts don't expect the conversion to occur this year due in part to the depressed housing market.

In May at an annual investor conference, the company said a conversion is unlikely to happen this year but it remains a possibility for the future.

Weyerhaeuser wasn't immediately available for comment.

Franklin Mutual Advisers LLC pushed several years ago for Weyerhaeuser to consider reorganizing itself as a REIT to make its timberland business more tax efficient. Paper companies have been selling off timberland for years to endowments and investment pools called TIMOs, or timber investment-management organizations, that can own the land more tax efficiently.

The dividend cut to five cents from 25 cents, which will save Weyerhaeuser about $85 million a year, "enhances our current liquidity and provides for more financial flexibility, including a possible REIT conversion should the board make that decision in the future," said Chief Executive Dan Fulton.

While the company confirmed its second-quarter forecasts, Mr. Fulton said the economic outlook for the company remains "challenged and uncertain." The results are due to be released July 31.

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WEYERHAEUSER - LOUISIANA

Weyerhaeuser cuts dividend, closes mill

Portland Business Journal, July 7, 2009

Weyerhaeuser Co. said it slashed its dividend to 5 cents a share from 25 cents, citing a "challenged" business environment.

The Federal Way, Wash., timber giant (NYSE: WY) also said it will close its lumber mill near Taylor, La., putting 39 people out of work.

Company officials did not change the outlook on second-quarter guidance that they will announce on July 31. Analysts are expecting a second-quarter loss of 70 cents per share.

"Although our guidance for the recently completed quarter remains unchanged, the economic outlook for our businesses continues to be challenged and uncertain. We are taking many actions, including deferring timber harvest, shutting and curtailing facilities, and reducing costs wherever possible to preserve our long-term value and improve our performance during this uncertain period," said Dan Fulton, president and CEO, in a statement.

The Louisiana mill is being shut down because "demand for wood products continues to decline due to a slowdown in the housing market," officials said in a statement.

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Aggressive investing backfires on companies

by Brent Hunsberger, The Oregonian, July 4, 2009

U.S. Bancorp and Weyerhaeuser try unconventional approaches with their pension money and get burned

Most investment gurus recommend balancing retirement savings invested in volatile stocks with stable bonds or cash.

That's not what U.S. Bancorp does. The Minneapolis-based bank, Oregon's largest by market share, put 100 percent of its $2.9 billion employee pension plan in stocklike investments, its annual report showed.

The result: The plan plunged from being 50 percent overfunded at the start of 2008 to 19 percent underfunded by the end -- a $1.4 billion loss.

Weyerhaeuser Co. doesn't adhere to convention either. It had 86 percent of its $6.9 billion pension in hedge funds and private equity. The Federal Way, Wash.-based forest products company once boasted to workers that its strategy returned a stunning 17 percent a year.

Last year, the plan lost 40 percent, or $2.7 billion, of its value. It went from being 40 percent overfunded to 7 percent underfunded. In April, the company suspended its 401(k) match.

Both illustrate the risks of aggressively investing worker retirement funds. Most companies plug between one-half and two-thirds of their assets in stocks or equities. They put far less -- 4 percent to 7 percent -- in hedge funds and private equity.

"It's unlike other pension funds I've seen, that's for sure," said Diane DelGuirco about Weyerhaeuser. DelGuirco is a University of Oregon associate finance professor who has studied pension accounting.

Weyerhaeuser spokesman Bruce Amundson declined comment. U.S. Bank spokeswoman Teri Charest, when questioned about the bank's investment allocation, referred to the company's annual report. In it, the company said that while investing in bonds might lead to less volatility, it also "limits the pension plan's long-term up-side potential." So, the bank's compensation committee based its all-equity strategy on its plans' "investment horizon and the financial viability of the company to meet its funding objectives."

More corporate pensions, lured by high returns, have dabbled in hedge funds and private equity but none to the extent of Weyerhaeuser. Such alternative investments pose different risks from stocks and bonds because they often require long-term commitments and their exotic holdings can be hard to value.

"Just by their definition, they're not transparent," said Jennifer Koski, a finance professor at the University of Washington. "You can't know what's going on inside of them. So when you invest in a hedge fund, you basically end up investing in the manager. To me that raises red flags. In general, it violates my rule of 'Don't buy anything you don't understand.'"

Weyerhaeuser loaned its pensions $200 million last year after some funds blocked withdrawals, or redemptions, leaving its plans with less cash than expected to pay workers wanting lump-sum benefits, the company said.

Workers didn't understand Weyerhaeuser's strategy but weren't concerned because returns were high and the company was liable for any problems, one union leader said.

"The sense I got out of it is they were using their pension fund almost as a large hedge fund," said Don Draeger, who represented 220 union workers at a former Weyerhaeuser plant in Albany. "I don't think any of us really understood the logic behind the instruments they were talking about."

Federal law does not prohibit alternative investments, but it requires pension managers to invest prudently. Still, federal officials have taken note of the practice. U.S. Labor Department officials recently threatened to penalize a New York company unless it improved how it valued its pension investments in private equity. Outside experts have recommended the agency develop guidelines for such investments, but not adopt new regulations.

"There's lots of risks," said Susan Mangiero, founder of Pension Governance Inc., a research firm. "But on the flip side, if you don't look at (investment) alternatives like hedge funds, you may be leaving money on the table."

Some economists allege companies use aggressive pension investing to inflate earnings. A 2006 study by Harvard University and University of Chicago researchers found evidence that corporate managers facing mergers, worsening performance or large compensation contracts appeared to alter pension accounting to goose earnings.

Despite last year's market turmoil, pension advisers think pension plans will turn even more to alternative investments to make up losses or to offset risks in stocks. Hedge funds are responding by lowering fees and offering better reporting.

"We're seeing hedge fund managers offer their existing clients more information on the underlying portfolios," said Janine Baldridge, director of investment strategy at Russell Investments in Tacoma.

Weyerhaeuser has since sold mills in Albany and Springfield to International Paper Co., which has one-tenth of its pension in hedge funds and derivatives. "May was the best month we've ever had in our hedge fund portfolio," company pension manager Robert Hunkeler said.

Draeger is fine with Hunkeler's plans to expand that strategy. "At least when their investment managers talked to us, they gave you the feeling that it wasn't just 'Trust us on this,'" Draeger said.

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PLUM CREEK - WASHINGTON

Eleventh-hour land buy keeps Rock Creek acres in public hands; $3.27 million in grant money

By Scott Sandsberry, Yakima Herald-Republic, July 3, 2009

Just hours before access to a large part of its grant funding would have expired, 2,675 acres in the Rock Creek area were preserved this week as state wildlife land.

A collaborative effort of private and public interests -- with The Nature Conservancy and Rocky Mountain Elk Foundation providing much of the legwork to obtain $3.27 million in grant funding -- completed the purchase of nearly four square miles of ecologically rich forest.

The land, acquired by the Washington Department of Fish and Wildlife from timber industry giant Plum Creek, begins about two miles east and northeast of Cliffdell, which is on State Route 410.

The purchase is the first of what is expected to be a three-part campaign to bring more than 10,000 acres of land along the southern edge of Kittitas County into public ownership, preventing it from being parceled into development lots and thereby ensuring its future as wildlife habitat.

The entire area has been in checkerboard ownership between the U.S. Forest Service and Plum Creek, creating what wildlife department regional director Jeff Tayer called "a very difficult management scenario, because (ownership) changes every mile."

The two additional transactions, each spaced about a year apart, will cost about $4 million. About three-quarters of that money has already been generated, said Betsy Bloomfield, The Nature Conservancy's forest director for Eastern Washington, noting it will take that time to "go through another round of public funding applications."

The $3.27 million for Monday's transaction came from two grants -- $1.8 million in state money from the Washington Wildlife and Recreation Program and $1.47 million from a federal U.S. Fish and Wildlife Service fund designed to protect habitat for endangered species.

The state grant would have expired Tuesday, the end of the fiscal year, had the transaction not been completed, Bloomfield said.

The Rock Creek purchase is crossed by several streams and is prime territory for large wildlife (elk, mule deer and bighorn sheep), fish and birds, including the federally protected northern spotted owl.

Although the area will remain in checkerboard ownership between the state wildlife and federal forest agencies even after the remaining purchases, "It's all public," Tayer said.

"And we have a collaborative agreement with the Forest Service, the Department of Natural Resources, the Yakama Indian Nation and The Nature Conservancy to collectively manage these checkerboard ownerships."

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PLUM CREEK - IDAHO / MONTANA

Friends of the Palouse Ranger District: Stop the shady land exchange

The Latah Eagle, July 2, 2009

The Upper Lochsa Land Exchange would allow the U.S. Forest Service to swap appx. 28,000 acres of well-managed Public Lands in northern Idaho for 38,000 acres of clearcut lands on the border between Idaho and Montana. These Plum Creek Timber lands were sold in 2005 to Tim Blixseth, of Western Pacific Timber, who bought the land with the intention of trading them with the Forest Service.

Forest Service Clearwater District supervisor Tom Reilly released a Feasibility Analysis after an April 2006 meeting with Mr. Blixseth, who then stated his desire to "consolidate his holdings" in Idaho. He hoped to trade for land in the McCall area. Neither McCall or Priest Lake was considered to be "in the Public interest", so now scattered tracts of Public lands across the Panhandle are on the table. Blixseth's representative Brian Disney has said they are not interested in selling the land outright, or trading for other forested lands in the Lochsa, even though Reilly has indicated he would support either of those mechanisms for regaining the WPT owned land.

Last November there was little knowledge of this deal. This April, thanks to Latah County Commissioner Jennifer Barrett, residents of Latah County started to rumble, along with Friends of McCroskey State Park. In May, Kathy Judson of Potlatch, spokesperson for grassroots organization Friends of the Palouse Ranger District (FPRD) hosted an information meeting, and the noise reached further. Now the rumble is spreading across Idaho and toward Washington D.C.

Many from Elk City to St. Maries have spoken out in their opposition to this exchange— FPRD has noted 1000 folks from the Bovill/Elk River area added their names to the opposition. The Latah County Commissioners have made a statement in opposition, along with Reps. Tom Trail, Shirley Ringo, Sen. Gary Schroeder, and Clearwater County Commissioner John Allen. Recently, the Idaho County Commissioners unanimously reversed their earlier tentative agreement to the exchange.

FPRD member Cheryl Halverson is quoted from the St. Maries Gazette, "Most of the lands proposed for exchange in Latah and Benewah counties are heavily used for hunting, berry gathering, off road vehicles, horseback riding, and fishing. There are pieces in the proposed exchange which block access to other public lands. The American River near Elk City includes an anadronamous fishery. Many pieces are in watersheds that would impact public and private water sources. There are pieces of land behind Corp of Engineers Land along Dworshak Reservoir. They are even talking talking about trading away the ranger station at Elk City. Idaho Fish and Game has expressed concern about some of the parcels."

Friends of The Palouse Ranger District are encouraging everyone to join in the effort to combat the loss of valuable public land by contacting their Congressmen before July 4 (see contact information below for assistance). Maps of the areas proposed for exchange can be viewed on the USFS site: www.fs.fed.us/rl/clearwater/ Projects/Upper_ Lochsa_LEX/Upper_ Lochsa_LEX.htm

For more information, contact: EMAIL: fprdO9@gmail.com FACEBOOK (group): FRIENDS OF THE PALOUSE RANGER DISTRICT Call 208-274-2536 or 208-274-2455

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POTLATCH - ARKANSAS

Potlatch to Sell 50,700 Acres of Pre-Merchantable Timber in Arkansas to FIA for US$50.2M

Campbell Group LLC, Timber Trends, July 2009

Potlatch Corp. has entered into an agreement with timber investment management organization Forest Investment Associates (FIA) to sell about 50,700 acres of premerchantable timber in southern Arkansas for US$50.2 million. The sale, which does not include the underlying land, is expected to close in September.

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PLUM CREEK - WISCONSIN

RMK Buys 60,000 Acres in Wisconsin from Plum Creek

Campbell Group LLC, Timber Trends, July 2009

RMK Timberland Group (RMK) and Plum Creek announced the purchase and sale of approximately 60,000 acres of Wisconsin land in Sawyer, Price, Ashland and Rusk Counties. Through the purchase, which closed on June 24, 2009, RMK took immediate ownership of the land previously owned by Plum Creek.

