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Corporations in the News: 2011

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CORRECTION: Major U.S. land sale offers a new approach for Nevada mining development

Mineweb reporter Dorothy Kosich corrects errors made in her prior story, concerning land ownership and mineral rights along former railroad checkerboard lands in the heart of northern Nevada's gold country.

by Dorothy Kosich, Mineweb.com, December 13, 2011

The ownership of land and mineral rights and the leasing of mineral rights along the Interstate 80 corridor of northern Nevada are so complex the issue confuses many Nevadans including this reporter.

  • Through the years, the checkerboard pattern of the railroad land grants system that granted the Central Pacific Railroad right-of-way plus 10 square miles for every mile of track built by the railroad in Nevada in the 1860s would eventually become the property of the Santa Fe Pacific Land Company, who would lease the mineral rights for those millions of acres to its sister company, Santa Fe Pacific Gold.
  • Although Santa Fe Pacific Gold was subsequently acquired by Newmont Mining, Newmont did not actually acquire ownership of the land belonging to the Santa Fe Pacific Land Company, as was incorrectly stated by this reporter in a story published in Mineweb's Monday newsletter. Newmont actually would inherit from Santa Fe Pacific Gold the mineral leases on hundreds of thousands of acres in the Interstate 80 Corridor.

Longtime Nevada geologist Don Pattalock participated in mineral exploration programs along several of the renowned Nevada mining districts found along the corridor. The trends include Battle Mountain, Carlin, Getchell, Humboldt-Austin and Oreana.

In an interview with Mineweb Monday, Pattalock observed that Santa Fe Pacific Gold did not have the opportunity to conduct mature exploration on a substantial portion of mineral rights along the corridor because its geologists were kept busy conducting near-mine exploration on the gold mines along the corridor.

  • In 1995, the Atchison, Topeka and Santa Fe sold hundreds of thousands of acres of Nevada checkerboard railroad land, along with minerals rights. By 1997 La Jolla, California-based Pico Holdings held the acreage and the mineral rights. The company separated the acquisition into five operating segments including a real estate division, which specialized in selling and leasing land and mineral rights for development.

More than a decade ago, Pattalock would join Pico as the manager determining the extent of and the ownership of land and minerals rights holdings that had become a complex maze of ownership. The Nevada Land group would examine minerals and geothermal potential on the checkerboard acreage on and off for a number of years. Among those companies which leased mineral rights was Newmont Mining, which still retains a number of minerals leases on those lands, Pattalock said.

  • Meanwhile, Pico Holdings has investments in water resources and water storage, insurance, corporate and agribusiness. Its companies sold land and water rights, developed water rights, and developed geothermal rights. Eventually the company realized that a substantial exploration program--simply to prove or disprove real minerals potential of its checkerboard lands--would cost multiples of what Pico originally paid for the properties.

Even if discoveries were made on those mineral rights, Pico Holdings' insurance company investors would not be able to wait out the seven to ten years it normally requires to permit and take a mining project into production in Nevada.

Meanwhile, since major power transmission lines are scarce in north-central Nevada, development renewable energy applications on some properties in the area are currently challenging in terms of delivering the produced power to a major utility company. However, discussions of future major north-south utility lines could benefit future geothermal projects, Pattalock suggested.

Earlier this year, Pico Holdings announced it would sell 483,000 acres or 750 square miles of free simple lands which offered all available rights including mineral rights to the buyer, along with mineral rights for 800,000 acres. The result is one of the largest U.S. land sales ever, which Pattalock said, offers a sizable mineral estate of 1.2 million acres of northern Nevada.

Fountain Investments, a small privately owned investment company based in Miramar Beach, Florida, bought the land and the mineral rights for $31 million. Among Fountain's specialties are land sales and leases involving timber and oil and gas interests, which Pico Holdings felt were particularly relevant to the Nevada checkerboard lands and mineral rights. The Florida company is used to conducting lengthy negotiations for properties and mineral rights that, in a number of cases, can take years to develop.

Pattalock estimated that Pico earned from $5 million to a peak of $20 million annually from the leases and land sales from its properties and mining rights.

Among those companies currently involved in negotiations with Pico and its successor is Newmont Mining, which has several leases including some about to expire, according to Pattalock. Newmont is among a dozen companies now conducting exploration programs on the checkerboard lands now owned by Fountain subsidiaries.

Fountain's owners have assigned their rights to Conduit LLC, with New Nevada Land and New Nevada Resources as Conduit's wholly owned subsidiaries. Pattalock is the new CEO for both companies.

Pattalock told Mineweb that Fountain and New Nevada Land and New Nevada Resources have no intention of becoming a mining operator. Instead, New Nevada hopes to develop into a combination of land, mineral rights, and mining royalty company that hopes to help the lands and mining rights achieve their highest and best use.

Several companies serve as potential role models for the development of New Nevada Resources, Pattalock observed, including Franco-Nevada, which originally owned resources and then sold those lands, while retaining the mining royalties.

Basically, New Nevada is a privately owned company, which offers mineral rights on private lands; no SEC rules and regulations come into play, nor does the lengthy bureaucracy of exploration and mining on public lands. The thousands of acres of privately owned land belonging to New Nevada along the I-80 corridor also can provide easier access to mineral leases.

Pattalock believes the acreage is wide open for mineral exploration and development because most of it has never been opened up to any development. As he recently told an Associated Press reporter, "We see a fairly bright future as to the development of those minerals" in a state internationally renowned for both its precious metals and copper operations.

While this Mineweb reporter apologizes for the confusion her previously published story may have created in terms of the actual ownership of New Nevada Resources property, it did open up an in-depth opportunity to tell New Nevada's story.

The bottom line: a huge swath of privately owned land and mineral rights along the main highway corridor serving Nevada's major mining districts is now being marketed to both major and junior mining companies, by a single landowner, focused on mining and geothermal leases and development. A huge portion of privately-owned land in the nation's number one gold mining state is about to open its doors to new mineral exploration if Pattalock is successful in implementing the New Nevada Land and New Nevada Resources strategic plans.



One of largest U.S. land sales ever, targeted for mining, geothermal exploration

by Dorothy Kosich, Mineweb.com, December 12, 2011

The announcement that Fountain Investments of Miramar Beach, Florida, has acquired the mineral rights of 1.2 million acres of northern Nevada for the bargain price of $31 million has made news across the country, primarily because it is one of largest land sales (in terms of total acreage sold) in U.S. history.

The land-which had been a part of insurance company portfolios since 1997-stretches from Reno to the Utah border along Interstate 80, encompassing 483,000 acres or 750 square miles of fee-simple land, along with mineral rights for the other 800,000 acres.

New Nevada Land is the entity that will manage the fee-simple lands while Dan Pattalock, a geologist, will serve as the president of New Nevada Resources, the entity that will manage the mineral rights.

Pattalock used to work for former landowner Pico Holdings, who originally bought and/or leased the property from Newmont Mining. So, why would Newmont Mining sell million-plus acres of "sizable mineral estate" to Pico in the first place?

  • The acreage was originally part of checkerboard pattern of the railroad land grants system that granted the Union Pacific and the Southern Pacific right-of-ways plus 10 square miles for every mile of track built by the railroads in the 1860s.

Santa Fe Pacific Railroad and its subsidiaries Santa Fe Pacific Land and Santa Fe Pacific Gold would inherit most of the northern Nevada and north-central Nevada portions of the land. Santa Fe Pacific Gold was home to a particularly strong mining exploration team who studied much of these Nevada lands.

Santa Fe Pacific Gold would be acquired by Newmont Mining with an even larger team of geologists who would continue to study the Nevada mineral holdings. While Newmont would eventually sell the much of the property that now comprises Nevada Land holdings, the company retained

By 1997 La Jolla, California-based Pico Holdings acquired the acreage and the mineral rights. Pico was incorporated in 1981 by the Citation Insurance Group, which was acquired in a reverse merger with Physicians Insurance Company of Ohio in 1996. The diversified company separated the acquisition into five operating segments: water resources and water storage; real estate; insurance; corporate and agribusiness.

Real estate operations were primarily conducted through Nevada Land, which developed the strategies to monetize the assets once they had reached their highest and best use. These strategies include the sale of land and water rights, development of water rights, the management of minerals rights, and the development of geothermal rights.

Nevada Land has examined minerals and geothermal potential on the land on and off for a number of years. Eventually, the company realized a substantial exploration program would take multiples of what was originally paid for the land, simply to prove or disprove its real minerals potential.

Even if a discovery has been made, Pico Holdings' insurance company investors may not be able to wait the seven to ten years it normally requires to permit and take a mining project into production.

Since major power transmissions lines are scarce in north-central Nevada, developing renewable energy applications for the property may also prove challenging in terms of delivering the produced power to a major utility company.

Fountain Investments' owners, who previously have specialized in oil, gas and timber leases, have assigned their rights to Conduit LLC. with New Nevada Land and New Nevada Resources as the wholly owned subsidiaries of Conduit.

The new president of New Nevada Resources, Pattalock told the Associated Press, "We see a fairly bright future as to the development of those minerals."

"There's a real opportunity left on the minerals," he told AP. "Pico also pursued mineral development, but not to the extent we're looking at now."

"We're aware of the resources and the potential we have, but we're not a mining company," he stressed, adding the mineral rights are being leased to third parties who are exploring.

Phone calls by Mineweb to Nevada Land, now New Nevada Land, were not returned by Mineweb's deadline late Sunday night.



Timber company looks to swap Upper Lochsa land with U.S. Forest Service

By Rob Chaney, The Missoulian, November 25, 2011

A new proposal to protect timberlands west of Lolo Pass could save jobs for Idaho towns, if its supporters can find a legal way to push it through.

The latest version of the Upper Lochsa Land Exchange draft environmental impact statement would have the U.S. Forest Service make an acre-for-acre swap with Western Pacific Timber Co., all within the boundaries of Idaho County, Idaho. County Commissioner Skip Brandt said that would help his rural communities hang on to their economic base.

"In Idaho County, we’re 85 percent public land," Brandt said. "It’s a huge county to provide law enforcement and search and rescue services with only a 15 percent tax base. We can’t afford to go to 90 percent or even 86 percent public land."

But that could violate the Forest Service’s requirement to get fair market value for any property it exchanges. It prefers an appraised swap that offers one acre of public land for every two acres of the approximately 40,000 acres of Western Pacific Timber property. A different deal could require congressional approval.

"That’s outside our authority to do," said Kamiah Ranger District project manager Teresa Trulock. "Somebody else would have to promote that."

The land in question is checkerboarded around U.S. Highway 12 along the Montana-Idaho border. It is popular with snowmobilers and cross-country and backcountry skiers in winter, as well as campers and hunters in summer and fall. It has good habitat for sensitive species such as steelhead and bull trout, lynx and wolverine.

"There’s certainly great ski opportunities up at the pass on both sides of the border," said John Weyhrich of the Missoula Nordic Ski Club. "The whole Lolo Pass area, with the amount of snow they get, and the terrain they have, could have world class Nordic ski facility."

There are also numerous small lakes and streams that have potential for real estate development. Commissioner Brandt said if the Western Pacific Timber land was put in public ownership, his county stood to lose $100,000 a year in tax revenue and the local sawmill would lose access to one-fifth of the county’s harvestable timber. That could cost 128 jobs, Brandt said.

"I’ve spent since the first of March trying to put sticks in the spokes of the exchange," Brandt said. "We just can’t take that economic hit."

Trulock said Western Pacific Timber bought it from Plum Creek Timber Co. with the intention of trading it for better harvest lands. Most of the marketable trees in the Upper Lochsa properties have already been logged, she said.

"We tried to start an exchange with Plum Creek to acquire checkerboard about 10 years ago, but they weren’t interested at the time," she said. "It makes it hard to manage resources across a landscape when you only have every other square mile."


Plum Creek was open to a land deal in Montana that eventually put 310,000 acres of its timber land into public or conservation ownership. But the Montana Legacy Project depended on federal appropriations as well as fundraising from The Nature Conservancy and Trust for Public Lands for a cash purchase.

Jonathan Oppenheimer of the Idaho Conservation Trust said his group called for a similar deal in the Upper Lochsa. But the down economy, cuts to the federal Land and Water Conservation Fund and lack of a congressional advocate have made that a non-starter.

"Elk River and Idaho County citizens value their public lands, and they don’t want to see them sold off to the highest bidder," Oppenheimer said. "The Montana Legacy Project was successful in large part because of the position of Sen. Max Baucus. We don’t necessarily have those political stars lining up here."

Other ideas the Forest Service has considered involved swapping acres out of neighboring Benewah, Bonner, Clearwater, Kootenai, Latah and Idaho counties. The Forest Service has four options besides the Idaho County proposal to consider in its EIS. The Rocky Mountain Elk Foundation is exploring a conservation easement for the area.