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PLUM CREEK - GEORGIA

Big Riceboro development hits snag

By Alena Parker, Coastalcourier.com, June 5, 2009

LIBERTY COUNTY, GEORGIA -- After Hampton Island Preserve manager Ron Leventhal vowed a lawsuit, Plum Creek was left sitting on the bank Tuesday night when Liberty County commissioners tabled a request to rezone land for the massive development.

"We believe it’s a taking. It undermines our values," Leventhal said of his $200 million development that neighbors the proposed 10,000-acre, mixed-use community south Riceboro’s Retreat Road.

Leventhal fears granting a planned unit development permit over such a massive development gives Plum Creek free reign, while shirking government oversight for future variances.

And it leaves the county and surrounding property owners to deal with the effects of 7,800 residential units and a mix of industrial and commercial areas over some 5,000 usable acres.

Tom Ratcliffe, representing Plum Creek, said the landowner has not picked developers, set building locations, buffers and other details.

"But we know, generally, what the pattern is and we know where its uses are and we know what the constraints are," Ratcliffe said.

"If we only had one bite of this apple, we’d be concerned. But it’s our first bite. It’s not our last bite," the attorney said, mentioning a specific development plan in the future.

Incomplete plans for a 30-year project, that many won’t live to see completed, should be a red flag, Leventhal said.

He said a company listed on the New York Stock Exchange should be able to plan and provide advanced commitment that it will mitigate development effects on surrounding infrastructure, particularly traffic on Retreat Road.

"Why can’t it be figured out now?" Leventhal said. "They’re a powerful, multi-billion dollar company, for God’s sakes."

The permit would allow one dwelling unit per acre, according to Liberty Consolidated Planning Commission Director Sonny Timmerman.

Leventhal wants the board to have details on the property before "densifying the daylights out of it."

Charles Ezelle of Plum Creek said the company would make improvements to the intersection of Retreat Road and Highway 17 during the building of the first 2,500 units.

"After that point, the traffic generated by the development would require significant upgrades to the roadway," Ezelle said, mentioning widening, additional lanes and even another overpass on I-95.

"I think once this PUD is approved, up to 2,499 units, the developers are going to say ‘tough luck’," Leventhal said. "They’re going to have an edge, legally."

Commission Chairman John McIver was also skeptical of road use.

"There will never be…allowing for that kind of development to reach that point on Retreat Road, knowing that road can’t accept that kind of traffic." he said.

Leventhal thinks Plum Creek should be arranging water and sewer now, before getting the permit.

But that would be premature, according to commissioner Pat Bowen.

"It just doesn’t make sense to me to spend that type of money if you can’t get it rezoned," Bowen said.

Commissioner Eddie Walden did not want to see Plum Creek soley responsible for road improvements, considering other property owners in the area.

"Let’s hold the rezoning to the rezoning until we get the road fixed," Walden said.

"All I can say is we need the tax dollars," District 1 Commissioner Marion Stevens said.

McIver and Walden voted against tabling the decision.

###

Plum Creek announces NW Montana closures
Seattle Times, June 5, 2009

Plum Creek Timber Co. says the weak housing construction market requires closing the company's facilities at Evergreen, next to Kalispell, and eliminating the jobs of 63 people.

COLUMBIA FALLS, MONTANA -- Plum Creek Timber Co. says the weak housing construction market requires closing the company's facilities at Evergreen, next to Kalispell, and eliminating the jobs of 63 people.

The Seattle-based company on Thursday announced the June 26 closures of its Evergreen sawmill and a facility that removes defects from wood and processes it into stud-grade lumber. The closures will be indefinite, Plum Creek said.

"The company's manufacturing business has been hard hit by industry turbulence over the past several months," said Rick Holley, Plum Creek president and chief executive. Holley said the company has "done everything possible to keep these facilities running," but improving their efficiency is not enough to sustain them.

"The housing market remains dormant for new construction, which is directly tied to the wood products we make at the Evergreen plants," Holley said.

The Evergreen mill closed in early January and restarted in May.

Plum Creek also is preparing to close its sawmill in Pablo, where 87 employees got the federally required 60-day notice in April. Evergreen workers received similar notice, as did Plum Creek employees in Columbia Falls.

The company said Thursday that a slight improvement in prices for the pine boards manufactured in Columbia Falls likely will allow the mill there to continue running, if operating costs are reduced.

In March, Plum Creek permanently closed its mill near Eureka, shedding 90 jobs.

###

PLUM CREEK - WASHINGTON

State swaps for land in Tacoma watershed
Associated Press, June 4, 2009

OLYMPIA, WASHINGTON -- The state Board of Natural Resources approved a land swap with the Plum Creek Timber Company.

The state gets 21,000 acres of forest land in eastern King County along the North Fork of the Green River. It's in the drinking water watershed for the city of Tacoma.

The company will get 6,000 acres of land of equal value - about $23 million - elsewhere in the state.

In other transactions Tuesday, the board approved a 500-acre swap with the Kitsap parks department for a future park near Silverdale. And the board approved the sale of 42 acres in Spokane County for a veterans cemetery near Medical Lake.

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PLUM CREEK - WASHINGTON

State acquires over 20,000 acres of King County forestland for Common School, UW trusts

Washington State Dept of Natural Resources news release, June 2, 2009

The Board of Natural Resources today approved a land exchange with Plum Creek Timber Company, which will add 20,681 acres to state trust forestland holdings in eastern King County. Plum Creek will receive 6,033 acres of equal value—about $22.9 million—elsewhere in the state. The Washington State Department of Natural Resources (DNR) will manage the newly acquired land for revenue to trusts that support construction of public schools and the University of Washington.

"DNR will keep these lands as healthy, viable forests providing habitat, drinking water to Tacoma, and non-tax revenue to building schools," said Commissioner of Public Lands Peter Goldmark.

"Plum Creek was pleased to work cooperatively with the Department of Natural Resources to achieve this outcome which benefits the State, public schools, Tacoma Water and Plum Creek," said Rick Holley, President and Chief Executive Officer, Plum Creek Timber Company.

Most of the acquired land becomes part of the Common School Trust which helps fund school construction. DNR also will manage about 350 acres in the area to support University of Washington capital projects. The property, which is located along the North Fork of the Green River and east of the Howard A. Hanson Reservoir, will remain closed to public access because it is part of the watershed supplying drinking water to the City of Tacoma.

Many of the state parcels exchanged with Plum Creek were isolated from larger blocks of DNR-managed forestland; several were bordered by housing and other development not consistent with effective habitat management and natural resource production. Four public meetings and two public hearings about the exchange were held across western Washington during 2008.

###

PLUM CREEK - MAINE

LURC Holds Final Deliberations On Plum Creek Plan
WCSH6.com, June 2, 2009

BANGOR, MAINE -- The Maine Land Use Regulation Commission is holding what's expected to be its final deliberations on Plum Creek Timber Co.'s massive development plan for the Moosehead Lake region.

LURC gave its approval in September to the project that includes nearly 1,000 house lots, two large resorts and more than 400,000 acres of land conservation.

No public comment will be permitted at the meeting Tuesday in Bangor, although parties who submitted recent comments will have a brief opportunity to address the commission before deliberations begin.

Seattle-based Plum Creek offered its proposal four years ago. The plan has been revised three times, but critics still maintain that it calls for too much development in key areas, including Lily Bay.

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West Fraser Timber Now World’s Largest Lumber Firm
Campbell Group Timber Trends, April 2009

BC lumber companies, led by West Fraser Timber, are now the largest in the world despite the devastating collapse of wood products markets, according to a survey on the global lumber sector. Wood Markets International (WMI) reported that in 2008 West Fraser stood alone at the top as the world’s largest lumber producer, a spot it captured for the first time by maintaining productivity in 2008 while other global giants faltered. West Fraser replaced Tacoma-based Weyerhaeuser, now No. 2, as the world’s largest. WMI lists BC’s Canfor Corp. at No. 3, Finnish company Stora-Enso at No. 4, and BC company Tolko Industries at No. 5.

Despite obstacles at its Canadian mills, like the softwood export tax of 15 percent and the mountain pine beetle infestation, West Fraser kept its production levels almost as high in 2008 as in 2007, when markets were stronger. It also began increasing production at mills in the US South that it acquired in 2006.

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Plum Creek to Permanently Close Pablo, Montana, Sawmill
Campbell Group Timber Trends, April 2009

Plum Creek announced plans to permanently close its Pablo sawmill. The Pablo mill near Polson, Montana, which produces pine boards, has been operating at one shift. The mill will continue to run for the next 60 days or until log inventory is depleted, whichever comes first.

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Weyerhaeuser says REIT conversion unlikely this year
By Steve James, Reuters, May 29, 2009

Timber company Weyerhaeuser Co said on Friday it was unlikely to convert to a real estate investment trust (REIT) structure this year, although that might change if economic conditions improve.

"Several factors, including the low level of timber income this year ... make it unlikely that conversion to a REIT will be beneficial in 2009," Chief Financial Officer Patricia Bedient said at the company's annual investor conference.

"However, if economic conditions improve that outlook could change," she said, noting the company's board had considered a potential REIT conversion, but had made no final decision.

Weyerhaeuser, which has been undergoing a multiyear restructuring, has been under pressure from analysts and investors to adopt a REIT structure, which is more tax efficient than its current corporate structure.

Last year, at the same event, Bedient had ruled out converting to a REIT in 2008 or 2009, saying such a move given the dismal U.S. housing market conditions would not be tax efficient and would only increase the company's debt burden.

On Friday, she said: "It remains clear to us that to maximize the value of our timberlands, we must use the best tax structure."

She noted Weyerhaeuser had made some recent changes, including adopting a calendar financial year, "so we would have the flexibility to change to REIT status if it is advantageous."

But this year, in addition to lower income from timber as demand slumped in the recession, she said REIT status would require the company to carry forward net operating losses.

Also, she said, distribution of earnings and profits under a REIT structure would require a distribution of $1.3 billion in cash, when the company's cash-in-hand at the end of March only totaled $1.7 billion.

Asked about the advantages of changing its corporate structure to a REIT, she said the company believed its portfolio of timberlands, lumber production, home construction and sales was "manageable within a REIT structure.

"But the most important part is not the structure, but how the businesses generate attractive returns for shareholders."

Weyerhaeuser has cut its quarterly dividend to 25 cents per share from 60 cents, as the company reported a wider first-quarter loss and she said it expected challenging market conditions to persist in the second.

Weyerhaeuser stock was down 6 cents at $33.33 in afternoon trading on the New York Stock Exchange.

###

PLUM CREEK - GEORGIA

8,000 homes on way to Riceboro area: LCPC urges rezoning 10,000 acres

By Alena Parker, CoastalCourier.com, May 23, 2009

Rave reviews followed the Liberty Consolidated Planning Commission unanimous recommendation to rezone more than 10,000 acres of unincorporated Liberty County for a mixed-use development.

Plum Creek, which is requesting the rezoning, plans to put up 7,800 residential units and an undetermined mix of commercial and industrial units on the property south of Riceboro’s Retreat Road.

The corporate landowner giant has had its sights on doing the planned unit development for almost a year.

"We’re all familiar faces," said local attorney Tom Ratcliffe, speaking on behalf of Plum Creek at Tuesday evening’s commission meeting before the vote.

After a brief reference to the request being tabled last month, commissioners gave the nod with little discussion.

"This thing has been on our table nine months, 10 months," chairman Don Hartley said.

"A long time coming," added Sonny Timmerman, LCPC executive director.

"Well done. Excellent process. Looking forward to working with ya’ll," Hartley said.

But Plum Creek still has to get the ultimate go-ahead from county commissioners.

LCPC recommendation comes under the condition that Plum Creek will preserve wetlands with 50-foot buffers and study historical and archeological sites.

Rivers and marshes, mostly on the eastern side of the development, make up about half of its 10,000 acres.

"So basically starting from the marsh going toward I-95, the density will increase," said Gabrielle Hartage, who presented the zoning analysis to the board.

Because of its size, the project will be reviewed by the Georgia Department of Natural Resource’s Wildlife Resources Division.

Hartage explained how other surrounding properties are zoned for PUDs, so Plum Creek would not be considered spot zoning.

However, the impact on streets and utilities would have to be studied as development progresses. She said it is possible property values may increase.

Riceboro Mayor Bill Austin also recalled hesitation from residents during a public hearing in Riceboro.

"At that meeting there was some concern that was raised how their development would affect existing development on Hampton Island," Austin said.

Hampton Island Preserve, a high-end housing development southeast of Riceboro, also neighbors the development.

Hartley said Hampton Island submitted a letter of support to the board.

Austin was also concerned with traffic, but said the city will work with Plum Creek to add roads to lessen the impact.

"What we wanted to do was make sure there was some public access to that community," Austin said.

Overall, Plum Creek fits into Riceboro’s plans to stimulate growth, the mayor said.

"Part of the development calls for commercial light industrial [to] continue throughout our city," Austin said. "So we think that will help our local economy and provide employment opportunities for our citizens."

He said he welcomes the development.

"And we’re totally in support of it," Austin said. "We think it’s going to benefit our area from a growth standpoint. We’re very happy to have them as neighbors."

County commission approval or denial could come as earlier as its next meeting June 2.

About Plum Creek: Plum Creek is the largest private landowner in the nation, with more than 7 million acres in timber producing regions of the United States. The company produces lumber, plywood and medium density fiberboard. Plum Creek also operates a real estate development business known as Township 110 Land Company.

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Big Oil teams up with Big Timber for next biofuel breakthrough

By Gordon Hamilton, Vancouver [British Columbia]Sun, May 18, 2009

One of the world’s largest forest companies has teamed up with one of the world’s largest oil companies, in a bid to crack bioenergy’s holy grail: Converting trees and plants to hydrocarbons.

Catchlight Energy, a joint venture between Weyerhaeuser Co. and Chevron Corporation, laid out its ambitious plans to forest industry executives attending a recent PricewaterhouseCoopers’ forest and paper products conference in Vancouver.

Catchlight Energy president Michael Burnside said the company’s goal is to accomplish through technology what it takes nature millions of years to do: Turn biomass grown on Weyerhaeuser’s vast U.S. tree farms into a green hydrocarbon fuel.

It would be no different than the gasoline or aviation fuel derived from fossil fuels, except it would be made directly from plant life.

Burnside said the businesses of the two parent companies encompasses the full spectrum of forests to fuels, providing Catchlight with a broader perspective on how to get from one to the other. The catch: it’s going to take tens of millions of tonnes of biofuel to make a commercially viable hydrocarbon-based fuel, he said.

To grow sufficient biomass, Catchlight is going back to an old but proven sustainable agricultural model, moving away from monoculture to growing several crops on the same site. Burnside framed Catchlight’s land husbandry breakthrough, called intercropping, as a new concept.

Weyerhaeuser intends to grow a native American prairie grass call switchgrass between the trees planted on its southern U.S. lands. The grass grows fast and can be harvested every year, roughly doubling the biomass grown per hectare.

Weyerhaeuser provides a ready source of biomass but it’s up to Chevron to develop the key to making a fuel that can go straight into a car, truck or jet airliner.

This next-generation biofuel is based on chemical conversion technologies similar to those found in the petrochemical industry. The advantage is that they can directly replace fossil fuels using existing infrastructure. Green hydrocarbon fuels, according to the National Science Foundation of the United States, are essentially the same as those currently derived from petroleum except that they are made from biomass.

"It’s a difficult nut to crack," Burnside said of the task in producing a hydrocarbon-based biofuel. "The industry in general is waking up to the fact that biomass and biomass at scale, in a cost efficient way, is a huge challenge."

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PLUM CREEK - MONTANA

Commission endorses land deal

Associated Press. Billings Gazette, May 18, 2009

HELENA, MONTANA - A $3.5 million deal to buy 2,623 acres of prime wildlife habitat in Western Montana's Blackfoot River Valley has approval of the Montana Fish, Wildlife and Parks Commission and now goes to the state Land Board for final action.

The Little Doney Lake Project in the Ovando area covers lands owned by The Nature Conservancy, which bought them from Seattle-based Plum Creek Timber Co.

Under Plum Creek ownership the property was "threatened" with conversion from timberland and wildlife habitat to residential and commercial uses, the Department of Fish, Wildlife and Parks said in a briefing paper prepared for Thursday's commission meeting.

In a draft environmental assessment last year, the department said the potential for "houses, fences, driveways, garages, barns and other structures constitutes a direct loss of exceptional winter habitat for ... deer and elk populations."

State officials say that besides supporting deer and elk, the Little Doney Lake Project lands provide habitat for grizzly bears and lynx, plus nesting opportunities for loons and trumpeter swans and will contribute to the conservation of bull trout and westslope cutthroat trout.

The Nature Conservancy's Jim Berkey said the organization bought the lands, which are next to the state-administered Blackfoot Clearwater Wildlife Management Area, in phases beginning in 2004 and ending in 2007.

The purchase would be covered with money from the Department of Fish, Wildlife and Parks, federal dollars and private sources. The Fish, Wildlife and Parks funds include $1.5 million from Habitat Montana, a program for the protection and enhancement of wildlife habitat. That program's money comes from fees for Montana hunting licenses.

The department held a public meeting in Ovando in November to hear comment on the Little Doney Lake Project. No one spoke against it, officials said.

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Plum Creek: major layoffs, quadruple earnings

PoliticsPeaksValleys.wordpress.com, April 30, 2009

Anyone walking down the street in Western Montana yesterday got to see Plum Creek Timber Co. talking out two sides of their mouth underneath a Missoulian headline waxing humble about massive layoffs and proud about shining first quarter profit margins.

Close to 300 employees of Plum Creek’s regional timber operations in Pablo, Evergreen, and Columbia Falls received notice that they’d be let-go in roughly 60 days, according to the front page story in this western Montana daily, linked here.

"It really is getting rougher and rougher," Kathy Budinick, the company’s PR rep told the Missoulian, "We’re working hard to manage the situation, but there’s not much good news." Her lamenting goes on to cite statistics from the national construction market, down 70 percent since 2005. She said it, there’s not really much good news…

Oh really?

No good news at all huh?

Well, the front page story that ran right next to that one glowed about the company’s $157 million in earnings and $470 million in revenue from their first quarter reports–a quadrupling of earnings. See the linked story here.

Budinick wasn’t quoted in that story.

The stinger for us is the mickey-mouse approach to PR that Plum Creek can take as they become a real estate giant using formerly public lands. They’ll use statistics from the national construction market’s collapse to justify major layoffs, but then let slip the reality of the booming real estate market which has created the lion’s share of their growth this last year. They pretend they’re still a timber company when it’s to their benefit or sympathy, but a fiscally muscular real estate trust when it’s time to court investors in their quarterly earnings report.

The truth is, the regional timber market–both on the supply and demand side–has come tumbling down in the past two years. We’ve posted on this topic here, and here. PC knows they can get sympathy by pretending to be a part of this slide, even though they hedged their bets years ago by consolidating their assets, trimming production, and expanding their ability to develop vast former-timberlands that they’ll now use to sell and develop as real estate. Getting federal and state officials to help them adjust some road-easement regulations was the first major step–allowing them to develop these lands without the previous restrictions.

This easements thing is a huge issue folks should read about if not already in the know. Newwest, a rocky mountain web-news portal, has a piece on it here. A columnist for Missoula’s alternative weekly newspaper, the Independent, George Ochenski wrote a well-developed piece on it here. Wildlands CPR, a restoration and anti-ORV group has some really good background on it as well, here.

Anyhoo, Plum Creek has been in the habit of playing backroom politics to advance its bottom line while crying "poor us" when its time to layoff scores of employees.

Fortunately, many of the laid-off employees will qualify for federal re-training funds, allowing them to attend professional course and college programs with generous subsidy.

Otherwise, they’d have no other options.

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West Fraser New North American Leader in Lumber Production
Campbell Group Timber Trends, March 2009

West Fraser Timber displaced Weyerhaeuser as North America’s top lumber producer in 2008, according to International Wood Markets Group. Each company operated 27 sawmills in the US and Canada during part or all of 2008. Total softwood lumber production by the top 20 Canadian companies declined by 16.7% compared to 2007, according to Wood Markets’ annual survey. Similarly, total Canadian softwood lumber output dropped 20.5% to reach 23.8 billion board feet in 2008, as compared to 29.95 billion in 2007. Eastern Canadian firms in the top 20 had the largest average production decline of close to 27%, while Western Canadian firms saw an average decline of about 12% in 2008 vs. 2007.

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Weyerhaeuser to Consolidate Washington Log Export Facilities
Campbell Group Timber Trends, April 2009

Weyerhaeuser Company will permanently close its Bay City log export facility in Aberdeen, Washington. "We are taking this action due to continued weak demand for wood and wood products," said Rich Wininger, vice president of Weyerhaeuser’s Western Timberlands operations. "We will consolidate log sorting and exporting at our other facilities in the region, located at Longview and Olympia, WA."

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Weyerhaeuser to Permanently Close Lumber Mills in Wright City, OK, and Dallas, OR
Campbell Group Timber Trends, March 2009

Weyerhaeuser Company announced it will close its lumber mills in Wright City, OK, and Dallas, OR, effective immediately. The announcement will affect approximately 307 employees. "Demand for wood products continues to decline due to a slowdown in the housing market," said Tom Gideon, executive vice president, Forest Products. "Unfortunately, extraordinarily weak market conditions in the homebuilding industry require that we take decisive action."

The company has closed 10 wood products manufacturing facilities this year and virtually all sites are experiencing reduced operations. Since the beginning of 2009, Weyerhaeuser has announced the closure of four softwood lumber facilities with an annual capacity of 870 million board feet. In addition, the company has eliminated operating shifts at its other lumber facilities, resulting in an annual capacity reduction of 280 million board feet. Since January, Weyerhaeuser has reduced its softwood lumber volume by over 1.1 billion board feet to balance its production with customer demand.

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Weyerhaeuser’s Major Timberland Sale in Washington
Campbell Group Timber Trends, March 2009

Weyerhaeuser will offer for sale approximately 200,000 acres of prime timberland in Washington State, according to RISI’s Timberland Markets Report. Based on 2008 comps in the Northwest, the deal could fetch around $600 million.

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Weyerhaeuser Moves Closer to REIT
Campbell Group Timber Trends, April 2009

Weyerhaeuser is in a financial crisis so deep the largest US lumber producer turns down the heat in its offices to save money and is contemplating upending its corporate structure after 109 years to become a real-estate investment trust. Other US timberlands managers have converted to REITs to slash corporate taxes. The move would reward Weyerhaeuser shareholders by returning most profits to them as dividends. At the same time, it may force the spinoff of more non-timber assets.

The company has been shedding them under CEO Daniel Fulton, who has closed 10 wood-products mills this year, halved capital expenditures, sold off packaging businesses, frozen salaries and eliminated almost half of the work force, now at 19,850. A record $1.2 billion loss on $8 billion in revenue last year and the likelihood of negative cash flow through 2010 has put Fulton into "conservation" mode, said Joshua Zaret, an analyst with Independence, Ohio-based Longbow Research.

"We missed the depth and severity of this homebuilding crisis," said Fulton, 60, who headed the real-estate unit for seven years before becoming CEO last April. "The primary business going forward is the one we started with in 1900, which is timberlands ownership and management." Fulton told reporters after the meeting that the housing market may hit bottom later this year. "We’ll start to see some modest recovery in 2010 and pick up steam in 2011," he said.

Weyerhaeuser, which calls itself "the biggest homebuilder you’ve never heard of," was slow to consider REIT status partly because it didn’t want to shrink, Zaret said. Under REIT rules, 75% of pretax income must come from real-estate property. No more than 25% can come from manufacturing, including homebuilding.

Now, Fulton is telling shareholders Weyerhaeuser qualifies for 2009 REIT status, after selling businesses including a packaging unit for $6 billion to International Paper in August. It may make the REIT switch as early as next April, when the company files income taxes, he said. "I’m not fighting it."

The Weyerhaeuser of the future may be two companies, with its timber business separate from its lumber and real-estate arms, said Robert Willens, president of a New York tax advisory firm. While residential real estate could still be a taxable subsidiary of a REIT, shareholders might prefer a pure timber business, Willens said. A REIT pays no corporate income tax on timber sales.

Timberland owned by Weyerhaeuser may be worth $10 billion, more than the $6.5 billion market valuation for the company as a whole, said Russell Croft, a fund manager at Croft-Leominster in Baltimore, which holds 250,000 shares among $600 million in assets. "They have that underlying timberland asset, which is one of the reasons we like the stock," Croft said. The challenge will be preserving cash as the housing market remains depressed, said Ed Sustar, a senior paper and forest-products analyst at Moody’s Investors Service. In the fourth quarter, timber was the only profitable business for Weyerhaeuser.