"This will not be an easy decision to make," Nez Perce/Clearwater National Forest Supervisor Rick Brazell said. "There is nearly unanimous support for acquiring the Upper Lochsa lands, but every parcel we have identified for possible exchange has a concerned and vocal constituency."

The exchange has been in the works since 2008. If an alternative surfaces from this draft, it could be finalized around fall of 2012.

Information on the exchange can be found on the Internet at www.fs.fed.us/nepa/project_content.php?project=26227. Two open house sessions are scheduled for Nov. 28 at the Best Western Salmon Rapids Lodge in Riggins and Nov. 29 in the National Guard Armory in Grangeville. Both sessions run from 2-7 p.m.

Public comment on the draft EIS has begun and will run through mid-January. Email comments can be delivered through the Forest Service website, while written comments should be sent to Kamiah Ranger Station, 903 Third St., Kamiah, Idaho, 83536. For more information, call (208) 935-4256.

Reporter Rob Chaney can be reached at 523-5382 or at rchaney@missoulian.com.



Flagler timberland parcel sells for $3M

By Bob Koslow, Daytona Beach News-Journal, October 5, 2011

Another large tract of Flagler County timberland has changed hands.

JMS Timber LLC, managed by Tallahassee businessman John Stewart, bought 2,941 wooded acres in the county’s northwest corner along State Road 100 for $3 million from the Millican family, according to Flagler County property records.

The Millicans have owned almost 9,800 acres along the Putnam County line, northeast of Crescent Lake and midway between Bunnell and Palatka since the Great Depression, said William D. Millican, who, along with brother James Millican and sister-in-law Sandra Millican, decided to sell it off.

"We just got tired of paying interest to the bank and wasting money," William Millican said Tuesday from Flagler Beach. "It’s been in timber production all along and looks like it will stay that way."

Millican considered the purchase price of about $1,025 an acre a "fair" return for timberland in today’s depressed market with sluggish timber sales in recent years because of the downturn in home construction.

"It’s not like it was when everyone was buying on speculation. It was priced as timberland," Millican said.

Stewart could not be reached for comment.

Orlando-based Merckel Real Estate handled the recent sale and is listing the Millican’s remaining 6,800 acres priced at $1,450 an acre.

"It was just an investment by the gentleman to round out his portfolio and will stay as timberland," Bill Merckel said. "He may even put it back on the market tied to the other Millican property."

The land provides income from timber harvesting and leases for hunting turkey and deer, according to the real estate company’s website. It could also be held for future sale as a green belt or development.

However, development is a long way off, said Toby Tobin, a Realtor with Take Action Properties in Palm Coast.

"Beside just the economy, the issue of services, water and sewer, would be a major issue that far west," Tobin said.

With numerous previously approved subdivisions scattered across Flagler County with developers waiting for the economy to turn before they start building, the possibility of someone starting a new project is slim, he said.

"The price the buyer got is not too bad. What we are seeing are companies land banking because the prices are so inexpensive," Tobin said.

In June, Exeter, N.H.-based Conservation Forestry LLC paid $22 million to Seattle-based Plum Creek Timber Co. for 30,200 acres in southern Flagler County and northern Volusia County. Activity there is limited to timber harvesting and hunting because they are within government-purchased conservation areas.



Gov. Walker Announces Chippewa Flowage Forest Legacy Easement

New release, October 4, 2011

HAYWARD – Governor Walker Tuesday recognized the first major stewardship purchase of his administration, an initiative that will protect more than 10,000 acres of new land in Northwestern Wisconsin for public use.

"This action guarantees permanent public access for hunters, fishers, trappers, hikers, cross county skiers and snowmobilers, and it ensures future generations that this land will not be developed," said Governor Walker.

"Long term forestry production is also protected through today’s agreement and will help support Wisconsin’s huge timber industry and related jobs."

Privately owned, the land remains on the tax rolls.

Tourism generates more than $12 billion in economic impact in Wisconsin each year and supports many jobs.

The forest products industry employs 56,500 workers and provides 16 billion in economic value in wood and paper products.

The easement keeps this significant forest area in productive forest use under private ownership.

It provides a very large area for permanent public access for hunting, fishing, trapping, cross country skiing and hiking.

The land will remain in undeveloped condition and will be managed by the private landowner to insure productive managed hardwood and pine forests.

"Plum Creek is proud to have helped to conserve more than 1.3 million acres nationwide and we are especially pleased to play a role in conserving this Wisconsin land that has exceptional recreational as well as working forest values," said Mark Sherman, Senior Resource Manager for Plum Creek.

"Such partnerships take dedication and collaboration, and we thank state and federal leaders, the Trust for Public Lands, the WI DNR, and others for their support to conserve this land for generations to come."

The large block of forest land is at the southeast edge of the Chippewa Flowage, nestled in between the Chequamegon-Nicolet National Forest to the northeast, Wisconsin Department of Natural Resources land on the Chippewa Flowage and lands of the Lac Courte Oreille Band of Lake Superior Chippewa, located along the west edge of the land.

The land is dominated by an upland northern hardwood forest with maple, read oak, birch and aspen.

In addition, the property has red and white pine, spruce, cedar and hemlock.

It has been managed for several decades as a working, productive forest.

Of the 18,000 acres, about 3,000 acres are wetlands and there are 32 miles of rivers and streams on the property.

The mix of uplands and lowlands provides and excellent habitat for deer, bear, wolves, ruffed grouse and a host of other birds, mammals and other northern forest animals.

The land is just south of the Chippewa Flowage, a world-class fishery for muskellunge and walleye.

A world record musky was caught on the Flowage in 1949 weighing 69 lbs. and 11 oz.

The purchase price is $4,547,100.

Of this amount, $2,500,000 is being provided by the US Department of Agriculture through its Forest Legacy Program.

The balance of the cost $2,047,100, is from the Knowles-Nelson Stewardship program.

The current transaction is for an easement purchase of 10,083 acres from Plum Creek Timberlands.

This is phase 2 of a two part transaction, timed to best use federal dollars.

Phase 1 was closed in December of 2010 – 8,096 acres for $3,659,900.

In total, the transaction covers 18,179 acres.



Timber company supports spruce planting

By C.V. Moore, Beckley West Virginia Register-Herald, October 4, 2011

Before the industrial logging era in West Virginia, researchers estimate that over 5,000 acres of red spruce populated the higher elevations of the state. The lumber boom saw 99 percent of the forest harvested or burned. Red spruce regeneration was less than vigorous, and today we find only about 10 percent of the original forest in place.

Times have changed, and timber companies like Plum Creek say they are looking to become more responsible in their management practices. The industry responsible for wiping out the tree species is now helping out with a red spruce tree planting effort at the headwaters of the Gauley River.

Plum Creek is the largest private landowner in the nation, owning 111,000 acres of forest in West Virginia alone. The company’s philanthropic arm, the Plum Creek Foundation, recently awarded a $5,800 grant to the Appalachian Forest Heritage Area (AFHA) to plant 2,000 red spruce seedlings on Plum Creek property in Pocahontas County.

They hope the trees will someday replace the stream-side shade that hemlock trees will no longer provide as they die off in mass numbers, the result of an invasive insect.

The hemlock woolly adelgid is quickly wiping out eastern hemlock forests, and ecologists are concerned that this will affect, among other things, aquatic species reliant on cool water temperatures made possible by hemlock shade.

A week ago, 16 volunteers from AFHA, AmeriCorps, Davis & Elkins College and Plum Creek came out to plant the seedlings along the waterways of the Gauley River near Slatyfork, which stands at an elevation of about 4,000 feet.

The AFHA works in partnership with the forest industry and forest companies to encourage good forest management and tell the story of West Virginia’s "forest heritage."

Mark Doty, spokesperson for Plum Creek, says the company may one day harvest the red spruce trees currently being planted. The Sustainable Forestry Initiative-certified company’s policy is to avoid sedimentation and warming when harvesting in stream zones.

"This was a unique collaborative community effort that we wanted to support," says Doty.

The effort dovetails with the aims of organizations like The Central Appalachian Spruce Restoration Initiative (CASRI), which wants to restore red spruce ecosystems in central Appalachia.

Evan Burks, a Partnership Specialist at the USDA Forest Service who also helps coordinate CASRI, says patches of red spruce exist in the state’s northern mountains and Plum Creek owns a "critical piece of land" that could potentially serve as a connector for migrating species calling that ecosystem home. The spruce forest harbors endangered species like the Cheat Mountain salamander and the northern flying squirrel; the latter, for example, needs a viable corridor to migrate between isolated patches of red spruce forest.

Burks says he was impressed by Plum Creek’s practices.

"As a large landholder and timber company, they are obviously concerned with making a profit from the timber product, but I was really impressed with their dedication to wildlife and habitat restoration," he says.

More information on the red spruce can be found at www.restoreredspruce.org.


Weyerhaeuser’s log-export operations bring boom times for Port of Olympia

by Rolf Boone, The Olympian, October 1, 2011

Olympia, Washington -- Douglas fir trees, many of which date to the Kennedy administration, stand stately on hilltops near the town of Rainier. Soon they will begin a journey that takes them through Olympia’s streets, onto a ship at the port and, eventually, to a sawmill in Japan thousands of miles away.

That journey is visible daily in Olympia. Drive down Plum Street and you’ll likely see several log trucks hauling some of the 1,200 loads it takes to fill a log ship at the port. It feels like boom times as the Port of Olympia exports roughly 100 million board feet of logs a year, volume that hasn’t been seen there in more than two decades.

Driving that activity has been Federal Way-based Weyerhaeuser’s decision to move its log-export operations here from Tacoma. The relationship with Weyerhaeuser has both boosted the port’s financial fortunes and increasingly connected the port’s marine terminal to ship traffic to and from Japan, as well as China and South Korea.

It wasn’t always like this. Only one log ship visited in all of 2008, and marine terminal revenue had slumped to $1.6 million, according to a recent state auditor’s report. After Weyerhaeuser’s five-year lease with the port took effect in 2007, log-ship traffic jumped tenfold. That lease is up for renewal at the end of 2012.

Weyerhaeuser is the largest log-yard tenant at the port, followed by Pacific Lumber and Shipping, a division of the Port Blakely Cos. of Seattle. Both have helped raise the profile of the port’s marine terminal.

Weyerhaeuser, in business since 1900, owns a million acres of timberlands in Washington and another million in Oregon. The company says it planted about 50 million seedlings worldwide in 2010 and annually harvests about 1.5 percent of its Western timberlands. Area tree farms include its Vail tree operations outside Rainier, as well as operations in Aberdeen and Pe Ell.


Long before a tree becomes a log, it starts as a seedling at a nursery where it grows for two years before being transplanted to a tree farm such as Vail. A section of forest known as a stand is thinned about halfway through its 50-year average life cycle so the best trees can tap into more nutrients and sunlight to grow larger, Weyerhaeuser forester Mark Morris said. Once harvested, logs are loaded onto trucks and sent to port.

The company used to truck logs to the Port of Tacoma and ship them out from there. But in time, transporting logs from Rainier to Tacoma wasn’t viewed as cost-effective, said Brad Kitselman, director of marketing for the company’s Western timberlands. Rainier is about 40 miles from Tacoma’s port and about 18 miles from Olympia’s.

He said the shorter drive promised "significant savings," but he wouldn’t disclose numbers.

Eleven log ships and 11 barges called on Olympia’s port in 2009; 22 log ships and seven barges visited the port in 2010; and 19 log ships have docked thus far in 2011. That includes the Global Wisdom, which loaded about 30,000 logs last week, or about 6 million board feet, then departed for Japan.

Marine terminal revenue grew to $2.6 million in 2010, according to the state auditor’s report, an increase of $1 million in two years.

The highest-quality logs tend to go to Japan, where they will be used for post-and-beam home construction, while logs bound for China and South Korea are used in different applications. In China, logs are milled to make concrete forms, while South Korea uses the logs for packaging, such as for pallets, crates and wire spools.

Of the 18 to 20 log ships that typically visit the Port of Olympia each year, about 25 percent are bound for China and South Korea, Weyerhaeuser Olympia log yard manager Jon Seifert said. The rest go to Japan. on the ship

The Global Wisdom loaded logs over four days last week. Weyerhaeuser employs 25 people at the port, and another 35 to 40 dockworkers typically load logs on each ship.

Ships leave during an incoming high tide, and a shipboard pilot, working with the ship captain, helps guide them to Elliott Bay in Seattle. Once there, the ship changes pilots, and the new pilot guides the ship to Port Angeles. Pilots aren’t allowed to work more than eight consecutive hours, so it takes two to bring a ship to Port Angeles, said Kelly Atkinson, a vessel agent with Talon Marine Services of Seattle.