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Weyerhaeuser in Position to Become a REIT
Campbell Group Timber Trends, March 2009

Analysts say that Weyerhaeuser Co.’s business decisions are putting it in position to convert to a real estate investment trust this year or in 2010. Weyerhaeuser builds houses and makes pulp and wood panels from trees it grows on 6.4 million acres of forest it owns. The company has been getting hit hard by the slumping US housing market, which has put lumber prices at historic lows. In 2008, Weyerhaeuser lost $1.18 billion, compared with a 2007 profit of $790 million. In 2008, Weyerhaeuser sold its packaging business to International Paper Co. for US$6 billion in cash, allowing it to pay down some of its debt, according to analysts. It also sold and retooled some wood products plants and split off its fine-paper division and combined it with an existing company, Domtar Inc. of Montreal.

Joshua Zaret, an analyst with Cleveland-based Longbow Research, said Weyerhaeuser is in a "cash-conservation mode," which will allow it to be ready when the economy comes back. Zaret said Weyerhaeuser’s deal with International Paper could be more important for what it did to enable the company to become a REIT. REITs own and operate income-producing real estate. They pay lower taxes than corporations but can do limited manufacturing. Weyerhaeuser’s leaders have indicated that becoming a REIT is a possibility. In January, Weyerhaeuser CEO Dan Fulton told the Puget Sound Business Journal that the company was positioned for maximum flexibility in terms of making a choice between operating as a C corporation or a REIT, and that he believed the company could function as either. Weyerhaeuser has $2.4 billion in cash on hand and $2.2 billion in bank lines of credit, for a total of $4.6 billion of liquidity, Zaret said.

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PLUM CREEK - MONTANA

Board endorses Blackfoot land deal
Associated Press, May 15, 2009

HELENA, MONTANA - The Montana Fish, Wildlife and Parks Commission has approved a $3.5 million deal to buy about 2,600 acres of prime wildlife habitat in the Blackfoot River Valley of western Montana.

The proposal now goes to the state Land Board for final action.

The Little Doney Lake Project in the Ovando area covers land The Nature Conservancy bought from Seattle-based Plum Creek Timber Co.

In a briefing paper for the commission, the Department of Fish, Wildlife and Parks says that when Plum Creek owned the property, it was "threatened" with conversion from timberland and wildlife habitat to residential and commercial use.

Buying the land from The Nature Conservancy would involve money from FWP, federal dollars and private sources.

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PLUM CREEK - MONTANA

Plum Creek pays pollution penalty
Associated Press, May 15, 2009

HELENA, MONTANA - Plum Creek Northwest Lumber Inc. has paid a $32,400 state penalty for a 2007 environmental violation at a Montana sawmill that closed in March, amid declining demand for wood products.

The Montana Department of Environmental Quality said Tuesday that testing on Nov. 28, 2007, indicated air pollution from a boiler at Plum Creek's Fortine operation, just south of British Columbia, exceeded levels allowed in the company's state air-quality permit.

DEQ enforcement specialist Larry Alheim says Plum Creek cleaned a pollution-control device upon learning results of the compliance test, and follow-up testing showed emissions were well within limits.

The Plum Creek operation in Fortine was the last major sawmill in Montana's Tobacco Valley.

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PLUM CREEK - MONTANA

Plum Creek fined for exceeding air-quality limitations
By Michael Jamison. The Missoulian, May 15, 2009

FORTINE, MONTANA - State regulators have fined Plum Creek Timber Co. $32,400 for an air-quality violation at the company's Eureka-area sawmill.

That mill, located in Fortine, was shuttered in March, as the lumber company struggled with falling consumer demand for boards.

Before the closure, however, the facility operated a "hog fuel" boiler. On Nov. 28, 2007, independent testers recorded that it was pumping out 14.8 pounds of particulate per hour. The company's emission permit allowed only 13.9 pounds per hour.

According to Larry Alheim, enforcement specialist at the state Department of Environmental Quality, mill managers cleaned and repaired a pollution-control device, and subsequent tests showed particulate emissions well within the permit limits.

"The problem resulted from an equipment malfunction," said Plum Creek spokeswoman Kathy Budinick. "Plum Creek self-reported the problem, then corrected it."

With the exception of a 2005 citation, "we haven't had a violation against Plum Creek, where we've taken a penalty, in almost a decade," Alheim said.

In 2005, DEQ fined Plum Creek $20,400 for missing a deadline for testing boiler emissions at a fiberboard plant in Columbia Falls, and then later failing that test.

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PLUM CREEK - MONTANA

Rocky Mountain Elk Foundation marks 25th year
By Rob Chaney, The Missoulian, May 10, 2009

The view out the window of the Rocky Mountain Elk Foundation keeps changing.

Twenty-five years ago, it was a pine forest out back of Bob Munson's trailer home/real estate office in Troy - and the vision of four men who thought their favorite animal needed a helping hand.

Twenty-five years later, the Elk Foundation's executive offices command the second floor of a $14 million headquarters, overlooking a cottonwood bottom along Grant Creek in Missoula. And the vision encompasses 155,000 members who've protected or improved 5.5 million acres of habitat in 30 states for their favorite animal.

"It's a lot bigger," Charlie Decker said of the project he, Bob and Bill Munson and Dan Bull started in 1984. "When we started, there was an organization similar for sheep and for ducks, but we felt there was nobody doing anything for elk. So we kind of took a run at the animal, the one that we really loved. Since then, we've been drawn into a lot of issues, but you can't argue with habitat. If you've got habitat, you've got elk."

The foundation celebrates its silver anniversary this Saturday with an open house and a banquet. And its members will grapple with a vision for the next quarter-century, one with growing numbers of elk on shrinking acreages of habitat. The challenge will push the foundation back to its core principles, according to president David Allen.

"My to-do list is to keep focused on what we're really structured for - permanent land protection and habitat stewardship," Allen said. "When we get outside those two boxes, we tend not to do as well. We over-commit and under-deliver. We need to stay within ourselves."

That means staying away from involvement in issues surrounding elk hunting, topics like license fees or gun ownership or bear-baiting. RMEF staff might alert its members to debates on those issues, Allen said, but it won't be spending money or time drafting positions or organizing movements.

Rules have exceptions, Allen allowed. The RMEF board of directors recently offered a formal opinion on removing the wolf from the endangered species list.

"We've been hammered in the past about positions such as the wolf issue, where we weren't very strong on our stance, which caused us some problems," he said. "We've changed that. We definitely have a position, and it favors states' rights to manage wolves - period."

Another issue that slips over the border is hunting recruitment. An organization dedicated to preserving a hunting heritage can't be sanguine when the number of hunters declines 1 percent or 2 percent every year. RMEF conservation director Tom Toman said the foundation has sponsored 200 projects nationwide introducing people to archery, target shooting and hunter ethics, reaching half a million participants.

For Allen, the idea of helping an animal in order to hunt it holds no contradiction.

"If we didn't hunt our wildlife in this country, I don't think people really understand what kind of mess we would have," he said. "We don't live in a zoo. It's a very real wild world out there. We have to hunt to maintain the healthy populations we have."

There are plenty of people willing to argue that point. To them, Allen offered to compare accomplishments.

"Hunters are some of the best conservationists around," he said. "They certainly have put their money where their mouth is over the years."

In the Elk Foundation's case, that translates to a 44 percent increase in elk populations nationwide in the past 25 years. The foundation has developed partnerships that can multiply its dollar contributions three to nine times over with private, state and federal matching funds.

"It's made all the difference in conserving not only elk habitat, but wildlife habitat in Montana and across the West," said Mike Thompson, Montana Fish, Wildlife and Parks regional wildlife manager. For proof, he pointed to the acquisition of the Blackfoot-Clearwater Wildlife Management Area: 7,800 acres of elk winter range that Plum Creek Timber Co. sold to the public in the late 1990s.

"We got along with Plum Creek fine, but you never knew how that was going to end up," Thompson said. "The land was bought through several transactions, spearheaded by the Elk Foundation with Fish, Wildlife and Parks and the Nature Conservancy. It was a really important effort and a precursor to the Blackfoot Community Project. And now (there's) the Legacy Project," he said of the 310,000-acre land transfer from Plum Creek to conservation ownership.

"If you're looking at dominoes, that was one of the first ones."

Such efforts are growing fraught. Nationwide, RMEF estimates wildlife habitat is consumed for human development at a rate of 2,500 acres a day. Conservation groups of all sorts are feeling the pressure to grab what they can.

"In the past several years, there has been tremendous pressure on federal managers to develop public lands even at the expense of fish and wildlife," said Bill Geer of the Theodore Roosevelt Conservation Partnership. "It is more important than ever for RMEF to advocate for land management policies favorable to fish and wildlife on public lands in the face of development, because that is where the future of hunting and fishing is."

In 2008, RMEF's 10,000 volunteers contributed $16 million in donated labor. Their projects included building watering sources for wildlife, pulling obsolete fencing and other land-management tasks. They also held more than 550 fundraising banquets to provide cash for land conservation.

"When you give a nod to the Rocky Mountain Elk Foundation, you're acknowledging thousands of individual people who've donated or fundraised or helped with banquets or helped lead conservation efforts," Thompson said. "It gives a bit of structure to their efforts."

Open house Saturday

To celebrate its 25th anniversary, the Rocky Mountain Elk Foundation will host an open house on Saturday at its Missoula headquarters.

The public is invited to stop by between noon and 4 p.m. at the RMEF Visitor Center, 5705 Grant Creek Road, which is just north of the Reserve Street exit on Interstate 90. Activities include tours of the office, games for kids and refreshments.

That evening, a fundraising banquet at the Hilton Garden Inn will feature two of the foundation's founding members; Charlie Decker of Libby and Bob Munson of Lynnwood, Wash. There will also be a benefit auction and dancing to live music. Tickets for the banquet are $50 per person; call (406) 532-4511.

RMEF by the numbers -- From the archives of the Rocky Mountain Elk Foundation, here are a few of the more interesting numbers:
Brochures in the first membership solicitation mailing in 1984: 43,000
Responses to that mailing: 233
Membership 25 years later: 155,000
Wild elk population in Kentucky, Tennessee and Wisconsin following RMEF restoration efforts: 10,400
Wild elk population in Kentucky, Tennessee and Wisconsin in 1984: 0
Total acres enhanced or protected by RMEF projects: 5,578,967
Acres enhanced in partnership with U.S. Forest Service: 2,640,792
Acres opened or secured for public access by RMEF: 875,336
RMEF staff in 1984: 4
RMEF staff in 2009: 123

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PLUM CREEK - MONTANA

Cruel story of Libby's lost logging heritage
By Kim Briggeman. The Missoulian, May 9, 2008

LIBBY, MONTANA - A recent addition to Libby's "new" economy sits in the town's abandoned mill yard.

It's the Lucky Logger Casino, and Jeff Gruber calls it "one of the cruelest ironies."

On Friday morning in Missoula, as W.R. Grace & Co. officials were acquitted in an environmental crimes case on one side of Missoula, Gruber traced the rise and fall of the lumber industry in Libby on the other.

A Libby native and high school history teacher there, Gruber was the opening speaker at a county history initiative conference at Fort Missoula's Heritage Hall, part of a larger weekend of presentations, tours and Saturday's Preservation Fair billed "Preserving Our Heritage in a Changing Landscape."

Gruber's was a story of a town that grew up around a family-owned lumber mill where long-term timber management was both practiced and preached.

"They were really pioneers of sustained yield," he said of Julius Neils and his sons, who moved J. Neils Lumber Co. to Libby in 1911 as the forests in Minnesota played out.

Even after J. Neils sold to the St. Regis Paper Co. in 1957, the mill kept the Neils name, its managers and its philosophies intact.

"In the words of one longtime employee, St. Regis bought us and forgot us," Gruber said.

Dark clouds appeared in the 1970s, when timber corporations began wholesale liquidation of forests "for quick monetizing of timber" and replanting them with faster-growing trees.

High-powered financiers became attracted to timber companies like St. Regis. A British financier eyed the company, then corporate raider Rupert Murdoch.

"No longer strong enough to fend off another attack, St. Regis looked to Champion International as its white knight," Gruber said. The companies merged in September 1984.

Gruber read from a 1985 forestry report of Champion's Libby timberlands, which said, in part, "The forestry department goal, starting in 1975, was to double the growth of timber on fee lands at Libby by the year 2000."

A forestry program was developed with yearly goals to reach that goal.