The ship spends 16 to 17 days at sea and follows the curve of Alaska’s Aleutian Islands before turning south toward Japan, heading for ports in Kashima, near Tokyo, and Hiro, near Hiroshima.

That route is the fastest way to get to Japan, and the islands can be safe havens during a storm, Global Wisdom Capt. Michael Bidon said.

On its way to Olympia, the Global Wisdom cut its engines and drifted behind one of those islands as crew members waited for a storm to pass, he said.

Bidon, 36, has been a ship’s captain for nine months; he has spent 15 years in the shipping business, working his way up from deck hand, he said. He oversees a 21-person crew that includes mostly Filipinos and one Japanese engineer.

Ship crews tend to be Filipino, Chinese, Korean or Burmese, largely because the log ship owners are based in Asia, vessel agent Atkinson said. As vessel agent, Atkinson helps crews with doctor appointments and coordinates provisions. Once ships dock here, crews tend to head straight to the mall to shop.

"The crews feel safe and secure here, and the people are very warm and friendly," Atkinson said. "They really enjoy calling on Olympia."


Chugoku Mokuzai is Japan’s largest mill operator and Weyerhaeuser’s largest offshore customer. Chugoku’s Kashima plant, which opened in 2007 east of Tokyo, processes 200 million board feet a year.

Weyerhaeuser has been working with Chugoku since the early 1980s. Exports of larch, red pine and white spruce from the old Soviet Union had become too unreliable, so the company turned to Weyerhaeuser and its Douglas fir, which is popular for home-building because it’s stronger than other species and holds up well under the milling process. The company also processes domestic tree species unique to Japan, as well as products from Europe.

Kitselman, the Weyerhaeuser marketing official, said the housing market has flattened in Japan in recent years, but the country remains a steady customer. A typical home in Japan measures 1,400 to 1,500 square feet and costs $300,000 to $500,000. One hundred percent of each log is used by Chugoku, including by-products such as bark, which is used to fire kilns that steam-dry lumber, he said. Wood shavings and chips are used for pulp products. Although parts of Japan are recovering from the massive earthquake and tsunami that struck in March, the magnitude of the increase in business for Weyerhaeuser is unclear, Kitselman said.

Japan has to replace infrastructure, such as utilities, and the disaster struck a rural area with lower incomes, so they won’t be rebuilding right away, he said.

"We don’t expect a significant upward shift in business," Kitselman said.


In China, demand continues to grow. Russia used to be the country’s primary log provider, but after it raised log-export tariffs in 2008, China and other east Asian countries began to look elsewhere for logs, including New Zealand, Canada and the United States, Kitselman said.

Weyerhaeuser’s log sales to China made up 24 percent of its overall offshore log sales in the first quarter of 2011; that’s up from 6 percent in the first quarter of 2010. Overall, U.S. log exports to China from the Pacific Northwest increased 270 percent from 2009 to 2010.

Port Commissioner Bill McGregor said that in addition to bringing in cash, the resurgence of log exports has given dockworkers more working hours at the port. A Port of Olympia study has shown that at least 400 jobs are associated with the movement of cargo, including logs, into and out of the port.


Weyerhaeuser’s move to the Port of Olympia wasn’t always smooth.

As soon as the deal was announced in 2005, activists challenged the adequacy of the port’s environmental review for Weyerhaeuser’s operations. Numerous legal challenges followed, delaying the start of log exports until 2008.

"The port could have written 10 environmental impact statements rather than going through all they have," activist Jerry Parker said at the time. "Compliance with the law is far cheaper than resistance."

McGregor, who was not a member of the commission when the Weyerhaeuser lease was announced, said the port has become much more transparent with the public.

"The port staff is far more aware to make good records and respond to requests," he said. "We keep track of that now."

Activists continue to keep a watchful eye.

A group calling itself Olympians for Public Accountability recently sued the port, claiming violations of the federal Clean Water Act. Among its concerns was that the port "allowed wash water from the Weyerhaeuser log-export operation to mix with stormwater in violation of the port stormwater discharge permit issued by the state Department of Ecology."

The port and the group reached a settlement in which the group agreed to drop its two legal cases. In return, the port has agreed to pay OPA attorney and consultant fees of $215,000 and spend $120,000 toward a $180,000 project to restore Mission Creek in lower Budd Inlet.

Meanwhile, log ships continue to call on the Port of Olympia. On Monday, the port expects the arrival of the Luzon Strait, a ship that will load about 5.8 million board feet of Weyerhaeuser logs, then deliver them to Lanshan, China, and Busan, South Korea. It will be the 20th ship to visit the port this year.


WEYERHAEUSER Announces Participation In Jet Biofuel Research

Company news release, September 28, 2011

Weyerhaeuser Company today announced that it is a participant in the portion of the Northwest Advanced Renewables Alliance consortium led by Washington State University to study the feasibility of producing jet biofuel from woody feedstocks in the Pacific Northwest.

The WSU-led project is one of two five-year, $40 million grants announced this morning in Seattle by Thomas Vilsack, U.S. secretary of agriculture. The University of Washington received the other $40 million grant.

The WSU-led grant aims to address the urgent national need for a domestic biofuel alternative for U.S. commercial and military air fleets. NARA researchers envision developing a new, viable, aviation fuel industry using wood and wood waste in the Pacific Northwest, where forests cover almost half of the region. The project also will focus on increasing the profitability of wood-based fuels through development of high value, bio-based co-products to replace petrochemicals used in products such as plastics. [MORE]


Conservation easement protects No. 5 Mountain

Bangor Daily News, September 22, 2011

JACKMAN — The Nature Conservancy and the Forest Society of Maine have finalized a conservation easement to conserve nearly 10,000 acres of land in northwestern Maine that are nationally recognized for their ecological significance and are a destination for hikers, paddlers, hunters and anglers.

The newly conserved lands, according to a press release, are located just southwest of Jackman. The lands include forests along the renowned Moose River Bow Canoe Trip and a popular trail to the summit of No. 5 Mountain. Public access for hiking, cross-country skiing, hunting and fishing is ensured by the terms of the easement, as is road access to Spencer Rips on the Moose River.

The Nature Conservancy purchased this property, now called the Moose River–No. 5 Mountain Preserve, from Plum Creek Timber Co. with the goal of permanent conservation. This goal was achieved in August when the Forest Society of Maine accepted the conservation easement and took responsibility for overseeing the property and ensuring compliance with the easement terms.

The property will be managed as an ecological reserve where forests, including some of the best jack pine woodlands in Maine, will be permitted to function naturally as a benchmark within the broader working forest landscape of Maine’s North Woods.

The easement represents the latest success in a quarter-century effort by landowners, timber and tourism interests, local communities and ecologists to maintain this region’s special character by balancing conservation and economic growth, the release said.

With this latest addition, a network of nearly 50,000 acres of conservation lands in the Jackman area now sustain a flow of forest products to local mills and businesses and protect ecologically sensitive areas such as No. 5 Bog. They also maintain open space for hunting, fishing and a network of trails and campsites that attract large numbers of visitors to the area each year.

"It is so heartening to stand atop No. 5 Mountain, see this grand expanse of woods and waters, and realize that through thoughtful action the lands and traditions that define and sustain this region will endure," said Alan Hutchinson, executive director of the Forest Society of Maine.

"This is an especially meaningful step for our organization because we got our start in the Jackman area." The Forest Society of Maine was created in 1984 when the Coburn family chose to conserve 18,000 acres of their productive forestlands surrounding Attean Pond, Attean Mountain, the Moose River and No. 5 Bog.

The property also provides an important buffer for the neighboring, 5,000-acre Moose River Reserve, a state property protected by a Nature Conservancy easement.

"Patches of old forest provide an important complement to the working forests in this region, and many species of plants and animals — including deer and migratory songbirds — will benefit from a large block of mature forest," said Nancy Sferra, director of science and stewardship for The Nature Conservancy in Maine.

The Nature Conservancy is the leading conservation organization working around the world to protect ecologically important lands and waters for nature and people. To date, the Conservancy and its more than one million members have been responsible for the protection of more than 18 million acres in the United States and have helped preserve more than 117 million acres in Latin America, the Caribbean, Asia and the Pacific. Visit The Nature Conservancy online at www.nature.org/maine

The Forest Society of Maine has helped to conserve more than 930,000 acres of Maine’s forestlands in a manner that sustains the ecological, economic, cultural and recreational values of the Maine woods. As Maine’s land trust for the North Woods, FSM focuses its efforts to promote the conservation of functional, working forest landscapes with multiple social and ecological values. Visit the Forest Society of Maine online at www.fsmaine.org

More info about the Moose River Bow Canoe Trip is available at http://bdn.to/mooseriver.



New wildlife management area proposed

By Eve Byron, Independent Record, September 20, 2011

A public hearing on the Douglas Creek proposal is set for 7 p.m. Oct. 4 at the Drummond Community Center. Comments will be taken there, and can be mailed to Region 2 FWP, 3201 Spurgin Road, Missoula, MT 59804; emailed to shrose@mt.gov or called to 406-542-5540. A copy of the draft EA can be viewed online at http://fwp.mt.gov/news/publicNotices/environmentalAssessments/acquisitionsTradesAndLeases/pn_0099.html.

Public comments are being sought on a proposal by Montana Fish, Wildlife and Parks to purchase 3,594 acres for a new Wildlife Management Area north of Drummond, as well as a conservation easement on 1,957 adjacent acres.

What state officials are hoping will become the Douglas Creek Wildlife Management Area (WMA) is former Plum Creek Timber property that was purchased by The Nature Conservancy in 2004 as part of the 89,000-acre Blackfoot Community Project.

The conservation easements would be on land also purchased by The Nature Conservancy from Plum Creek Timber, but the plan for this acreage differs from that of the WMA. Instead, it would be sold to private — probably adjacent — landowners once the conservation easements are in place to limit their development. This property is about 4 miles north of Drummond and is on or adjacent to Sturgeon and King mountains at the head of Bear and Sturgeon creeks.

FWP hopes to finalize the deal by December.

According to a draft Environmental Assessment (EA) released by FWP, the purpose of the project is to conserve wildlife habitat by preventing development of the parcels, and to help perpetuate the ranching and logging lifestyles in the area, as well as to guarantee access for public hunting.

"It’s a good place to hunt," said Mack Long, regional supervisor for FWP. "Parts of it have been heavily used and parts haven’t."

He said that gaining access to portions of the property was what limited hunting in the past, and he hopes that will change if the acquisition and easement are approved by the FWP Commission and the State Land Board.

"This has a lot to offer regarding habitat and the location," Long said.

The money for the purchase and easement would come through a $2.9 million grant awarded to FWP by the U.S. Forest Service’s Forest Legacy Program. The proposed Douglas Creek WMA property is between Sturgeon Mountain and Murray Creek, about 6 miles north of Drummond at the headwaters of Black Bear and Douglas creeks.

The plan calls for the state to pay The Nature Conservancy about $600,000 — which is 75 percent of the conservation easement’s appraised value — from the Forest Legacy Program grant. The nonprofit conservation group is donating the other 25 percent of the easement’s value.

If the nearby landowners purchase the 1,957-acre parcels, they can’t construct permanent buildings without prior approval from FWP. The land also can’t be subdivided other than one section that can be sold separately and the remaining portion may be split one additional time.

The rest of the grant will be used for the WMA purchase. Under state law, FWP will continue to pay to the county a sum equal to the amount of taxes that would be due if the land was owned by a private party.

Ron Aasheim, the FWP spokesman, said the request for federal funding was made last year, long before this year’s legislative session where the state agency came under fire for purchasing properties but not maintaining that land in some legislators’ opinions.

Aasheim added that no license dollars are being used in the transaction.

"This is part of the Forest Legacy Project, and these grant applications are prioritized locally as well as nationally," Aasheim said. "So it’s got a lot of support."

These properties lie within a mix of state, federal and private lands, as well as parcels purchased by The Nature Conservancy. Additional nearby lands may be protected by conservation easements during a future project phase.

An official with The Nature Conservancy didn’t return telephone calls seeking comments about the proposal.

The draft Environmental Assessment notes that a single 160-acre private inholding sits within the proposed WMA, accessed by a public road. No additional roads will be opened to provide the landowner access to the property, which currently is undeveloped. The draft EA notes that Powell County zoning provisions prohibit significant subdivision of that parcel.

According to the EA, the area proposed for the WMA is heavily forested, and provides summer and fall range for elk, mule deer, white-tailed deer and moose. Some of those species also use significant portions of the property during the winter if snowpack isn’t too limiting. In addition, it’s home to black bears, wolves and mountain lions, and grizzly sightings are becoming more common.