"This is where it started, folks," he said.

Champion cut trees around Libby faster than the local mill could saw them, Gruber said. Hundreds of truckloads were shipped off to Champion's Bonner plant.

The company's logging department was eliminated in favor of contract, or gyppo, loggers. The mill's long-running Montana Light and Power Co. was discontinued, as were its box factory, Presto log plant and paneling and molding operations.

Champion focused on high volumes of commodity boards and lumbers and, in 1989, the Libby mill churned out a record 187 million feet of lumber and plywood.

Two years later, Champion was running out of wood and looking for a way out of its Montana operations, including 867,000 acres of timberlands.

Gruber said Champion, working with managers of the two plants, agreed not to break up the lands and mills, though it was "widely known" that Plum Creek Timber Co. wanted the timberlands. In the end, however, Champion didn't live up to its pledge - Plum Creek bought only the timber holdings for $269 million.

"To soften the blow to the communities of Libby and Bonner, Plum Creek searched out Stimson Lumber Co. to buy the plants for $10.5 million," Gruber said.

Under Stimson, jobs at the Libby mill were cut from 650 to just over 300. The old-line sawmill and studmill were auctioned off in May 1994, and fire broke out as the sawmill building was dismantled. The flames crippled the powerhouse that provided steam, and electricity to the plant was crippled. Stimson didn't rebuild the plant, and soaring electricity prices in the late 1990s added a new financial burden.

The company received another setback when asbestos-contaminated vermiculite was discovered at several sites around the mill - byproducts of W.R. Grace & Co.'s mining operation outside town. Health insurance and workers' comp premiums went up over $1 million a year. With timber supplies diminishing, Stimson shuttered its Libby mill on Dec. 27, 2002.

His town is not alone among communities hit by the loss of primary industries, Gruber said.

"But Libby is unique among them, for generations of Libby residents saw and heard and believed in the connection between land and community," he said.

Logging has always been a part of Libby's culture, Gruber said. Visiting football teams are met with roaring chain saws as they enter Logger Stadium. Logger Days have been celebrated since 1960.

Schoolchildren take "woods tours" and bring home seedlings to plant at home. There's a "Lumber Shelf" at each school library, and for years new teachers were given tours of the mill and timberlands to familiarize them with the local industry.

"Whether it was J. Neils, St. Regis, Champion or Stimson, community projects always received help and assistance," Gruber said.

Community stability was tied to careful land and timber management.

"The abruptness of the change � to profit being the only consideration has been cruel for Libby," Gruber said. "They feel betrayed and angry that they have been ‘monetized.' "

Stacks of wood cut locally by local hands have been replaced by the blinking neon lights of the Lucky Logger Casino.

"There is," Gruber said, "nothing lucky about it."

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Plum Creek Cuts Back In Montana
Building-products.com, May 6, 2009

Plum Creek Timber Co., Seattle, Wa., is permanently closing its Pablo, Mt., sawmill and june also shut down mills in Evergreen and Columbia Falls, Mt., due to the tepid residential construction market. The pine board in Pablo will run at one shift until late June, unless log inventories run out earlier. In late April, Plum Creek also issued 60-day notices that the other two plants would be evaluated and either kept running or closed, either temporarily or permanently.

"It could go either way," said spokesperson Kathy Budinick. "We'll just have to look at the market and see how its doing."

Since the first of the year, Evergreen and Columbia Falls have experienced temporary shutdowns, while a sawmill in Ksanka, Mt., was permanently closed. It will be dismantled and its equipment sold-the same fate that awaits the Pablo facility if a buyer cannot be found.

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PLUM CREEK - FLORIDA

County deal preserves 1,958 acres in Ft. McCoy
Easement granted as part of rights-transfer program
By Bill Thompson. [Florida] Ocala.com, May 6, 2009

Marion County's primary land-conservation program has taken a major leap forward.

The County Commission on Tuesday spared 1,958 acres from future development through a deal with a Seattle-based timber harvester, more than doubling the land preserved under the county's Transfer of Development Rights, or TDR, program.

The land, owned by the Plum Creek Co., is part of a 4,116-acre tract at county roads 315 and 316, just east of Fort McCoy, and is about a half-mile from the Ocklawaha River.

On Tuesday, the board unanimously granted Plum Creek a conservation easement that forever prohibits development of the site.

The four-year-old TDR program allows owners of rural or environmentally sensitive lands to swap rights to develop their property for credits to build elsewhere in the county.

In Plum Creek's case, commissioners cited the value of the native soils and vegetation on the site as well as its sizeable amount of wetlands and proximity to the river. Nearly half of the land covered by the agreement is wetlands.

Lisa Walsh, a senior planner in the county Planning Department, also told the board the property was "highly vulnerable" to pollution run-off.

Commissioner Barbara Fitos, whose district includes Plum Creek's property, hailed it as a "significant acquisition" for the county. The "infusion of this 1,958 acres says we are serious about our TDR program," said Fitos.

Todd Powell, Plum Creek's southern region director, who is based in Gainesville, said, "This puts sensitive land under conservation at no expense to taxpayers" - a vital consideration since land-preservation programs at the state and local levels are threatened by falling government revenues.

Powell said Plum Creek had been monitoring the county's comprehensive land-use plan and decided that changes to it and the land-conservation initiative made it advantageous to act.

Under the TDR program, landowners with at least 30 acres to preserve receive credit to build one home for each acre placed into conservation. Those credits are then utilized to build in areas the county classifies as Urban Reserve, or places on the fringe of urbanized areas where the county anticipates future growth.

Credits can also be sold to other developers.

The TDR idea is not new, having been discussed by commissioners nearly 20 years ago.

When the initiative was finally launched in 2005, participating landowners were granted credits equal to three homes for every 10 acres placed in conservation.

Commissioners changed that to one home per acre in November 2007. The board also opened the program to landowners outside northwest Marion County, which has been designated the Farmland Preservation Area.

Since the changes, interest has seemingly grown in the program, with two-thirds of the preserved land being added in the past year or so.

"The TDR program is in its infancy, and we wanted to put our toe in the water and see how this turns out," Powell said.

While the county's pact with Plum Creek prohibits all development on the land, the company can conduct other activities there. Those include silviculture, hunting and ecotourism.

Powell said the company will continue tree-harvesting operations on the property and hold its development credits until the real estate market turns around.

The rest of the adjacent land will be kept as is, he added.

"We're landowners, not developers," said Powell, noting his company is the largest private landowner in Florida.

Plum Creek, according to him, holds more than 600,000 acres across 22 Florida counties. More than 11,000 acres are in Marion County.

The commission's vote Tuesday more than doubled the land preserved by the TDR program, from 1,240 acres to 3,198 acres. That also put the county almost two-thirds of the way toward its goal of saving 5,000 acres by 2015.

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Weyerhaeuser Debt Rating Cut to Junk by Moody’s
By Christopher Donville. Bloomberg, May 6, 2009

Weyerhaeuser Co., the largest U.S. lumber producer, had its credit rating cut to below investment grade for the first time in the company’s 109-year history.

Weyerhaeuser’s rating was lowered two levels to Ba1 from Baa2 by Moody’s Investors Services, the credit-rating company said today in a statement, citing the lumber producer’s "weakened financial position" and a slump in U.S. housing construction. The cut affects about $6 billion of debt, Ed Sustar, a Toronto-based Moody’s analyst, said in the statement.

"The company’s performance will remain challenged until U.S. housing starts recover towards trend levels," Sustar said.

Weyerhaeuser Chief Executive Officer Daniel S. Fulton is selling land, closing wood-product mills and firing workers to reduce costs and conserve cash amid the worst economic slump in at least 50 years. The annual pace of U.S. single-family housing starts has fallen by 80 percent since the first quarter of 2006, according to Commerce Department data.

The cut brings Moody’s ratings on Weyerhaeuser to the lowest since at least September 1960, Sustar said today in a telephone interview. The ratings have fallen eight levels since peaking at Aa2, the third-highest credit rating, between 1974 and 1981, he said.

"It’s been a slow and steady decline," Sustar said. "It’s new territory for them being non-investment grade."

$1.8 Billion Cash

Bruce Amundson, a spokesman for Weyerhaeuser, said the cut was the lowest ever for the company, which got its start in 1900 when German immigrant Frederick Weyerhaeuser bought timberlands in Washington state the size of Rhode Island. The company now has 6.4 million acres of U.S. timberlands.

"If you look at it from a practical standpoint, we still have $1.8 billion in cash on our balance sheet and can access $2.2 billion in unused credit facilities," Amundson said today in a phone interview.

Standard & Poor’s today affirmed its stable outlook and BBB- rating on Weyerhaeuser. The rating is S&P’s lowest investment-grade ranking.

While S&P said it expects Weyerhaeuser’s credit measures to be weak for as many as two years, "we continue to believe its cash-flow performance will improve over the next several quarters."

Shares Decline

Weyerhaeuser, based in Federal Way, Washington, fell 68 cents, or 1.8 percent, to $36.09 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have climbed 18 percent this year.

The company, which owns six residential builders, said yesterday its first-quarter net loss widened to $264 million, or $1.25 a share, from $148 million, or 70 cents. The results followed a record $1.21 billion fourth-quarter loss.

"Industry conditions across all four of Weyerhaeuser’s business segments of timber harvesting, cellulose fibers, wood products and home building are not expected to improve significantly in the near term to materially reduce the company’s expected cash burn levels," Moody’s analyst Sustar said in the statement.

Weyerhaeuser’s ratings are supported by its standing as North America’s second-largest private timberland owner and its cash holdings, Moody’s said. Any moves to sell forestlands to pare debt may not be easy.

"We believe the market value and the salability of large tracts of timberlands are uncertain in the current environment as many of the potential buyers of timberland have significantly less liquidity," Sustar said in the statement.

Plum Creek Timber Co. is the largest private U.S. timberland owner.

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Shareholders vote to separate CEO, board chairman
By Mateusz Perkowski, Capital Press, April 30, 2009

The Weyerhaeuser lumber company has been targeted as part of a shareholder movement to improve corporate governance.

A proposal to bar Weyerhaeuser's CEO from also serving as chairman of its board of directors received 59 percent of the vote at an annual shareholders meeting April 16.

The vote fell short of the two-thirds "supermajority" required to change Weyerhaeuser corporate policy, but supporters of the proposal hope it will nonetheless resonate with the firm's leadership.

The company's board recommended that shareholders reject the proposal, which was submitted by the Laborers' International Union of North America's pension fund.

"We're hoping the weight of the shareholder vote will cause the board to change its mind," said Jacob Hay, spokesman for the union.

The group supports similar proposals at other public companies in which its pension fund owns shares.

"It helps cut down on conflicts of interest and increases transparency," Hay said.

A similar proposal to separate Weyerhaeuser's CEO and board chairman positions received about 41 percent of the vote in 2008, according to the RiskMetrics Group financial research firm.

The last person to hold both positions, Steve Rogel, stepped down as CEO in 2008 and resigned as chairman during the most recent meeting.

Dan Fulton, Weyerhaeuser's president, replaced Rogel as CEO. Chuck Williamson, a board member and retired executive vice president of Chevron-Texaco, was appointed board chairman.

The positions have been filled by different people for the past year, but the union wants to prevent one person from assuming both roles again in the future, Hay said.

Hay said Rogel received a compensation increase in 2008 even though Weyerhaeuser's financial performance was poor, which may have prompted the backlash from shareholders.

Weyerhaeuser spokesman Bruce Amundson said Rogel's salary decreased in 2008. The increase in his total compensation was primarily due to Rogel cashing in on deferred income from prior years in anticipation of his retirement, he said.

"It's not that he got more that year," Amundson said.

The decision to appoint two people to the CEO and chairman positions demonstrates Weyerhaeuser is open to that alternative, he said.

The board opposed making the separation mandatory, since the directors didn't want to limit their choice of candidates, Amundson said.

"Basically, they wanted the option of choosing who is most appropriate," he said.

The majority of Weyerhaeuser's counterparts on the S&P 500 index do not prohibit the CEO from serving as chairman, but the movement to separate those positions has been picking up steam in recent years, according to RiskMetrics.

In 2008, about 38 percent of S&P 500 companies had split roles, up from 37 percent in 2007 and 34 percent in 2006, according to RiskMetrics.

Dan Rohr, an analyst at the Morningstar financial research firm, said Weyerhaeuser's board won't likely jump on that bandwagon.

Previous initiatives that would have allowed a simple majority of shareholders to approve proposals also received strong support, but the board hasn't acted on them, Rohr said.

"They haven't been all that amenable to shareholder proposals," he said.

In its evaluation of corporate stewardship, Morningstar docks points for companies that employ the same person as chairman and CEO, Rohr said.

"Our opinion is that the board should only have one master: shareholders," he said.

Even so, the firm gives Weyerhaeuser a B grade in corporate governance, whereas companies typically earn C grades on average, Rohr said.

That's because the company has been responsive to the current downturn, reducing operating costs and dropping bonuses for top executives, he said.

"They've been fairly proactive at cost-cutting," Rohr said.

Weyerhaeuser had a tough year in 2008, losing about $1.2 billion dollars, but Rohr said the company has the mettle to survive.

"It's definitely something they can get through," he said. "Their balance sheet is a lot better a lot of folks'."

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Founders of ritzy Montana club trade accusations
By Kahrin Deines and Matthew Brown. Associated Press, April 30, 2009

The founders of the Yellowstone Club are trading blame over who is responsible for the financial collapse of the Montana haven for the rich that has fallen more than $400 million into debt.

Members of the private ski resort — including former Vice President Dan Quayle and Bill Gates — pay substantial sums for the privilege of building expensive homes in the gated resort but they do not own the club itself.

Its founders, recently divorced Tim and Edra Blixseth, blame one another for the problems that led the club to file for federal bankruptcy protection.

Edra Blixseth has owned the club outright since last August. But Tim Blixseth was in control in 2005 when the Yellowstone Club took a $375 million loan through the firm Credit Suisse.

Most of that money went to the Blixseths' private accounts, to be spent on luxury jets and estates in California, France, the Caribbean, Mexico and Scotland.

"I assumed when no one said to me there's something wrong with it, there's nothing wrong with it," Tim Blixseth said during testimony Wednesday in the club's bankruptcy trial. He was referring to one of several money transfers — totaling more than $300 million — that the club made to a corporation Blixseth had sole control over.

"I was the manager and I did what I felt was an appropriate decision at the time," he added.

The club's creditors and members accuse Tim Blixseth of "looting" the resort. They say the loan was fraudulent and should be voided because Credit Suisse knew it would not benefit the club.

Edra Blixseth's attorney latched onto that claim during opening statements Wednesday.

"The corporate greed of Credit Suisse coupled with Mr. Blixseth's sense of entitlement is a very, very bad situation," said attorney Troy Greenfield.

Tim Blixseth's attorney, Mike Flynn, said the fact that some of the money went to his client was a red herring. "If anyone in America builds a business and wants to take money out of the business ... they're absolutely entitled to do so," Flynn said.

Edra Blixseth last month declared personal bankruptcy. Her former husband says the club was making money when she took it over, and that she drove it into the ground.

But attorneys for the creditors have cast Tim Blixseth as the engineer of the 2005 loan that makes up most of the club's debts. And despite the millions she made off the loan, Edra Blixseth says she objected to the deal at the time.

The loan was one of at least six Credit Suisse arranged for upscale resorts now in financial trouble. The deals were marketed to resort owners who then took massive and early "profit dividends" before the developments were completed.

During his testimony Wednesday, Tim Blixseth said he was told by Credit Suisse that other owners also took "distributions" from the loans made to their resorts.

Credit Suisse brought in third-party investors to fund the loans, and made its money off fees — $7.4 million in the case of the Yellowstone Club.

A Credit Suisse attorney, George Zimmerman, defended the loans and pointed out that the Yellowstone Club kept up with its payments for three years before it fell in bankruptcy.

A club member and Boston real estate investor, Sam Byrne with Crossharbor Capital Partners, has offered to buy the resort for $100 million. The price could be driven higher during an auction scheduled for May 13.

Tim Blixseth accuses his former wife of colluding with Byrne to "prepackage" the resort's bankruptcy so Byrne could later pick up the club at a bargain price. Credit Suisse has made similar allegations, but so far the judge has rejected them.

Tim Blixseth has said he will bid to regain control of the club during the upcoming auction. He developed the 13,600-acre resort with his former wife in the late 1990s, after making his riches in the timber industry.

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PLUM CREEK - MONTANA

Plum Creek to close Pablo sawmill
Associated Press, April 27, 2009

Plum Creek Timber Co. says it will permanently shut down its Pablo sawmill, and says it may close sawmills in Evergreen and Columbia Falls.

The company said Monday it has issued federally required 60-day notices to 87 employees at the Pablo mill near Polson, which produces pine boards. It has been operating at one shift and will continue to run for the next 60 days or until log inventory is depleted, whichever comes first.

Plum Creek says it issued similar notices to 69 workers at its Evergreen sawmill, and 130 employees at the Columbia Falls sawmill. The company says those two mills will run for 60 days, and Plum Creek will evaluate whether to keep them open longer.

Workers at Pablo will be paid through the 60-day period, company spokeswoman Kathy Budinick said, and will use the time to work through existing log inventory. After that, they get one-month severance and qualify for federal retraining programs.

Employees of the Evergreen mill also qualify for retraining, and "we have submitted an application to work to get our Columbia Falls sawmill certified, as well," Budinick told the Missoulian newspaper.

In March, the company permanently closed its Ksanka sawmill, shedding the last 90 jobs there. That Eureka-area mill will be dismantled, Budinick said, and its equipment sold at auction.

Budinick said its possible another operator will be found to run the Pablo mill. Otherwise, it will be dismantled and auctioned.

"The waning demand for our wood products is directly linked to the troubled housing market," Rick Holley, Plum Creek president and chief executive officer, said in a press release.

"Housing starts dropped again last month and we expect economic conditions to continue to put pressure on new construction. Unfortunately, we must, once again, take steps to attempt to match supply with the eroding demand," Holley said. "We regret that the Pablo mill closure will affect a number of our valued employees and their families."

The Columbia Falls pine board sawmill, which was idle from early January through mid-March, is currently operating with 1 1/2 shifts and employs 130 people.

The Evergreen stud sawmill near Kalispell, which employs 69 people, has been closed since early January. Evergreen employees will return to work on May 4 to restart the mill.

At the end of the 60 days, Budinick said, those mills might stay open, might shut down temporarily, or might close for good.

"It could go either way," she said. "Well just have to look at the market and see how its doing."

Plum Creeks employment statistics in the Flathead Valley have been in steady decline for months. If the Columbia Falls and Evergreen plants close in 60 days, along with the Pablo mill, only 650 employees will be left on Plum Creeks Montana rolls, down from 1,450 just two years ago.

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PLUM CREEK - MONTANA

Timberland-purchase bill gains final approval in Senate at last
By Mike Dennison, Helena Independent Record, April 25, 2009

The bill enabling the state to buy 26,000 acres of former Plum Creek Timber Co. forestland east of Missoula finally won Senate approval Friday, some eight days after initially being stalled.

The Senate voted 37-13 in favor of House Bill 674, gaining the two-thirds majority needed for final approval and sending the bill to Gov. Brian Schweitzer for his signature into law.

HB674 is part of a two-bill package to assist Montana’s struggling timber industry. The other half is HB669, which creates a $7.5 million revolving loan fund to assist small timber mills and other timber businesses.

The latter bill gained final approval from the Legislature earlier this week and is on its way to the governor’s desk, for signature into law.

HB674 authorizes the state to issue $21 million in bonds to finance state purchase of the former Plum Creek timberlands in Missoula County, near Potomac.

It needed approval by two-thirds of both the Senate and House because it creates state debt. The bill fell six votes short of the two-thirds majority in the Senate a week ago, but the Senate later revived the bill and delayed a final vote until Friday, as the measure was caught up in the final-week negotiations on unrelated budget bills.

The state plans to purchase the forestland and manage it as state forest, with an eye toward providing timber for mills that need supply and allowing access for hunting and other recreation.

The purchase would be part of the Legacy Project, which is transferring 310,000 acres of Plum Creek timberland in western Montana primarily to public and nonprofit ownership. The goal is to preserve all of the land for timber management and public access for recreation.

The Nature Conservancy and The Trust for Public Land are two of the main groups involved in the project, in addition to Plum Creek Timber.

Rep. Chas Vincent, R-Libby, the sponsor of both bills, said Friday that the purchase of the 26,000 acres of timberland in Missoula County won’t happen overnight.

The state Department of Natural Resources and Conservation will examine the property and present the purchase to the state Land Board, which must approve the transaction.

The agency also must decide the "rate of growth" for timber harvesting on all state forests, given the addition of new acreage, before increased logging can occur, Vincent said.

"I’ve been an optimist the whole time with this package," he said. "I think the promises made on this package will be fulfilled."

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PLUM CREEK - MONTANA

2 timber measures survive in Senate
By Mike Dennison, The Missoulian, April 16, 2009

Two measures designed to help Montana's struggling timber industry survived a Senate vote Wednesday, putting them close to final passage - although one made it without a single vote to spare.

The close shave came on House Bill 674, which authorizes the state to issue $21 million in bonds to finance state purchase of 26,000 acres of former Plum Creek Timber Co. timberlands near Potomac in Missoula County.

Because the bill creates state debt, it needs approval by two-thirds of the 50-member Senate, or 34 votes.

It received exactly 34 votes, setting up a final, binding vote on Thursday. Sixteen Republican senators voted against HB674.

Rep. Chas Vincent, R-Libby, the sponsor of both bills, said afterward he's hopeful he can convince a few more senators to support the measure on the final vote.

HB674 has been moving through the Legislature along with House Bill 669, which creates a $7.5 million revolving loan fund to assist small timber mills and other timber businesses.

Vincent and the bill's chief co-sponsor, Rep. Jill Cohenour, D-East Helena, have said the two pieces of legislation can work together to help sustain Montana's timber industry, which is struggling to survive.

HB674 would transfer ownership of the 26,000 acres of former Plum Creek timberlands to the state, which would manage them as state forest, for logging and recreation.

The purchase is part of the Legacy Project, which is taking 310,000 acres of Plum Creek timberland in western Montana and transferring it primarily to public and nonprofit ownership. The goal is to preserve the land for timber management and public access for recreation, such as hunting and hiking.

As part of the project, the state plans to take control of about 100,000 acres, including the 26,000 acres authorized for purchase by HB674. The latter acreage is primarily east of Missoula between the town of Potomac and Interstate 90.

The state Senate on Wednesday easily endorsed the loan-fund bill, but HB674 faced opposition by senators who questioned why the state needs to control more land.

"How much more land do we have to have?" said Sen. John Brenden, R-Scobey. "To bail out one company on 300,000-some acres of land? Pretty soon we won't have any private land left in the state."

Sen. Jeff Essmann, R-Billings, noted that the bill requires the state to offset the purchase of forestland by selling state lands elsewhere in Montana. That "elsewhere" is likely to be in eastern Montana, he said.

"At my end of the state access to public lands is getting increasingly limited," Essmann said. "The no-net-gain (of state land) provision in this bill is going to result in the sale of lands in my part of the state, that are very valued by sportsmen and recreaters."

Supporters, however, said the 26,000-acre purchase is a great opportunity for the state to create productive timberland that can help keep struggling mills open.

"Those of you who support the timber industry can't turn your back on this bill, because (it and HB669) go together," said Senate Minority Leader Carol Williams, D-Missoula. "We can't have a healthy timber industry in this state and protect our mills if we don't have the timber."

Supporters also said most state land sold to offset the 26,000-acre purchase would be "nominated" for sale by adjoining landowners, who often already control the access, and that 26,000 acres is only one square mile in each of 41 counties.

"I think we're making a mountain out of a molehill here," said Sen. Kelly Gebhardt, R-Roundup.

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PLUM CREEK - MONTANA

Timberland-purchase bill stalls in Senate
By Mike Dennison. Billings Gazette, April 16, 2009

The state Senate on Thursday blocked a bill enabling the state to buy 26,000 acres of former Plum Creek Timber Co. forestland east of Missoula, but lawmakers said the measure isn't quite dead.

House Bill 674, part of a two-bill package to assist Montana's struggling timber industry, could be revived as soon as today, but may end up as a bargaining chip in the final days of the Legislature.

"It's not dead by any means," said Senate President Bob Story, R-Park City. "Nothing is ever over with" until the Legislature adjourns, he said.

HB674 authorizes the state to issue $21 million in bonds to finance state purchase of the former Plum Creek timberlands in Missoula County, near Potomac.