It’s expected that the Douglas Creek WMA would be open to the public for year-round use for motorized travel on the roads, snowmobiling, hunting, camping, hiking, horseback riding, mountain biking and general recreation.

The conservation easement requires the landowner allow the general public to hunt on the land during open seasons, but the landowner can control the means of access and may close it off to people not conducting themselves in prudent, safe manners.

State officials plan to coordinate with Powell County to develop an integrated noxious weed management plan for the spring and summer of 2012 to treat spotted knapweed and hound’s tongue infestations along roadsides.


Weyerhaeuser performs as a REIT

Pure play in timber and housing designed to make Weyerhaeuser more attractive to investors came at a bad time for residential construction.

By Melissa Allison, Seattle Times, August 13, 2011

After years of facing a stagnant stock price, Weyerhaeuser finally gave Wall Street what it wanted: a smaller company focused on timberlands rather than paper and packaging mills.

In just five years, assets and revenues have been cut in half and employment reduced 70 percent, from 46,700 to 14,250 people.

The timber giant also gave investors $5.6 billion of its past earnings, a special dividend that was required by its conversion last year to a real estate investment trust.

Yet Weyerhaeuser shares continue to trade within a few dollars of its 52-week low, and the people who lead its shrinking headquarters staff in Federal Way — 1,138 workers in two buildings who used to be nearly 3,000 people in 11 buildings — are bombarded by analysts' demands for more.

"We worry about pressure to enhance shareholder value with another bold move," the corporate bond research firm Gimme Credit wrote in March.

Apparently the decision to boost Weyerhaeuser's dividend payout from $40 million to $320 million a year — part of a requirement that REITs disburse income to investors — was not enough for some. "We do get a lot of inquiries about when we're going to increase it, absolutely," said Chief Financial Officer Patty Bedient. "But I suspect that if you talk to any CFO of a company that is a dividend player, there's always pressure for more dividends."

Still, Weyerhaeuser is pleased with its decision to sell half its assets, most notably its paper and packaging mills.

What's left are businesses tied to the housing market — 20.6 million acres of timberland, home-building and housing-product subsidiaries — plus a cellulose fibers business that sells packaging for milk cartons as far away as Japan and absorbent pulp for diapers as far away as China.

In some ways, Weyerhaeuser bet on the housing crisis at the worst possible time.

"People can second-guess it because of the state of U.S. housing, but housing's coming back," said CEO Dan Fulton.

Experts say it will not be soon.

Housing starts are at a third of their average level, said Stuart Gabriel, director of UCLA's Ziman Center for Real Estate at the Anderson School of Management.

"The market will ultimately recover, because homes are not only an investment but also a consumption good," Gabriel said.

But it could take several quarters to see even modest improvements, he said, assuming no further shocks to the economy.

Getting Weyerhaeuser's cash

The only timberland company bigger than Weyerhaeuser is Plum Creek of Seattle, the first timber company to become a real estate investment trust, back in 1999.

Investors were so enamored of Plum Creek's model — namely, their ability to get their hands on its cash — that for years they pushed Weyerhaeuser executives to become a REIT, too. REITs receive tax breaks, because they pass so much of their earnings along to investors.

Weyerhaeuser executives lamented what would happen if they tore apart their conglomerate and became a REIT, more narrowly focused on timberlands.

"We believe the integrated approach makes us better able to compete," a spokesman said five years ago.

Indeed, the paper and packaging businesses Weyerhaeuser sold would add balance now to its housing-heavy portfolio.

But fine paper, a business it sold in 2006 for $3.3 billion, faces narrowing margins because of a potentially lethal combination of flagging demand and competition from overseas.

Shares of International Paper, the company that paid $6 billion for Weyerhaeuser's packaging, containerboard and recycling facilities in 2008, have fallen 8 percent since January 2010.

Weyerhaeuser shares, by contrast, have stayed about even. Although the REIT conversion process is long and complicated, executives say the conversion took effect in January 2010.

Plum Creek model

Plum Creek is also steady and Potlatch has risen 7 percent since then. The fourth and only other timber REIT, Florida-based Rayonier, has climbed a whopping 45 percent. Aside from loving bigger dividends, investors like having a "pure play" in timber and housing.

"Now rather than have management decide what's in your [investment] portfolio, you get to decide by having less diversified companies," said Dan Rohr, an analyst at the research firm Morningstar.

They also like timberland being front and center.

"The land used to be a nice bonus, but nobody gave it full value before," said Joshua Barber, an analyst at the investment firm Stifel Nicolaus.

Investors used to assume that Weyerhaeuser's mills were its priority, he said.

"There was an incentive to keep the mills full, even if they're damaging timberland," Barber said. "They might cut trees too early and not optimize harvests."

Now, there's little doubt that timberlands are key. They represented 14 percent of Weyerhaeuser's revenue in 2010, up from 8 percent in 2007.

Wall Street also likes the reduced debt and nearly $1 billion cash cushion Weyerhaeuser has from its divestitures.

Some analysts would like it to boost its dividend even higher, a daunting prospect for a company that faced cash-flow problems during the recession and might be looking at a second housing dip.

Their pushiness is not what experts predicted before the REIT conversion.

Back then, when housing values seemed limitless, concerns centered on how much timberland Weyerhaeuser would sell to developers for a quick buck.

Some people — including Weyerhaeuser executives — worried that its biggest shareholders would simply cash out after the conversion to a REIT.

So far Franklin Mutual Advisers, which pushed Potlatch to become a REIT several years ago and was expected to sell drop Weyerhaeuser fast, is hanging in there. It sold about a third of its shares earlier this year, but still owns 3.3 percent of the company.

New investors have come aboard, including Paulson & Co., a hedge-fund manager in New York that bought 5.9 percent of Weyerhaeuser earlier this year.



Forestar Completes $75 Million Land Sale To Plum Creek

Campbell Group Timber Trends, August 2011

Forestar Group Inc. has completed its previously announced sale of approximately 50,000 acres of timberland in Georgia and Alabama for $75 million to Plum Creek Timber Company, Inc.

Forestar reserved mineral rights and retained an option to acquire the mitigation rights to approximately 1,000 acres for use in mitigation banks.



$8.2 million land deal on resources board table

State considers public access easement purchase of 18,000 acres of northern forests

By Lee Bergquist, Milwaukee Journal Sentinel, August 9, 2011

A major land transaction that guarantees public access to more than 18,000 acres of northern forests near the Chippewa Flowage will be considered Wednesday by the Natural Resources Board.

The State of Wisconsin and the federal government will share in the cost of the $8.2 million deal.

The state would purchase an easement on land owned by Plum Creek Timber, a Seattle-based company. The easement guarantees public access for hunting, bird watching, snowmobiling and other uses in perpetuity.

Had the Department of Natural Resources bought the land outright, a private appraisal valued the land at $21.9 million, documents show.

The easement means that Plum Creek will continue to own the land and harvest timber from it, but can’t subdivide the land or sell it for other purposes.

The DNR has been relying more on transactions involving easements in recent years. The deals cost less and keep forests from being developed.

Forest fragmentation - breaking up large tracts into smaller plots - is viewed as a major threat to logging and recreational use of forestland. Wisconsin ranks No. 2 in jobs in the forest product industry.

Last fall, the DNR purchased an easement of more than 8,000 acres for $3.7 million. The second phase, which comes before the board Wednesday at a meeting in Spring Green, is an easement of 10,083 acres at a cost of $4.5 million.

In both deals, the state is paying $4.2 million through the Knowles-Nelson Stewardship Program, which uses state bonding authority to protect land. The U.S. Forest Service is providing $4 million.

The land covered by the easement is located south of the Chippewa Flowage and will connect land in the Chequamegon-Nicolet National Forest and tribal lands held by the Lac Courte Oreilles band of Lake Superior Chippewa. It also will link to state-owned land on the flowage.



Public lands of Lochsa embroiled in struggle

Guest column by Marilyn Beckett

The Missoulian, September 1, 2011

This July, a shift in negotiations was reported between the Clearwater National Forest and the Idaho Board of County Commissioners over the Lochsa Land Exchange.

The Idaho board originally avowed "Not One Acre" of public land should be exchanged for the clear-cut private parcels in the Lochsa currently owned by Western Pacific Timber/Tim Blixseth. The board’s alternative is trading public land solely from Idaho County in an "acre for acre" exchange. High priority for the commissioners is preserving the county’s property tax base. They apparently believe, like those who have closely followed the exchange, some form of land trade is predestined.

The U.S. Forest Service cannot legally implement an "acre for acre" exchange. This can only be done by Congress, and proposing such a bill or earmark would be contentious for Idaho’s ranking congressional delegates. For Sen. Mike Crapo, R-Idaho, it would cause problems for key members of his Clearwater Basin Collaborative. For Sen. Jim Risch, R-Idaho, and Rep. Mike Simpson, R-Idaho, it would also be unpopular, a trade reducing federal assets in a time of budgetary crisis. The likelihood of any attaching their names to a bill supporting this alternative is slim under public scrutiny.

Another possibility being discussed is a "value for value" exchange with public lands traded solely from Idaho County. The Forest Service could do so administratively under the National Environmental Policy Act process. However, problems associated with the original exchange parcels from the Palouse Ranger District and elsewhere still exist - public access, elk and other wildlife habitat, watersheds (some municipal), grazing rights, and the concern over disposal of lands, both public and those connected to ancestral tribal rights. The appraisal process, despite legal guidelines, struggles to provide a proper valuation, as cited by the General Accountability Office and other studies (land exchange protocol - no formal appraisal of the Lochsa will made public until after the Record of Decision, six months before deeds are transferred).

Complicating the issue is Tim Blixseth, who is consistently embroiled in lawsuits. His relationship to the real estate investment trusts and timber investment management organizations, and a significant impact on Idaho, can be surmised.

With due respect to Idaho board’s concerns, neither the commissioners nor the Forest Service have the right to give up public land owned by all Americans. Although the board’s idea supposedly diverts disposal of 8,000-11,000 acres in the Palouse Ranger District, they still sit on the chopping block. Instead of nearly 18,000 total acres of public land originally proposed for disposal in the trade, approximately 42,000 acres have been added to the pool via the Idaho Board of County Commissioner’s proposal. Is 60,000 acres of public land worthy of consideration for disposal?

Public records requests show the majority of comments on the draft environmental impact statement released last November oppose land being exchanged. Many favored purchase. The Forest Service applied for purchase funding through the Land and Water Conservation Fund for fiscal year 2011: $10 million/10,200 acres; and again for fiscal year 2012: $38 million/38,000 acres. No monies were appropriated in the 2011 LWCF budget.

The Lochsa Land Exchange proposal was formally initiated in September 2008.

The Idaho Forest Owners Association, a statewide volunteer forest landowners alliance dedicated to the management, use, and protection of private forest resources in Idaho, overwhelmingly opposes any exchange, whether inside or outside Idaho County. They see the liquidation of federal timber driving down timber prices on their carefully managed timber lands. Over half their membership supports a complete purchase. Their survey is representative of documented public opinion.

USFS Chief Tom Tidwell privately reaffirms the deal must happen. Whether consolidating the Lochsa drainage or drawing back the borders of the public lands base, the goal is not transparent. But if public ownership of the Lochsa is important by its own right, then a public purchase with guaranteed funds for Idaho County is the most logical alternative. Otherwise, no deal.

Marilyn Beckett of Moscow, Idaho, represents Friends of the Palouse Ranger District.


Weyerhaeuser performs as a REIT

By Melissa Allison, Seattle Times, August 13, 2011

After years of facing a stagnant stock price, Weyerhaeuser finally gave Wall Street what it wanted: a smaller company focused on timberlands rather than paper and packaging mills.

In just five years, assets and revenues have been cut in half and employment reduced 70 percent, from 46,700 to 14,250 people.

The timber giant also gave investors $5.6 billion of its past earnings, a special dividend that was required by its conversion last year to a real estate investment trust.

Yet Weyerhaeuser shares continue to trade within a few dollars of its 52-week low, and the people who lead its shrinking headquarters staff in Federal Way — 1,138 workers in two buildings who used to be nearly 3,000 people in 11 buildings — are bombarded by analysts’ demands for more.

"We worry about pressure to enhance shareholder value with another bold move," the corporate bond research firm Gimme Credit wrote in March.

Apparently the decision to boost Weyerhaeuser’s dividend payout from $40 million to $320 million a year — part of a requirement that REITs disburse income to investors — was not enough for some. "We do get a lot of inquiries about when we’re going to increase it, absolutely," said Chief Financial Officer Patty Bedient. "But I suspect that if you talk to any CFO of a company that is a dividend player, there’s always pressure for more dividends."

Still, Weyerhaeuser is pleased with its decision to sell half its assets, most notably its paper and packaging mills.

What’s left are businesses tied to the housing market — 6.2 billion acres of timberland, home-building and housing-product subsidiaries — plus a cellulose fibers business that sells packaging for milk cartons as far away as Japan and absorbent pulp for diapers as far away as China.

In some ways, Weyerhaeuser bet on the housing crisis at the worst possible time.

"People can second-guess it because of the state of U.S. housing, but housing’s coming back," said CEO Dan Fulton.

Experts say it will not be soon.

Housing starts are at a third of their average level, said Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate at the Anderson School of Management.

"The market will ultimately recover, because homes are not only an investment but also a consumption good," Gabriel said.

But it could take several quarters to see even modest improvements, he said, assuming no further shocks to the economy.

Getting Weyerhaeuser’s cash

The only timberland company bigger than Weyerhaeuser is Plum Creek of Seattle, the first timber company to become a real estate investment trust, back in 1999.

Investors were so enamored of Plum Creek’s model — namely, their ability to get their hands on its cash — that for years they pushed Weyerhaeuser executives to become a REIT, too. REITs receive tax breaks, because they pass so much of their earnings along to investors.

Weyerhaeuser executives lamented what would happen if they tore apart their conglomerate and became a REIT, more narrowly focused on timberlands.

"We believe the integrated approach makes us better able to compete," a spokesman said five years ago.

Indeed, the paper and packaging businesses Weyerhaeuser sold would add balance now to its housing-heavy portfolio.

But fine paper, a business it sold in 2006 for $3.3 billion, faces narrowing margins because of a potentially lethal combination of flagging demand and competition from overseas.

Shares of International Paper, the company that paid $6 billion for Weyerhaeuser’s packaging, containerboard and recycling facilities in 2008, have fallen 8 percent since January 2010.

Weyerhaeuser shares, by contrast, have stayed about even. Although the REIT conversion process is long and complicated, executives say the conversion took effect in January 2010.

Plum Creek model

Plum Creek is also steady and Potlatch has risen 7 percent since then. The fourth and only other timber REIT, Florida-based Rayonier, has climbed a whopping 45 percent. Aside from loving bigger dividends, investors like having a "pure play" in timber and housing.

"Now rather than have management decide what’s in your [investment] portfolio, you get to decide by having less diversified companies," said Dan Rohr, an analyst at the research firm Morningstar.

They also like timberland being front and center.

"The land used to be a nice bonus, but nobody gave it full value before," said Joshua Barber, an analyst at the investment firm Stifel Nicolaus.

Investors used to assume that Weyerhaeuser’s mills were its priority, he said.

"There was an incentive to keep the mills full, even if they’re damaging timberland," Barber said. "They might cut trees too early and not optimize harvests."

Now, there’s little doubt that timberlands are key. They represented 14 percent of Weyerhaeuser’s revenue in 2010, up from 8 percent in 2007.

Wall Street also likes the reduced debt and nearly $1 billion cash cushion Weyerhaeuser has from its divestitures.

Some analysts would like it to boost its dividend even higher, a daunting prospect for a company that faced cash-flow problems during the recession and might be looking at a second housing dip.

Their pushiness is not what experts predicted before the REIT conversion.

Back then, when housing values seemed limitless, concerns centered on how much timberland Weyerhaeuser would sell to developers for a quick buck.

Some people — including Weyerhaeuser executives — worried that its biggest shareholders would simply cash out after the conversion to a REIT.

So far Franklin Mutual Advisers, which pushed Potlatch to become a REIT several years ago and was expected to sell drop Weyerhaeuser fast, is hanging in there. It sold about a third of its shares earlier this year, but still owns 3.3 percent of the company.

New investors have come aboard, including Paulson & Co., a hedge-fund manager in New York that bought 5.9 percent of Weyerhaeuser earlier this year.

What’s gone

After decades of growth, Weyerhaeuser began selling big pieces of the company about five years ago, eventually cutting its assets and revenues in half and its work force by 70 percent. Here are some of the businesses it sold or closed:

Plans spinoff of fine-paper division in $3.3 billion stock deal to combine with Domtar. Closes five box plants, three plywood facilities and a dozen other manufacturing plants.

Sells all 16 building-materials distribution centers in Canada, another 10 in U.S. to unidentified buyer.

Sells 114 containerboard, packaging and recycling operations to International Paper for $6 billion. Closes several Canadian mills and sells timber harvesting rights to West Fraser Timber.

Sells Northwest Hardwoods, which had 1,000 employees, to a private equity firm in New York for an estimated $100 million and $150 million. Also sells Westwood Shipping Lines, which has a fleet of seven ships, to a subsidiary of Sumitomo Warehouse in Japan for $53 million.

What’s left

In the past five years, Weyerhaeuser has sold most of its mills and operating businesses, leaving it with just four lines of business, three of them tied directly to the housing market:

6.2 million acres in the United States, 1.1 million acres in Washington and 1 million in Louisiana and 0.9 million acres in Oregon. The only company that owns more is Seattle-based Plum Creek. Also leases 14 million acres in Canada and owns 387,000 acres in Uruguay and China.

Quadrant in the Puget Sound area, Maracay in Arizona, Pardee in California and Nevada, Trendmaker in Texas and Winchester in the Washington, D.C., area.

Wood products:
44 mills that produce lumber, panels and other building products such as manufactured joists.

Cellulose fibers:
Four mills that make absorbent pulp for diapers and other products; one mill that makes packaging for products like milk cartons; and one mill in Canada that makes pulp for tissue products.

A newsprint mill in Longview that is a joint venture with Nippon Paper.



Landscape of timberland ownership is changing

By Russell Hubbard, The Birmingham News, July 10, 2011

Alabama was part of a big timberland deal late last week, a $75 million transaction that transferred about 50,000 acres, both here and in Georgia.

Texas-based Forestar Group was the seller and Seattle’s Plum Creek Timber Co. was the buyer. Plum Creek, an old-line timber and wood products company, already owned about 100,000 acres in the state.

It wasn’t a huge deal by timber country standards, but has come at an interesting time for Alabama’s timberland economy. Wood and paper products manufacturing are massive engines for the state, employing about 20,000 workers. Forest products are the state’s largest manufacturing industry, with annual output of $15.4 billion of goods at last count, according to the Alabama Forestry Commission.

That’s big business, but an Auburn University professor said companies such as Plum Creek are a fading breed. The company owns land all over the nation, using a lot of it to grow trees, which it turns into lumber and other goods.

Alabama’s forests used to be owned mostly by such companies -- Weyerhauser, Georgia-Pacific and others.

But the ownership profile is changing, according to Auburn forest economics professor Daowei Zhang. He says industrial timberland owners such as Plum Creek in recent years have sold more than 30 million acres of commercial timberland across the country, and more than 3 million acres in Alabama. The buyers, he says, are mostly institutional investors.

That means pension funds and other Wall Street money managers. They get attractive tax rates for passively investing in the land and its output, rates unavailable to operating companies who do everything from planting the seedlings to making paper towels. Problem is, all of the latter takes a lot of capital and labor.

Integrated companies increasingly looked at the profit margins from finished goods such branded paper towels and decided to concentrate on making and selling consumer products. That has left the outdoor work to specialized timber management companies hired by the institutional investors who have snapped up the acreage.

Now, Zhang wants to know how their forest management practices stack up, and what the economic impact will be on rural Alabama. He has a $263,000 grant from the Agriculture Department and wants to map out who owns every acre of timberland in the state. He expects to publish results sometime in 2014.

"We hope the results will help the forestry-products industry and governments deal with the changing market dynamics and avoid possible negative economic impacts," Zhang said.



FWP looks to buy mineral rights under Fish Creek land

By Rob Chaney, The Missoulian, July 29, 2011

Montana Fish, Wildlife and Parks officials want to buy the mineral rights under 31,500 acres of its recently acquired Fish Creek property southwest of Alberton.

Last year, the agency bought 40,807 acres of former Plum Creek Timber Co. land in the drainage from The Nature Conservancy as part of the Montana Legacy Project. But the deal didn’t include the mineral rights, which were owned by CR Montana Corp.

There is only one active placer gold operation in the drainage, but the potential for open-pit gravel mining is also high. FWP already owns 5,000 acres of mineral rights in the area, and the U.S. Forest Service owns an additional 5,307 acres.

FWP floated the mineral rights purchase idea in June, offering $5 an acre - or $147,438 - for CR Montana’s interest.

Fish Creek is being managed as a 34,572-acre wildlife management area and a 6,234-acre state park. It includes part of the scenic Alberton Gorge whitewater section of the Clark Fork River, as well as miles of popular fishing water in Fish Creek and its tributaries. The southern end has extensive elk winter range.

The proposal got 15 comments, including 10 from individuals and five from organizations or agencies. Of those, 13 were in favor and two questioned FWP’s need to control mineral rights as part of its habitat and recreation management.

The proposal must now pass the FWP board of commissioners at their Aug. 18 meeting. It must also be approved by the state Land Board.


Weyerhaeuser sells Westwood shipping line

By Melissa Allison, Seattle Times, July 26, 2011

Weyerhaeuser finally found a buyer for Westwood Shipping Lines.

J-WesCo, a subsidiary of Sumitomo Warehouse in Japan, will buy the Federal Way-based unit in a $53 million deal that’s expected to close next month.

Weyerhaeuser has tried since at least 2008 to sell Westwood, which has a fleet of seven ships operating between North America and Japan, Korea and China. The deal with J-WesCo was inked in early June.

Westwood often ships newsprint, lumber, pulp and agricultural products to Asia, and brings automotive parts, motorcycles, parts for Boeing airplanes, outboard engines, tires and heavy cargo like generators back to North America.

According to Reuters, it had revenue of $246 million last year.

Westwood will move its 70-some workers in September from Weyerhaeuser’s headquarters to a 92-Acre South Hill Business and Technology Center in Puyallup, its new landlord Benaroya Co. said in a release.

The sale is part of Weyerhaeuser’s continued divestiture of businesses that are no longer central to its core timberland business. In recent years, it has sold its paper and packaging businesses, and in June it sold its hardwoods business.

Weyerhaeuser continues to own businesses that build homes, make softwood products and sell cellulose fiber for things like diapers.



House committee approves coal swap

By Matthew Brown, Associated press, July 21, 2011

BILLINGS, Mont. -- A proposed coal swap involving Montana’s Northern Cheyenne Indian Reservation was approved by a congressional committee Wednesday despite lingering questions over the value of deal.

The House Committee on Natural Resources unanimously passed the measure sponsored by Montana Republican Rep. Denny Rehberg. The bill now goes before the full House.

The swap calls for Texas-based Great Northern Properties to receive 232 million tons of government-owned coal split between two locations in Montana. The company would give up 130 million tons of coal beneath the Northern Cheyenne Reservation.

Not all of the federal coal could be mined. The tribe also would receive 40 percent of royalties on future sales of the coal acquired by Great Northern, with the company getting the remaining 60 percent.

Interior Department officials have said they want an appraisal of the coal reserves to make sure the deal is fair. Rep. Edward Markey of Massachusetts, the ranking Democrat on the House committee, highlighted the administration’s stance prior to Wednesday’s action on the bill.

"We support the aim of the legislation," he said. "We do continue to have some concern to appraise mineral rights involved in the trade to ensure all parties, including the tribe, receive fair value."

A similar bill is pending in the Senate.

Rehberg said the bill’s advance was the first step in righting a century-old mistake that prevented the Northern Cheyenne from gaining control over the mineral rights beneath their lands.

Great Northern acquired rights to the coal beneath the reservation from Burlington Northern Railroad in 1992. Tribal leaders say those rights should have been turned over to the Northern Cheyenne in 1900, when the reservation was expanded to include the land above the underground reserves but not the coal itself.

The deal is backed by leaders of the impoverished tribe, Montana’s congressional delegation and Signal Peak Energy, a 2-year-old underground mine in the Bull Mountains near Roundup owned by Ohio-based Boich Group and power company FirstEnergy Corp.

Great Northern would receive coal reserves sitting in the path of the Roundup mine and additional reserves near Ashland.

"This has taken too long to accomplish for the Cheyenne tribe. It solves that issue, and it also helps the mine to continue to move up in the Bull Mountains," Rehber said.

Rehberg added that he spoke with Rep. Markey after Wednesday’s committee meeting to allay his concerns about the value of the coal being exchanged. Great Northern has said only about 145 million tons of the coal his company would receive is recoverable through mining.

"There is a lack of understanding about the difference between recoverable coal and speculative coal," Rehberg said. "It’s important to make sure we are talking apples and apples."

Signal Peak wants to begin mining the Roundup reserves within the next two to three years. Separate from the Northern Cheyenne deal, the company has been attempting to lease those reserves through the Bureau of Land Management.