The bill needs approval by two-thirds of the 50-member Senate, because it creates state debt. It received the minimum 34 votes from the Senate on a preliminary vote Wednesday. But on a final vote Thursday, only 28 senators voted for it.

Supporters of the bill said they expect it to be revived Friday by a motion to reconsider, after which its fate is uncertain.

Eric Love of Bozeman, Rocky Mountain program director for The Trust for Public Land, said the group is "really disappointed" with the Senate vote on Thursday.

"I think we're missing a big opportunity to support our timber industry when we need it the most," he said. "This bill package is about jobs and it's about keeping working forests working. In the end, that benefits all of us. We hope that it can be CPR'd to life."

Transferring the land to state ownership would allow it to be managed as state forest, providing timber for mills that need supply, supporters of the bill have said.

HB674 has been paired up with HB669, which creates a $7.5 million revolving loan fund to assist small timber mills and other timber businesses.

The Senate endorsed HB669 by a wide margin Wednesday, but has yet to take a final vote on that bill.

Rep. Chas Vincent, R-Libby, said Thursday there's still a "glimmer of hope" that HB674 can gain approval from the Senate.

The purchase authorized by HB674 is part of the Legacy Project, which is transferring 310,000 acres of Plum Creek timberland in Western Montana primarily to public and nonprofit ownership. The goal is to preserve the land for timber management and public access for recreation, such as hunting and hiking.

Opponents of the bill said Wednesday they object to the state buying more private land, and questioned why the state should incur debt to do so.

On Thursday's vote, seven senators who voted "yes" on Wednesday changed their vote to no: Republicans Greg Hinkle of Thompson Falls, Verdell Jackson of Kalispell, Dan McGee of Laurel, Rick Ripley of Wolf Creek, Don Steinbeisser of Sidney; and Democrats Steve Gallus of Butte and Jonathan Windy Boy of Box Elder.

Sen. Rick Laible, R-Darby, changed his vote Thursday to a "yes."

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Ending Weyerhaeuser shareholders know is CEO’s focus
By Peter Robison and Christopher Donville, Bloomberg, April 16, 2008

Weyerhaeuser Co. agreed to protect land around a historic waterfall east of Seattle in 2004 in exchange for rights to build houses nearby. The deal worked well for the waterfall.

Dirt plots marked with blue and orange stakes outnumber finished homes in a Snoqualmie, Washington, neighborhood where Weyerhaeuser carved subdivisions out of a hillside. Record profits from real estate in 2005 turned to $847 million in losses for the company last year. So much residential property is for sale in Snoqualmie that there’s a three-year backlog, said George Isaacs, a local real-estate agent.

"Remember the movie ‘The Perfect Storm?’ We’re in that boat right now," Isaacs said.

The misadventure in Snoqualmie helps explain why the largest U.S. lumber producer is in a financial crisis so deep it turns down the heat in its offices to save money and is contemplating upending its corporate structure after 109 years to become a real estate investment trust.

Other U.S. timberlands managers have converted to REITs to slash corporate taxes. The move would reward Weyerhaeuser shareholders, who hold their annual meeting today at the headquarters in Federal Way, Washington, by returning most profits to them as dividends. At the same time, it may force the spinoff of more non-timber assets.

The company has been shedding them under Chief Executive Officer Daniel Fulton, who has closed 10 wood-products mills this year, halved capital expenditures, sold off packaging businesses, frozen salaries and eliminated almost half of the workforce, now at 19,850.

55 Degrees

A record $1.2 billion loss on $8 billion in revenue last year and the likelihood of negative cash flow through 2010 put Fulton into "conservation" mode, said Joshua Zaret, an analyst with Independence, Ohio-based Longbow Research.

"His priorities are stemming the cash leakage and battening down the hatches," said Zaret, who has a "neutral" rating on the shares.

Weyerhaeuser has lowered the thermostat at headquarters to 55 degrees on weekends and after hours, said Bruce Amundson, a spokesman who wears a sweater when he works late. Fulton also cut costs this month by shutting a public bonsai garden, eliminating one full-time and one part-time position.

"We missed the depth and severity of this homebuilding crisis," Fulton, 60, who headed the real estate unit for seven years before becoming CEO last April, said in an interview. "The primary business going forward is the one we started with in 1900, which is timberlands ownership and management."

‘Not Fighting’

Weyerhaeuser, which calls itself "the biggest homebuilder you’ve never heard of," was slow to consider REIT status partly because it didn’t want to shrink, Zaret said. Under the rules, 75 percent of pretax income must come from real estate property. No more than 25 percent can come from manufacturing, including homebuilding.

Now, Fulton is telling shareholders that Weyerhaeuser qualifies for 2009 REIT status, after selling businesses including a packaging unit for $6 billion to International Paper Co. in August. It may make the REIT switch as early as April 2010, when the company files income taxes, he said.

"I’m not fighting it," Fulton said.

The Weyerhaeuser of the future may be two companies, with its timber business separate from its lumber and real estate arms, said Robert Willens, president of New York-based Robert Willens LLC, a tax advisory firm. While residential real estate could still be a taxable subsidiary of a REIT, shareholders might prefer a pure timber business, Willens said. A REIT pays no corporate income tax on timber sales.

‘Huge Advantage’

Weyerhaeuser would follow Seattle-based Plum Creek Timber Co., which converted to a REIT in 1999, and Potlatch Corp. of Spokane, Washington, which made the move in 2006.

Plum Creek is the largest non-government owner of U.S. timberlands, with 7.4 million acres. Weyerhaeuser, which got its start in 1900 when German immigrant Frederick Weyerhaeuser bought a swath of Washington state forest the size of Rhode Island, is No. 2, with 6.4 million acres.

"Plum Creek has a huge advantage," Willens said. "They’re avoiding taxes on 35 percent of their pretax income, so they have that much more to invest in their business and share with shareholders in the form of higher dividends."

Weyerhaeuser rose 1.1 percent to $31.15 at 10:32 a.m. today in New York Stock Exchange composite trading. The shares have slumped 51 percent in the past year, compared with a 24 percent decline for Plum Creek.

Underlying Asset

Timberland owned by Weyerhauser may be worth $10 billion, more than the $6.5 billion market valuation for the company as a whole, said Russell Croft, a fund manager at Croft-Leominster Inc. in Baltimore, which holds 250,000 shares among $600 million in assets.

"They have that underlying timberland asset, which is one of the reasons we like the stock," Croft said.

The challenge will be preserving cash as the housing market remains depressed, said Ed Sustar, a senior paper and forest- products analyst at Moody’s Investors Service. Moody’s put Weyerhaeuser on review for a possible multiple-notch credit- rating cut in February.

In the fourth quarter, timber was the only profitable business for Weyerhaeuser, which expanded into packaging in 1949, fine paper in 1961 and residential housing in 1969. It now owns six homebuilders across the U.S., including Pardee Homes in Los Angeles and Phoenix-based Maracay Homes, the latter added at the height of the bubble in 2006 for $213 million, plus a $40 million deferred payment in 2007.

"I did it; I’m the guy," Fulton said, acknowledging he misjudged the market.

‘Twin Peaks’

In February, the U.S. recorded 357,000 annualized single- family housing starts, down 79 percent from the peak of 1.7 million in 2005, according to U.S. Commerce Department figures. As the economy recovers, housing starts should return to 1.2 million to 1.4 million a year, Fulton said.

The slump in Snoqualmie, known to fans of the 1990s television series "Twin Peaks" for the scenes shot at Snoqualmie Falls and around town, shows how long the rebound may be in coming.

From 2000 to 2007, the town 30 miles (48 kilometers) from Seattle was the fastest-growing in Washington state. Population surged 361 percent to 7,516 from 1,631, according to U.S. Census figures, as Weyerhaeuser’s Quadrant homebuilding arm developed a master-planned community called Snoqualmie Ridge.

‘Shadow’ Inventory

In 2004, Quadrant agreed to provide $8.7 million toward preserving 150 acres adjacent to Snoqualmie Falls and Weyerhaeuser yielded development rights to 3,450 acres of forestland. Lots for houses Quadrant had wanted to build near the falls were allocated to a second phase of ridge development.

Today, only 400 of as many as 2,150 homes planned for that phase have been built, said Bob Larson, the city administrator. Isaacs, the realtor, said he’s watching foreclosures rise and buyers fall behind on payments, creating a "shadow" inventory.

"We knew it was a growing community, and it was supposed to be a wealthy community," said Olivia Oliver, 42, who started the Artisan Table, a gourmet market, in June 2007. Now she’s selling furniture and fixtures to make the monthly rent.

Weyerhaeuser is also finding cash scarce, and may have to stretch to cover the cash portion of an estimated $6.5 billion dividend it would have to give shareholders before becoming a REIT, said Sustar, the Moody’s analyst. The company had $4 billion in cash and bank credit lines at the end of last year.

"The burning issue is how to minimize the cash bleed," said Zaret, the Longbow analyst. "Everything’s going to depend on the timing of a housing recovery, and at this point there’s no light at the end of the tunnel."

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Strategic Move?
The Forestry Source, February 2009

In December, Weyerhaeuser Company’s board of directors approved the adoption of December 31 as the corporation’s fiscal year end, a move that would be required if the company, now a "C" corporation, converts itself to a Real Estate Investment Trust (REIT), which some analysts expect it to do in 2010.

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Weyerhaeuser CEO gets 2008 pay valued at $4.7M
Associated Press, March 30, 2009

Dan S. Fulton, chief executive of timber and wood products company Weyerhaeuser Co., received compensation valued at $4.7 million in 2008, according to an Associated Press analysis of a report filed with the Securities and Exchange Commission earlier this month.

Fulton, 60, has led the Seattle-based company since last May, received a salary of $792,427 and perks of $34,456. Most of the perks came as financial counseling. He also received stock awards and options valued at $3.9 million on the dates they were granted.

The Associated Press formula is designed to isolate the value the company's board placed on the executive's total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.

The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the Securities and Exchange Commission, which reflect the size of the accounting charge taken for the executive's compensation in the previous fiscal year.

Fulton's predecessor, Steven Rogel, received compensation last year valued by Weyerhaeuser at $1.6 million, down 74 percent from 2007, when he served a full year as CEO.

In 2008, Rogel received a salary of $1 million, perks valued at $67,867, above-market earnings on deferred compensation of about $18,394 and stock awards worth $472,260 when they were granted.

Last year, the company recorded a loss of $1.18 billion compared with a profit of $790 million in 2007. Sales fell 26 percent to $8.02 billion.

Federal Way, Wash.-based Weyerhaeuser cited the continued decline in new-home starts, falling demand for lumber and structural panels because of lower levels of homebuilding, repair and remodeling and weakening log and wood products prices.

Shares of Weyerhaeuser fell nearly 59 percent in 2008. That compares with a 62 percent decline in the S&P 500 Paper & Forest Products index. The broader S&P 500 index fell 39 percent.

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SIERRA PACIFIC INDUSTRIES - CALIFORNIA

Groups Seek Federal Funds for Sierra Nevada Checkerboard Buyout
from:
Conserving America’s Landscapes by the Land & Water Conservation Fund Coalition

Tahoe National Forest, CA

Federal Land and Water Conservation Fund Project Need: $8 million

Acreage: 7,000

In the 19th century, in order to spur the construction of transcontinental railroads between the Pacific coast and the Mississippi valley, the federal government granted land to the railroads in alternating square miles. This "checkerboard" pattern of land ownership presents numerous challenges to landowners and managers. Fragmented ownership challenges public efforts in the

Sierra checkerboard to fight fires and to protect water quality, wildlife habitat, recreational access, and scenic views. The LWCF, in conjunction with state and philanthropic funds, is the primary federal tool in these efforts.

Acquisitions in the Sierra are focused on lands rich in natural resources: those that include or abut wild and scenic rivers, recreational trails, and wildlife migration corridors. Upcoming projects include parcels located in the watersheds of the North Fork American and the Yuba rivers. These and other Sierra rivers provide Californians with 60% of their water supply and support increasingly threatened fisheries and riparian corridors vital to wildlife. The parcels are also recreational attractions for winter sports enthusiasts, anglers, and hikers on the Pacific Crest Trail and at nearby lakes. Perhaps the greatest value of consolidated ownership lies in the preservation and restoration of intact ecosystems and watersheds, which are more likely to allow varied species to successfully adapt to the expected impacts of climate change. Sensitive species such as the American marten and Sierra Nevada red fox depend on habitat connectivity for their survival. Unfragmented forests recover faster and have significantly reduced damage costs from wildfires.