Conservation groups challenged that lease sale. But if the exchange goes through, the challenge would become meaningless.


Forestar Group to sell 50,000 acres to Plum Creek

Associated Press, July 7, 2011

Forestar Group Inc. will sell 50,000 acres of timberland for $75 million to Plum Creek Timber Co.

Forestar said Thursday it will retain the mineral rights to the land, which is located in Georgia and Alabama. The company said it hopes to close the deal by the end of the third quarter.

The sale is part of Forestar’s broader strategy to sell off assets and pay down debt. The company has signed agreements to sell roughtly166,000 acres of timberland in Georgia, Alabama and Texas for $270 million. It has paid down debt by over $120 million and repurchased more than 1 million shares of stock.


Weyerhaeuser Solutions Inc. Offers Services to Develop, Manage and Commercialize Forest Assets

BusinessWire, June 22, 2011

Weyerhaeuser Company today announced the launch of Weyerhaeuser Solutions Inc., a new subsidiary offering a full range of consulting and management services designed to help clients develop, manage and commercialize forest assets.

Weyerhaeuser Solutions Inc. is a business composed of consulting experts with Weyerhaeuser operating experience and expertise. The business can work with companies in industries such as energy, mining, forestry and manufacturing which are interested in reducing their carbon footprint, sourcing bio-energy feedstocks, and managing landscapes for water supply and quality.

Ray Risco serves as president of the new subsidiary, reporting directly to Tom Gideon, executive vice president -- Timberlands. Risco has more than two decades of experience operating international businesses in executive, general management, and financial roles. He has been a key player in Weyerhaeuser’s international strategic development, mergers and acquisitions, partnership management and operational leadership.

"With the ability to serve customers around the world, we can design, manage and commercialize forest-based solutions to mitigate risk, diversify investment and expand economic opportunity," Risco said. "We do this by taking a holistic approach to helping clients expand their portfolios to include renewable forest-based assets, and providing customized, innovative solutions, on a global scale, that enhance supply security and provide economic alternatives. Our experts can help customers to make informed choices, which we then help implement."

Services Weyerhaeuser Solutions provides include:

-- Natural Resource Management: Site evaluation, land appraisal, financial analysis, active forest management, watershed and water-use strategies, and supply chain services for sustainable forest products.

-- Climate Change Strategy: Innovative carbon sequestration solutions.

-- Renewable Resources for Energy: Ecosystem services to remediate current operations and assistance in transitioning to renewable energy supplies.

More information on Weyerhaeuser Solutions is available at www.wy.com/solutions .

Weyerhaeuser Solutions is a subsidiary of Weyerhaeuser NR Company, the taxable Real Estate Investment Trust subsidiary of Weyerhaeuser Company.


Weyerhaeuser to sell Tacoma-based Northwest Hardwoods unit

Seattle Times, June 22, 2011

Weyerhaeuser has agreed to sell its 1,000-employee Northwest Hardwoods unit to a private equity firm that says it will keep the operation’s headquarters in Tacoma.

Northwest Hardwoods has seven sawmills, four remanufacturing plants and several other facilities, the companies said in a statement that called it "the leading manufacturer of high quality hardwood lumber in North America."

Terms were not disclosed, but analyst Mark Wilde of Deutsche Bank estimated in a note to clients that Federal Way-based Weyerhaeuser likely is getting between $100 million and $150 million.

"Weyerhaeuser shareholders aren’t likely to be thrilled about timing or price on the sale, but the portfolio streamlining is apt to be appreciated," he wrote.

While Northwest Hardwoods "is one of the largest players in the hardwood market and had been viewed in the trade as a relatively well-run business," it is not central to Weyerhaeuser’s strategy of focusing on its softwood forest business, Wilde wrote.

Northwest Hardwoods’s sales have fallen with the downturn in housing and real estate markets, shrinking from $398 million in 2006 to $222 million last year, according to Wilde.

The buyer, American Industrial Partners, said that "as these depressed markets improve in the years ahead, the company is well positioned to meet the demand with its excellent hardwood timber supply relationships and extensive, modern and low cost manufacturing footprint."

Northwest Hardwoods produces 15 species of hardwood lumber, specializing in alder, oak, maple, cherry, walnut, ash, and hickory, according to Weyerhaeuser. In addition to the U.S., it has operations in Canada, China, Japan and Hong Kong.

The transaction is expected to close in August.



Island bands make bid to stop land sale

TimberWest says action not likely to impede sale

Victoria Times Colonist, May 18, 2011

Six Vancouver Island first nations have applied for an injunction to prevent the pending sale of TimberWest Forest Corp. to two pension funds.

The Hul’qumi’num Treaty Group, which represents six first nations of Southeastern Vancouver Island, filed the injunction application last week with the Inter-American Treaty Commission on Human Rights as part of a larger complaint against Canada. The commission is an independent agency of the Organization of American States, of which Canada is a member.

The treaty group’s complaint is over 830,000 hectares of land on the Island’s east coast that was handed over to the E&N Railway in 1884 as payment for constructing a line from Victoria to Comox.

The Hul’qumi’num say 268,000 hectares of that land, mostly owned by TimberWest, lies within their traditional territory and was taken from them unilaterally. The Hul’qumi’num first nations were all allocated small reserves, along the coast or rivers of the Island and there is little Crown land left within their traditional territory. They are opposing the sale of the land to provincial and federal employee pension funds and are seeking an end to logging pending settlement of their claim to the lands. Treaty talks with the federal and provincial governments are currently stalled. Timber-West unitholders are to vote on the sale June 14.

"We are asking the Inter-American Commission to make a ruling that Canada has an obligation to consult with the Hul’qumi’num people even on private lands and that the private corporate interests cease and desist from the intensified logging that they are doing, the sale of our lands and the development of our lands," treaty group chief negotiator Robert Morales said. The six first nations making up the group are the Cowichan, Lake Cowichan, Halalt, Penelakut, Chemainus and Lyackson first nations.

"Both Canada and British Columbia say those lands are private; they are not on the table for negotiation, so 85 per cent of our lands are virtually off the table. We say that is not acceptable, it is a breach of our human rights so we have launched a complaint against Canada."

The human rights commission has already ruled that the Hul’qumin’um case is admissible. Morales said the first nations are not seeking a ruling that could dispossess citizen title to lands that have been settled. It’s the timberlands, that cover 85 per cent of the lands claimed by the Hul’qumi’num, that are the issue.

TimberWest chief financial officer Robert Allen said the company does not believe the treaty group’s action will impede the sale. He said the company issued a news release on the issue to calm investors made jittery by the analyst report, issued by Dundee Securities. Allen said TimberWest is not a party to the claims but has fully disclosed the issue to two Canadian pension funds and other potential buyers.



Nature Conservancy sides with Plum Creek in Maine

Associated Press, April 27, 2011

BRUNSWICK, Maine—The Nature Conservancy says it’s joining Maine’s attorney general and Plum Creek Timber Co. in appealing a court ruling ordering regulators to give further consideration to Plum Creek’s Timber Co.’s development plan in the Moosehead Lake region.

The Nature Conservancy’s associate director in Maine says joining the appeal gives it more flexibility to participate in the legal process. Tom Rumpf says Plum Creek’s plan has environmental, economic and recreational benefits.

A superior court judge this month put a stop to Plum Creek’s plans for a sprawling resort and residential development in the Moosehead Lake region, citing missteps by the Land Use Regulation Commission when it gave its approval to the plan.



Groups want to acquire 71,000 acres in Upper Kittitas County

By Mike Johnston, Ellensburg Daily Record, March 10, 2011

Kittitas County government supports developing a long-range plan to boost water storage and habitat restoration in the Yakima River Basin yet has concerns about burdening county taxpayers and the possibility of decreasing public access to land for recreation.

County Commissioner Paul Jewell on Wednesday in Yakima told Yakima River basin water interests he wants to further discuss a proposal put forth by environmental groups. The plan calls for governmental entities to acquire tens of thousands of acres of privately owned, rural lands in Kittitas County to offset the impact of future basin projects.

The nine environmental groups are proposing the acquisition of more than 71,000 acres, mostly in Kittitas County, in exchange for their full support of a proposed water resources management plan developed in the past 18 months by a wide-ranging group of major water interests in the basin, including state and federal agencies and tribes.

The plan, eventually, will go to Congress and state government for funding.

The purchased land would be preserved in a natural state and also be the site of restoration projects to improve fish habitat and floodplains and boost water quality.

The land

The groups proposing the purchase, according to Jewell, are American Rivers, the National Wildlife Federation, The Nature Conservancy, Cascade Land Conservancy, Conservation Northwest, Trout Unlimited, The Trust for Public Land, the Washington Environmental Council and the Wilderness Society.

The environmental groups’ proposal includes the purchase of nearly 46,500 acres of Upper Teanaway River basin land owned by the American Forest Land Co.

Other lands proposed for purchase are about 15,000 acres in the Yakima River Canyon south of Ellensburg, with the majority of that owned by the Eaton family; about 10,000 acres of Plum Creek Timber Co. land in the headwater areas of Manastash and Taneum creeks in Kittitas County, and the Little Naches River in Yakima County.

Jewell said the proposal was distributed last week to representatives of a working group of the Yakima River Basin Water Enhancement Program, which reached consensus on the basinwide plan in December.

He met with major representatives of the proposal before the meeting in Yakima to get an understanding about the proposal and research its impacts.

A closer look

"We have clear concerns about how Kittitas County is providing the majority of the mitigation for the basin water plan," Jewell said after the Yakima meeting on Wednesday. "But we are willing to take a close look at it, discuss it with all parties, and explore its impact and its benefits."

Jewell stressed the county is committed to being part of crafting a long-term solution to basin water needs "that we all can be comfortable with."

"The stakes are very high for all of us to work together successfully to assure adequate water supplies for future generations throughout Central Washington," Jewell said.

The impacts include taking thousands of privately-owned acres off the taxpaying books when they become non-taxpaying public lands.

"We already have a county that is well over 55 percent public lands," Jewell said, and the proposal would increase that percentage.

The proposal "takes funds out of the local government stream and puts an increased tax burden on those owning the remaining private lands."

Jewell said other concerns include:

- Proposals by the environmental groups, which include expanding the lands in the county that have a wilderness designation, could have the effect of limiting public access and activities, a major tourism factor in the county.

- Questioning the ability of federal and state agencies to adequately manage and safeguard the added public lands at a time when government budgets are being cut.

Jewell said there are concerns about forest management and the spread of pests and diseases in forests that make them more prone to highly damaging wildfires.



Buffett makes $2.25B on railroad play

By Kim Peterson, MSN Money, March 9, 2011

Warren Buffett borrowed $8 billion so he could buy Burlington Northern Santa Fe railroad last year, but he’s not too worried.

Buffett’s Berkshire Hathaway (BRK.A) took $2.25 billion in dividends from the railroad in less than 13 months, Bloomberg reports. If that seems like a lot, that’s because it is: The payout is triple what the railroad previously paid before it was acquired.

That Oracle of Omaha is a cagey one. Berkshire had $38.2 billion in cash at the end of December, and the dividends from Burlington Northern will add to that cash position, Bloomberg reports.

Berkshire bought Burlington Northern for $26.5 billion -- a move Buffett called the "highlight of 2010" in his annual letter to shareholders last month. At the time he bought the railroad, Buffett described the move as an "all-in wager" on the future of the U.S. economy.

The wager was good, as the railroad’s profit zoomed 43% to $2.46 billion last year.

Shareholders of rival railroads may actually feel good about the dividends, Bloomberg reports. They could provide reassurance that Berkshire’s presence won’t put other railroads at a disadvantage.

"I did indeed get questions as to whether Burlington Northern would be at a capital advantage as a privately owned entity," one analyst told Bloomberg. "This would suggest that it’s certainly not the case."



Was rail deal conflict of interest for Bellevue official?

By Keith Ervin, Seattle Times, March 8, 2011

While prodding the Bellevue City Council last fall to study possible use of an abandoned rail corridor for a Sound Transit light-rail line, Councilmember Kevin Wallace was negotiating an extensive business relationship with a short-line railroad that wants to run trains on the same route.

He and his father, Bob Wallace, signed a nonbinding agreement in December to invest in GNP Railway and help raise $30 million for expansion.

Wallace Properties Development, a Bellevue-based developer of commercial properties, also agreed in a "memorandum of understanding" with GNP that the councilmember would hire brokers to sell preferred stock, invest $500,000 of its money and manage land acquisition and development of passenger stations, possibly with shops, offices, industrial space and homes. Kevin Wallace is president of the development company.

The Wallaces’ agreement with GNP — which has envisioned running freight and passenger trains from Snohomish to Renton — became public last month after creditors went to court in an attempt to force the railroad into bankruptcy reorganization.

The Wallaces signed the GNP agreement the same week Kevin Wallace explained in a Seattle Times guest-opinion column why it made sense for the City Council to spend $670,000 to study whether Sound Transit should put its light-rail trains on the old freight corridor.

Bellevue Mayor Don Davidson and the city attorney both said they had not seen the Wallace-GNP agreement and couldn’t say whether a conflict of interest existed. "It’s something that somebody should look at," Davidson said.

Councilmember Grant Degginger said the GNP-Wallace agreement envisioned "real-estate development up and down the corridor that runs through the heart of the city," and therefore Kevin Wallace should have disclosed the GNP deal to the city attorney.

"I think it’s troubling," Degginger said. "I think the council and the community probably deserve an explanation about this."

Wallace has strongly advocated in City Council deliberations for Sound Transit to run light-rail trains along a segment of the Eastside Rail Corridor between Interstate 90 and downtown Bellevue, arguing that route would do less damage to neighborhoods than Sound Transit’s preferred alignment along Bellevue Way and 112th Avenue Southeast.

A divided City Council voted in October to study a light-rail route across Mercer Slough near I-90, up the old rail corridor to 118th Avenue Southeast and into downtown Bellevue.

Wallace’s explanation

Wallace said he didn’t seek a legal opinion on the arrangement with GNP because the railway company hasn’t tried to buy real estate in Bellevue or run trains into the city. The nonbinding agreement was subject to Wallace obtaining a legal analysis concluding the pact wouldn’t conflict with his City Council responsibilities.

"We were at that point of exploring the connection between Redmond and Snohomish with a nonbinding agreement," Wallace said. "... If anything happened in Bellevue, we were going to have to explore that further with our legal counsel."

Wallace said he doesn’t expect to move forward with the deal because of the railroad bankruptcy case.

"From our perspective, it’s fair to say it’s water under the bridge," he said. "... We think their endeavor is very interesting, but the bankruptcy filing really made our nonbinding agreement sort of meaningless, so we sort of walked away."

Debate over the light-rail route in Bellevue has been punctuated by allegations of conflicts of interest. At a study session in late September, a citizen suggested Degginger refrain from voting because he and his law firm have represented Sound Transit in other matters.

That led to a confrontation in which Wallace said Councilmember Claudia Balducci, who is on the Sound Transit board, "put Sound Transit’s interests ahead of the interests of the constituents of Bellevue." Balducci responded that Wallace, whose family owns downtown property along a light-rail route he once supported, "put your personal financial interests before the best interests of the citizens of Bellevue."

"Don’t ever have four lawyers on your council," Davidson quipped this week. "They’ve tended to be at each other’s throat."

GNP has run freight trains between Woodinville and Snohomish since the Port of Seattle bought the 42-mile Eastside Rail Corridor from BNSF Railway in December 2009 for $81 million, and has tried to expand its freight operations and add excursion trains and commuter rail. The corridor connects Snohomish, Woodinville, Kirkland, Bellevue and Renton, with a spur between Woodinville and Redmond.

But the company was struggling to raise capital even as it sought approval from the federal Surface Transportation Board to extend freight service south to Redmond. The Port, which owns most of the corridor, opposes GNP’s attempt to put trains on the old tracks, as does King County, which has a trail easement and wants to buy most of the land, and Redmond, which owns part of the corridor.

The railroad’s efforts to obtain millions of dollars in loans from the Federal Railroad Administration have been unsuccessful, and Ballard Terminal Railroad claims GNP owes it $110,800 for operating the Woodinville-to-Snohomish freight trains.

Hoping a restructuring of GNP management could help make the railway solvent, "we intend to soldier on, and continue to operate the freight service," Ballard Terminal’s General Manager Byron Cole said in a U.S. Bankruptcy Court filing.

GNP had $122,000 in revenue in 2010 and $706,000 in expenses, according to creditors.

The railway’s financial difficulties came to a head in January, when Chief Financial Officer Doug Engle warned of impending bankruptcy and asked President and Chairman Tom Payne to step aside and let Engle restructure the company. Payne responded by firing Engle.

In court declarations, Payne accused Engle of erratic behavior and Engle accused Payne of financial misconduct. Both men worked on the deal with Wallace, which Engle in an interview last week called "the best opportunity we had come up with in three years."

"Attempted takeover"

Wallace Properties Development didn’t carry out its promises to make a $500,000 investment in GNP or initiate a $30 million private offering. Payne and his lawyers said Wallace didn’t follow through because of Engle’s "attempted takeover" of GNP and the bankruptcy petition.

While negotiating the deal, GNP consultant Tom Jones told the bankruptcy court, the business partners dropped plans for commuter trains and projected initial losses on freight and excursion trains followed by "net income of several million by 2020."

Those cash projections assumed approval by the Surface Transportation Board of the company’s expansion plans.

When GNP first asked the board in August to allow it to extend freight service to Redmond, Bob Wallace wrote in support, saying it would serve a Wallace-operated industrial park, and he endorsed freight and passenger trains on "the entire rail corridor along the I-405 corridor."

Engle said last week that, while the railroad wasn’t ready to go to Bellevue yet, that was in its long-term plans.



Court Hears Challenge to Plum Creek Development Project OK

By Josie Huang, Maine Public Broadcasting Network, Fevruary 24, 2011

It’s been more than a year, since the state approved one of the largest development projects in Maine’s history--a plan by Plum Creek Timber Company to build two resorts and more than 820 homes in the Moosehead Lake Region. But its approval by the state’s Land Use Regulation Commission, or LURC, is still being fought in the courts by several environmental groups, who are worried about overdevelopment. Today, the Maine Superior Court took up an appeal of LURC’s decision.

Central to the argument by environmental groups is that LURC violated the rules by amending the plan after a four-week public hearing process was over.

"There are a massive number of changes that were made after the adjudications had closed, and they’re not based on adjudications because those issues didn’t exist the time that the hearing was," said Phil Worden, an attorney representing the Forest Ecology Network and RESTORE: The North Woods. The Natural Resources Council of Maine is also part of the suit.

Worden says LURC moved housing units out of a particular area in response to concerns about environmental impact only to move them elsewhere.

"Imagine if you go through an adjudicatory hearing, and you’re doing things like traffic studies and corss-examining Plum Creek’s experts on traffic or on all the various impacts on animals or whatever, and it’s all based on there’s going to be so many units here, so many units there," he said. "Suddenly after the hearing is closed, with no right any longer for us to cross-examine the issue of how these decisions were made, they’re suddenly moving units from here, but they don’t just disappear, they move them somewhere else."

Justice Thomas Humphrey put the environmentalist’s argument to assistant Attorney General Gerald Reed, who was representing LURC.

"They don’t quibble with the commission’s authority to evalute Plum Creek’s petition, identify its deficiencies, suggest corrective measures that would make it appropriate, but that having done that, they failed to follow their own rules of practice--meaning public hearings and the like," Humphrey said.

Reed replied that the amendments to the plan are an element of the public hearings. "There weren’t new evidence that needed to be tested through cross-examination, and notably, the petitioners are unable to identify to the court anybody who they needed to cross-examine, except apparently one of the commission’s own consultants, who under the Administrative Procedures Act, is treated as a member of the agency’s staff--they’re not available for cross-examination."

It’s not clear when Justice Humphrey will make a decision about whether to overturn LURC’s decision--or even to proceed with the case. The state is making the case that the environmental groups do not have the legal standing to challenge the LURC decision.

But Cathy Johnson, the North Woods Project director for the Natural Resources Council of Maine, is optimistic that Humphrey will see the merits of their case, and void LURC’s decision, "and send it back to LURC, and if LURC wants to proceed with these amendments, and new evidence and new information, then they should have a public process and allow the public and intervenors like NRCM to cross-examine witnesses who are putting forth these new ideas."

Plum Creek, which also had representation in court, says that it’s waiting for the court outcome before moving forward with any development projects. Mark Doty is their spokesman in Maine.

"We feel that LURC has the legal authority over concept plans and has for many years, and its decision in the matter was reached after proper review," Doty says. "We expect that the court review will have the same findings, so when the court is done reviewing, we plan on moving ahead."

Aside from the development project, Plum Creek says its plan also calls for more than 360,000 acres of conservation easements, with forestry and wildlife protections. The environmental groups counter that even if Plum Creek’s development plan doesn’t go through, the terms of the easement last for up to five years--plenty of time, they say, for LURC to do a new zoning plan for the area.


Let’s end illusions about Weyerhaeuser

Forest landowners come and go, but communities will be here forever

Daily Astorian (editorial), February 8, 2011

Weyerhaeuser’s long-sought sale of its hemlock timberland in Pacific County last week leaves it still a major player in local and Pacific Northwest forestry. But this move is nevertheless symbolic of transformation in a pivotal industry.

One century ago in 1911, Weyco was the baron of local industry. It owned about 364 of the approximately 700 square miles of forest in Pacific County. With this sale, Weyco is down to 225 square miles – still a massive chunk of the Willapa Hills, but nowhere near as dominant as it once was. The company previously sold its land and mill in Clatsop County.

Looked at another way, Weyco’s Pacific County lumber holdings totaled 6 billion board feet in 1911. To put this into context, just before the recession the total annual timber harvest in all of Washington state came to about 4 billion feet. And Weyco’s worldwide sawmills had a processing capacity of 6 billion feet in 2008 – capacity that has since rapidly been whittled down with mill closures in the past two years.

After the sale, it will still own or manage more than 1 million acres in Washington, of which something like 14 percent is in Pacific County. Weyco noted in its press release it still employs 3,800 people in the "region," presumably meaning the Northwest states. Its most recent Pacific County job count was about 107 at two Raymond mills, plus some others in the woods.

Weyco clearly has a continuing and valuable role as a regional corporate citizen, but it is overtly out for itself. It has not, and will not, hesitate to cut any jobs and sell whatever land that its officers regard as nonessential to long-term profitability.

With this lesson now hopefully firmly learned forever, all counties and the communities in them must form their own strategic visions. This includes being unafraid of insisting on a collaborative planning process with firms like Weyco and its successors such as Hancock Timber Resource Group, which made the land purchase last week.

The days when one company ruled the roost – and dictated terms to contractors, communities and lawmakers – are over and done with. This is a good thing.

Pacific, Clatsop, Grays Harbor and other counties in our region remain prime timber and pulp producers, along with many other types of economic activity tied to our remarkable forests.

In mature and humbler circumstances, it is time for Weyerhaeuser and all forestry companies to work with citizens on equal footing. These communities are here for good, while the corporate players will come and go.


U.S. Lumber Hoisted by China Sales

By Jim Carlton, Wall Street Journal, February 8, 2011

Much of the $30 billion U.S. timber industry is still depressed because of weakness in the housing market, but some companies have found relief in a nontraditional customer: China.

U.S. timber exports to China are suddenly surging, especially from mills around the Pacific Northwest, giving a boost to companies like Weyerhaeuser Co. and Plum Creek Timber Co. Helping to spur the increase: One of China’s biggest timber sources—Russia—increased tariffs on its wood exports in 2007, leading Chinese buyers to turn increasingly to the U.S. and Canada for wood amid the country’s construction boom.

"Everybody in the Northwest is talking about China," said Dan Fulton, chief executive of Weyerhaeuser, a timber company in Federal Way, Wash.

On Friday, Weyerhaeuser said it had swung to a fourth-quarter profit from a loss a year earlier. It noted that a tripling of its Chinese log exports in 2010 helped offset a 10% drop in its total logging volume in the same period.

Mr. Fulton said the Chinese are mostly using wood for nonresidential purposes such as crates and pallets.

The export surge to China comes at a critical time for the U.S. timber industry. After being fueled by the nationwide housing boom for much of the last decade, it was hit by the property bust in 2008.

U.S. lumber production peaked at 40.5 billion board feet in 2005 and plunged to 23.4 billion in 2009, according to Western Wood Products Association and Southern Forest Products Association estimates.

To cope with the decline in domestic demand, many timber companies slashed costs by closing mills, among other moves. In all, roughly 35% of the U.S. timber industry’s lumber mills remain closed, said Stephen Atkinson, a forest-products analyst at the Bank of Montreal.

While exports to China aren’t a long-term solution for the U.S. timber industry—the trend hasn’t spurred many mills to hire new workers or expand capacity—they are a bright spot that is helping to stave off further declines and cuts.

"It’s a step in the right direction," said Steve Chercover, an analyst at D.A. Davidson & Co. in Portland, Ore.

Timber demand from China began rising in 2007 when Russia imposed higher tariffs on its logs, and demand was particularly strong last year, said Hakan Ekstrom, president of the research firm Wood Resources International LLC.