The Sierra’s natural resources have a profound impact on the entire state of California, and consolidation of the checkerboard is a multiyear effort that will eventually protect over 100,000 acres in partnership with federal, state, local, and private entities...

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PLUM CREEK - MONTANA

Plum Creek land transfer totals 111,740 acres
By Rob Chaney. The Missoulian, February 18, 2009

map of land trade

One of the biggest land deals western Montana may ever see came together Tuesday with little fanfare.

Sen. Max Baucus, D-Mont., got diverted to Colorado for President Barack Obama's signing of the $787 billion federal economic stimulus bill. So he missed the planned gathering of conservationists and Plum Creek Timber Co. representatives who were going to memorialize a $250 million land transfer.

And Tuesday became a quiet paper-shuffling day, as title to 111,740 acres of forest in the Seeley, Swan, Lolo and Blackfoot valleys moved from Plum Creek to the Nature Conservancy and the Trust for Public Lands.

But the lack of a news conference didn't diminish the enthusiasm of spectators who'd waited a decade or more for the moment.

"I think this is an incredible deal for the public," said Condon resident Melanie Parker. "We'd been chasing parcel after parcel, first Lindbergh Lake, then Van Lake, then the Swan River (drainage). We were paying retail prices acre by acre. The only way to break that was a wholesale transaction."

Parker and her husband Tom run Northwest Connections, an outdoor education program in Condon. Tom Parker also has a guiding and outfitting business. Melanie said their observations on the ground in the Seeley-Swan convinced them the land had long-term value.

While much of the Plum Creek property has been logged at various times over the decades, it's woven in with national forest land that has been under different management. Eliminating those checkerboards and most of the private development potential does two things, Parker said.

First, it allows forestry and wildlife managers to work their craft by drainage and altitude, rather than by section line. And second, it means local counties are spared the management costs of private driveways, fire protection and backyard wildlife management that would come with a sprinkling of trophy homes in the woods.

Hellgate Hunters and Anglers board member Pelah Hoyt agreed on the backcountry home matter.

"Some areas have been harvested pretty hard, and many of us would like to see better forest management there," Hoyt said. "Trees will come back, but you put big trophy homes on it and it's never going to be wildlife habitat again."

The deal remains a challenging work in progress for the conservation groups. They've already financed the first 130,000-acre phase with $150 million that's mostly made of loans against the Nature Conservancy's and Trust for Public Lands' own assets.

While the second phase is covered by $250 million in federal dollars, the land must pass muster for delivery to the U.S. Forest Service. The money's appropriation last fall partially implied that the deal was OK, but the two groups are still gambling that boots-on-the-ground review will back up their good intentions.

And the third phase of 70,000 acres in 2010 assumes a deal can be worked out with Montana state agencies that have an interest in some land. The bargain expects the state to pick up about $100 million of the tab, from a variety of pots.

The 2009 Legislature is now considering a "Working Forests Initiative" worth about $22 million that would pick up much of the acreage around Potomac.

Some might become new school trust land for timber harvest. Other sections might be bought through funds that Bonneville Power Administration provides to mitigate the impact of Hungry Horse Dam. Still more might come from an expected settlement with Pennsylvania Power and Light over back rent for its power-generating properties on state waterways.

Some money must come from a fiber agreement between the nonprofits and Plum Creek. That deal allows the timber company to buy logs from its former lands at market rates to keep its mills supplied over the next 15 years.

"It keeps some of the land in timber production and helps the economy," Plum Creek spokeswoman Kathy Budinick said Tuesday. "We want to be doing all we can to keep those mills running."

And finally, the two groups expect to raise about $40 million from land sales to private buyers. Another$100 million is planned to come from a charitable capital campaign.

"We know we were getting more land than what it's worth," said Nature Conservancy land protection specialist Jim Berkey. "We had to prove to our members we were getting good value for their money."

So although there was no ceremony, and a lot of work remains, the two groups' leadership in Missoula sounded excited.

"We're going to do the right thing - it's our mission," said Eric Love, program director for the Trust for Public Lands. "It's our hope that the U.S. Forest Service and the state of Montana get the best pieces for the best prices. And Plum Creek no longer owns any land in the Swan Valley."

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PLUM CREEK - MONTANA

Plum Creek land sells for $250 million
By Jim Mann. Daily Inter Lake, February 17, 2009

Two conservation groups on Tuesday announced the purchase of 111,740 acres of Plum Creek Timber Co. lands in Western Montana for $250 million.

The purchase is the second phase of the Montana Legacy Project, which ultimately will involve a total of 320,000 acres of Plum Creek lands being conveyed to state or federal agencies for a total price tag of $510 million.

The Nature Conservancy and The Trust for Public Land said the most recent closing involves lands in the Clearwater, Lolo, Rock Creek and Swan valleys that eventually will be conveyed to the U.S. Forest Service. The checkerboard lands in the Swan total 44,821 acres.

Money for the purchase came from provisions in the 2008 Farm Bill crafted by Sen. Max Baucus, D-Mont.

"I am really pleased to support this landmark conservation effort that will benefit Montana's environment, our working forests and local communities," Baucus said in a prepared statement. Baucus was scheduled to attend a press conference in Missoula announcing the deal on Tuesday, but instead attended the signing of the federal stimulus bill with President Barack Obama in Denver.

"It is also serving as a model for other places in the nation that want to conserve forests in the face of huge pressures to convert them to other uses," Baucus said.

The goals of the Montana Legacy Project are to assure continued public access to Plum Creek lands, along with other traditional uses, including timber harvest.

"We're all enormously thankful for the enduring work of Senator Max Baucus in making this historic project possible," said Kat Imhoff, state director of The Nature Conservancy in Montana.

"With this sale, we are proud that the company has placed more than 860,000 acres of land in the country, including more than 600,000 acres in Montana, into permanent conservation," said Rick Holley, Plum Creek's president and chief executive officer.

The first phase of the Montana Legacy Project was announced last December. It involved the purchase of 130,000 acres of Plum Creek lands in the Fish Creek drainage northwest of Missoula and the Potomac area east of Missoula.

The third phase of the Montana Legacy Project — scheduled to close sometime in 2010 — will involve about 69,000 acres, including additional lands in the Swan and Clearwater drainages.

Imhoff said those lands potentially could go to the Montana Department of Natural Resources and Conservation, depending on the state's funding abilities. The Montana Legislature is deliberating a bill that would authorize bond sales to raise up to $21 million for the project.

A hearing on House Bill 14 was held in the House Natural Resources Committee on Jan. 26, attracting considerable support.

"We had a lot of testimony," Imhoff said. "It was really compelling to hear people's passion for the landscape ... There's been tremendous support from the community in the Swan Valley."

But not everybody is ecstatic about the Montana Legacy Project. Flathead Valley resident Dave Skinner also testified at the hearing, criticizing the project for not being transparent enough and questioning the purchase prices for land with widely varying values.

"If this was supposed to be public, where was the public involvement?" Skinner asked Tuesday. "There really wasn't much at all."

Imhoff maintains that "a lot of public meetings' were held across Western Montana since the Montana Legacy Project's overall purchase agreement was announced at a press conference at Lone Pine State Park near Kalispell last June.

The Montana Legacy Project Web site lists 16 meetings held across the region, the last one in October in Bonner. Although the project was announced in Kalispell, no further public meetings on it have since been held in Flathead County.

Skinner said the public should have had greater influence in determining whether the lands are ultimately transferred to state or federal management and in knowing exactly what level of access will be maintained.

The purchase price on the second phase's 111,740 acres averages out at $2,237 per acre — an amount that Skinner considers widely excessive for some lands that recently have been logged and will not be productive again for decades.

But Imhoff said some of Plum Creek's lands in the Swan Valley were selling to private buyers for as much as $8,000 per acre while other lands that were purchased were valued as low as $400 per acre.

Imhoff said prices were arrived at through 'very long-term negotiations' carried out prior to last June's announcement of the overall purchase agreement. The purchases also required thorough appraisals, she said.

More information on the Montana Legacy Project is available online at:

http://www.montanaworkingforests.org

http://www.themontanalegacyproject.org

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Plum Creek may complete Montana land sale early
Seattle Post-Intelligencer, January 14, 2009

Plum Creek Timber Co. said it may complete the second phase of land sales in Montana in February, 10 months earlier than expected.

The company may receive $250 million in cash for about 112,000 acres of western Montana forestlands in the transaction, Seattle-based Plum Creek said Wednesday in a news release. Plum Creek is selling the land to the Nature Conservancy and the Trust for Public Land.

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PLUM CREEK - MONTANA

Forest Service paves way for development in Montana woods
Washington Post, January 4, 2009

The agency intends to finalize a deal, which would build roads through timberlands, before Obama takes office. The president-elect has joined local officials in opposing the proposal.

The Bush administration appears poised to push through a change in U.S. Forest Service agreements that would make it far easier for mountain forests to be converted to housing subdivisions.

Mark Rey, the former timber lobbyist who heads the Forest Service, last week signaled his intent to formalize the controversial change before the Jan. 20 inauguration of President-elect Barack Obama.

As a candidate, Obama campaigned against the measure in Montana, where local governments complained of being blindsided by Rey's negotiating the policy shift behind closed doors with the nation's largest private landowner.

The shift is technical but with large implications. It would allow Plum Creek Timber Co. to pave roads passing through Forest Service land. For decades, such roads were little more than trails used by logging trucks to reach timber stands.

But as Plum Creek has moved into the real estate business, paving those roads became a necessary prelude to opening vast tracts of the company's 8 million acres to the vacation homes that are transforming landscapes across the West.

Scenic western Montana, where Plum Creek owns 1.2 million acres, would be most affected, placing burdens on county governments to provide services and undoing efforts to cluster housing near towns.

"Just within the last couple weeks, they finalized a big subdivision west of Kalispell," said D. James McCubbin, deputy county attorney of Missoula County, which complained that the closed-door negotiations violated federal laws requiring public comment because the changes would affect endangered species and sensitive ecosystems. Kalispell is in Flathead County, where officials also protested.

The uproar last summer forced Rey to postpone finalizing the change, which came after "considerable internal disagreement" within the Forest Service, according to a Government Accountability Office report requested by Sen. Jon Tester (D-Mont.). The report said that 900 miles of logging roads could be paved in Montana and that amending the long-held easements "could have a nationwide impact."

Tester and Sen. Jeff Bingaman (D-N.M.), chairman of the Senate Energy and Natural Resources Committee, then asked for an inquiry by the inspector general of the Agriculture Department, which includes the Forest Service.

"I think we need another set of eyes on it," Tester said Friday. "I don't think that's running out the clock. If this is a good agreement, then what's the rush? Why do it in the eleventh hour of this administration?"

Obama sharply criticized Rey's efforts during the presidential campaign, citing concerns that a landscape dotted with luxury homes would be less hospitable to Montanans accustomed to easy access to timberlands.

"At a time when Montana's sportsmen are finding it increasingly hard to access lands, it is outrageous that the Bush administration would exacerbate the problem by encouraging prime hunting and fishing lands to be carved up and closed off," Obama said.

Rey vows to act soon. In a Dec. 12 letter to Tester and Bingaman, he repeated his logic for granting Plum Creek the changes it requested, then closed with a promise to schedule briefings "to describe how we plan to proceed."

In a phone interview Wednesday, Rey said he would act immediately after the courtesy meetings with the lawmakers. "Probably in the next week or so, before this goes forward," he said. Tester said he had not yet heard from Rey's office to arrange a meeting.

On environmental questions, the Bush administration has a checkered record of following through on promised eleventh-hour changes, said Robert Dreher, a lawyer with Defenders of Wildlife.

"I suppose it's a legacy issue," Dreher said. "They've already backed off on a couple of things they said they were going to do," including proposed changes on marine fisheries and industrial emissions.

On the other hand, the Bush White House went ahead with controversial changes to the Endangered Species Act, despite opposition from environmentalists.

The Plum Creek deal could be accomplished with the stroke of a pen. Because it amends existing easements, the change involves no 30-day waiting period. But the step carries a political cost that the administration evidently has been assessing since June, when Rey said he expected to formalize within a month the change that half a year later is still unresolved.

"It's conceivable they don't want to leave office looking like bad guys," Dreher said. "There's been a lot of concern about the nature of the process and the lack of inclusiveness. You've got the county government in Montana angry over it. If they do this walking out the door, they're kind of ramming it down their throats."

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