Overall, the number of U.S. logs shipped to China shot up more than 10 times from 256,000 cubic meters in 2007—or less than 1% of the total logs produced in the region—to an estimated 2.4 million in 2010, or about 7% of the region’s total log production, according to Wood Resources.

And prices for wood products are continuing to climb. Prices for hemlock logs destined for sawmills in the U.S. Northwest jumped 43% to $66 a board foot in 2010 from $46 in 2009, according to Wood Resources. The export surge also doesn’t include wood from other regions. Prices for southern pine, for example, rose just 4.8% in the period, to $65 from $62.

The benefits are greatest for U.S. timber companies with operations in the Pacific Northwest, where the access to China is easiest.

The West, including Washington, Oregon, Idaho and California, accounted for 44% of all U.S. timber production in 2009, compared with 50% for the South, according to estimates by the Western Wood Products Association and the Southern Forest Products Association.

In addition to Weyerhaeuser, Plum Creek and Rayonier Inc. have large operations in the Northwest.

At Jacksonville, Fla.-based Rayonier, officials said they plan to increase their harvest level for logs "10% to 15%" this year from 2010 because of continued strong export demand driven mainly by China.

And Seattle-based Plum Creek said it expects that 7% of the logs destined for sawmills from its forests in Oregon during the first quarter will be exported to China, up from "nominal" volume in the fourth quarter.

"As you start to see a return to housing demand in the future," there is likely to continue to be an export opportunity, added David Lambert, Plum Creek’s chief financial officer. Last week, the company reported that earnings more than doubled in the fourth quarter on a 38% jump in revenue. It also cited a firming of lumber prices, starting in December on the West Coast, as a sign the company’s prospects will continue to improve in 2011.


The settlement of Kansas: Railroad hype drew settlers

By Fred Mann, The Wichita Eagle, January 23, 2011

To hear the railroads tell it, Kansas was the Garden of Eden. "Temperate Climate, Excellent Health, Pure & Abundant Water," the Atchison, Topeka & Santa Fe Railroad declared on an advertising flier in 1876.

The "best stock country in the world," the Kansas Pacific Railway boasted in 1878.

The state was more productive than most, according to an 1870 handbook printed by the Kansas Pacific. Its crops yielded more profit because they were cheaper to raise. Its weather allowed farmers to do more work.

Kansas, the handbook said, offered "unsurpassed grazing" and an "enterprising population."

The climate, it said in a statement that would be proven wrong more than once in the state’s early decades, "is mild and pleasant."

The hype worked.

People came to Kansas from around the world in the 1870s, after the Civil War and "Bleeding Kansas" days had ended.

In large part, the new immigrants made the prairie into productive farmland and shaped our future.

They farmed the land and founded towns, and they passed their pioneer hardiness and work ethic to future generations of Kansans.

They came from Croatia, Germany, Russia, Sweden, Denmark, England, France.

They came from Pennsylvania, West Virginia, Kentucky, Missouri, Ohio, Illinois, New York.

Ethnic groups from foreign lands formed colonies all over the state, retaining their languages, customs and cultures and passing them on.

They came for land and opportunity, and also to escape religious persecution, poverty and compulsory military service in their home countries.

"From the beginning we’re being shaped by people of different backgrounds, particularly parts of Europe, but also African Americans and Native Americans," said Virgil Dean, editor of Kansas History: A Journal of the Central Plains and publications director for the Kansas Historical Society.

"It’s kind of symbolic of the story of America."

Railroad promotions

The railroads, trying to sell the millions of acres given to them by the U.S. government to grow their business, promoted Kansas all over Europe and Russia and the rest of the American states.

"The railroads were highly privileged, and the Supreme Court supported them lock, stock and barrel," said Robert Linder, history professor at Kansas State University. "They were able to make fortunes off settling the Great Plains."

Railroads offered free or reduced-rate transportation to Kansas, and settlers from overseas could bring all of their household goods at a railroad’s expense.

It wasn’t always a pleasant way to travel. The authors of an 1859 handbook offering advice to prospective settlers of the Kansas and Rocky Mountain territories cautioned that they "will probably have to put up with a sleeping cot in the saloon — a style of nocturnal accommodation which is exceedingly uncomfortable to persons unaccustomed to Western travel."

The restaurants on the trains were run by "very avaricious and inhospitable persons" out to swindle diners, they wrote.

"Frequently, too , the food is filthy, bread badly baked and unwholesome; the tea and coffee cold, or so bitter and black that they are far from furnishing an agreeable repast," they wrote.

And yet, people came. In 1860, a year before Kansas became a state, its population was 107,000. By 1875, it had grown to more than half a million.

Germans were the largest group of foreign immigrants to Kansas. Some came from Germany, but many came from the Volga River in southern Russia, where they excelled in agriculture and were drawn to Kansas by railroad posters.

But before the Volga Germans came, they sent five scouts to investigate. They were wary about the new territory after what had happened to them in Russia.

They had left their native Germany on promises from Catherine the Great of exemption from military service, freedom from taxation and free land. These privileges had slowly disappeared.

One of the scouts was Anton Wasinger, great grandfather of Leona W. Pfeifer of Hays. He and four other men came to America in 1874 to look at the territory and returned to Russia with some soil samples and a favorable report.

The land reminded them of the Volga.

A year later, groups of Volga German colonists came over by ship, then traveled by train to Topeka, where they spent the winter before moving west and starting villages in Ellis and Rush counties, each with its own dialect.

"They were a hard-working people, very reliable," said Pfeifer, who speaks with a trace of a German accent.

Self-reliance was important to them. They were ridiculed in newspapers for their dress, speech and customs, Pfeifer said, so they developed a mistrust of outsiders.

"They didn’t get any help from anybody, so they had to take care of themselves," Pfeifer said.

Hard work was the family ethic.

"They worked from early morning to late at night. That’s what made Ellis County," said Pfeifer, a former history and German teacher.

Hardy settlers

Most early Kansas settlers had lived in states farther east before making a final push west.

In 1871 Jesse Tyler Sturm of Shinnston, W.Va., traveled to Kansas by train with a brother-in-law looking for land to homestead.

As a Civil War veteran on the Union side, he was entitled to 160 acres of free land from the U.S. government, although it could have been railroad land they were after as well, said Karen Sturm, wife of Jesse Sturm’s great-grandson, Harold, of Caldwell.

After failing to find any land that hadn’t been claimed, they planned to return to West Virginia. But when a stage coach they were awaiting arrived, a passenger told them about great land in the southern part of Kansas that hadn’t been taken.

The men traveled by covered wagon to the Oklahoma line, seeing Indians and buffalo but no trees, Karen Sturm said.

Jesse Sturm staked a claim northeast of Caldwell in spring 1872 and brought his wife and four children to Kansas.

They lived out of covered wagons the first year. They had to travel 80 miles to Newton to buy processed lumber to build a house, Karen Sturm said.

"That was the way life was. It was hard and they didn’t think anything about it," she said. "They were so hardy, our ancestors. They had to be."

Jesse Sturm was a gifted storyteller. In 2002 the state of West Virginia published his Civil War book, "From a Whirlpool of Death ... to Victory," remembrances of his service with the 14th West Virginia Infantry.

Sturm became a justice of the peace, and township trustee and assessor.

He was Sumner County treasurer and trustee of Sumner County high schools, and was appointed by the governor as a member of the River and Harbor Congress and a delegate to the inter-state wheat congress.

An active Republican, he was urged to run for the state Senate in 1918 but declined because of failing health.

His great-great-grandson, Ryan Sturm, is the fifth generation to farm in Sumner County.

His farm is five miles from Jesse Sturm’s original homestead.

Haven for ex-slaves

Kansas, where anti-slavery forces had prevailed in its "Bleeding Kansas" days, became a haven for former slaves.

W.R. Hill, a white land speculator in Nicodemus in Graham County, traveled through the South to sell the state to African Americans still burdened by Jim Crow laws.

He promised that they could own their own land, build their own town and govern themselves.

Angela Bates’ family was among the first group of 350 to make the five-day trip from Kentucky by train in 1877.

Most of them had never been on a train.

And they didn’t like what they saw when they crossed the Flint Hills into Graham County — barren terrain where the few residents of Nicodemus lived in earthen dugouts.

"There was nothing except a few holes in the ground," Bates said.

About 60 returned to Kentucky.

More came as part of the exodus of former slaves from the South, but it took strong spiritual resolve to remain, Bates said.

Those who did built the town rapidly in the 1880s, replacing the dugouts with successful stores and businesses.

Bates, who worked to get Nicodemus designated as a national historic site, said the town "represents us and what we did with freedom. It became the icon of our ability to self-govern and make it on our own.

"These people had tenacity," she said. "They took freedom and did something with it."

Nicodemus failed to attract railroad lines in the late 1880s, and its economy declined. Many residents, including Bates’ parents, were forced to leave.

But they took the spiritual values and work ethic of their Nicodemus heritage with them and were able to get middle- to upper-class jobs, she said.

Bates said she sees a difference between African-Americans descended from the people who ventured to Kansas and those from families that remained in the South.

"There’s a lot of complacency there," she said. "They conform to that environment because that’s where slavery took place."

Kansas African-Americans are resourceful, Bates said.

Many of those who left Kansas had sense enough to come back and make Nicodemus their home again.

That includes her father, James Bates, 83, who still farms a mile north of Nicodemus.

Building towns

While many came to Kansas to farm the land, others came to build the towns that served the farmers.

It’s a misconception that Kansas was just a farm settlement, said Dean, of the state historical society.

"A big majority came for farming, but a few miles away there’s going to be a town starting at the same time."

Arriving trains unloaded merchants, bankers, blacksmiths, painters, gunsmiths, bricklayers, shoemakers, tailors and peddlers.

And stonemasons, like Franklin Rothenberger, whose family would build much of Osborne and the surrounding area.

Rothenberger was 9 when he came to Kansas by rail as part of the "Pennsylvania Colony" that founded Osborne in 1871.

On the wagon train taking them on the final leg of the trip, the tallgrass was so high they couldn’t see where they were going, said Von Rothenberger, Franklin’s great-grandson.

Somebody who left the group for supplies couldn’t find the party when he returned and had to ask for help.

Franklin Rothenberger eventually was designated a stone and brick mason by the colony because that had been the family’s business back in Pennsylvania.

He was trained by fellow homesteading stonemasons and in 1884 started the Rothenberger Construction Co.

Franklin and his five sons quarried and laid the stone for St. Joseph’s Church in Damar, a finalist for the Eight Wonders of Kansas Architecture. At the same time, he bicycled to other towns in the region to oversee other construction projects.

The business was passed on to succeeding generations until it closed in 1979.

By then, Von Rothenberger said, the family had built foundations, churches, homes, buildings, even sidewalks and curbs, across western Kansas from Syracuse to Medicine Lodge to Salina.

What Franklin gave to his family was the satisfaction of seeing a job done, Von Rothenberger said. "He instilled a work ethic into the family and into the business."

Laughable conditions

Those who settled Kansas occasionally may have found conditions as agreeable as the railroads had advertised.

But they also faced drought, harsh winters and summers, jackrabbit attacks, grasshopper infestations, dust storms, financial downturns, and dwindling populations.

In the 1890s, the railroads stopped advertising Kansas.

"People laughed at the railroad enthusiasms that once so gripped them," the late Wichita State University history professor Craig Miner wrote in "West of Wichita: Settling the High Plains of Kansas, 1865-1890".

A Mitchell County schoolteacher wrote in her diary in 1881:

"This is a hard place to live, this Kansas is. I wonder what in the world will become of us, anyway?"


WY Sells Railroad Assets to Patriot

Zacks.com, January 6, 2011

Weyerhaeuser Co. recently sold off its six short line railroads to Patriot Rail Corp, a privately-held short line and regional freight railroad holding company. The transaction was made effective from December 30, 2010.

The assets under consideration, operate over 160 miles of track in four states and annually handle roughly 60,000 carloads of freight. Main customers include Weyerhaeuser and International Paper mills and a number of third-party customers while prime commodities comprise wood and paper products, chemicals, industrial waste, minerals and agricultural products.

The six railroads include the DeQueen and Eastern Railroad (DQE); the Texas, Oklahoma & Eastern Railroad (TOE); the Columbia & Cowlitz Railway (CLC); the Patriot Woods Railroad (PAW); the Golden Triangle Railroad (GTRA); and the Mississippi & Skuna Valley Railroad (MSV).

Weyerhaeuser, in addition to the railroads, sold off its 28 locomotives, over 300 railcars, 2,500 leased railcars, 50 motor vehicles, right-of-way real estate, general office buildings, maintenance of way equipment, locomotive shops, rail car repair shops, a wheel shop, rail yards and office and shop equipment.



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