"a secret, closed-door plan"?
Forest Service, Plum Creek Conspire on Roads for Real Estate, County Says
By Dillon Tabish, 4-16-08
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| Gold Creek Road in Missoula County accesses Plum Creek Land. The company owns 58 percent of the private land in the county. Photos by Emily Haas. | |
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Elected officials are raising red flags after finding out about alleged back-room negotiations between the U.S. Forest Service and Plum Creek Timber Co. aimed at easing Plum Creek’s transition into residential real estate by amending road use regulations.
Last Thursday, the Missoula Board of County Commissioners wrote Montana Sen. Jon Tester an open letter alerting him of private dialogue on forest road easements that could, they said, significantly affect communities in Western Montana where Plum Creek owns large swaths of land.
According to Plum Creek spokeswoman Kathy Budinick, Plum Creek has not acted deceitfully.
“It has been characterized as a process that occurred behind closed doors and that is inaccurate, and in fact, just the opposite is true,” said Budinick. “The easement amendment was heavily vetted really at all stages of its drafting.”
The discussion surrounds the 44-year-old Forest Roads and Trails Act (FRTA) that sets forest access standards. The question is whether FRTA easements grant Plum Creek the right to use Forest Service roads to access residential and commercial developments, not just timber.
It’s a crucial distinction for Plum Creek, a company that owns 1.3 million acres of land in Montana and is aggressively pursuing real estate as its timber business follows industry-wide declines. The company announced plans to sell up to 2.5 million acres of its land nationwide, worth billions of dollars, for residential and business development. Plum Creek owns 58 percent of the private land in Missoula County.
“Unfortunately, it appears that the [Forest Service] is now considering amending those agreements to allow residential use of the roads for private land development without consultation with local governing bodies,” according to the letter signed by the Board of County Commissioners.
“Our biggest issue is that this really does affect the county. It affects the people who live here,” said Missoula County Commissioner Jean Curtiss. “Why is it being done behind closed doors?”
Sen. Tester responded quickly in a letter to Mark Rey, the Department of Agriculture Undersecretary and overseer of the Forest Service, asking him to “stop hatching a secret, closed-door plan that could alter the landscape of Western Montana without local input.”
“This letter is to express my concern that local officials from Montana communities have been left out of a road use agreement being facilitated by your office that would have substantial impact on my Montana constituents,” Tester wrote. “The process used to hatch these agreements is completely unacceptable and has shut the public out of a proposal that will hurt county governments and leave the American public with increasingly larger firefighting bills.”
Missoula County officials said they’ve been working with communities like Seeley Lake to hammer out forward-thinking zoning laws, efforts that have involved Plum Creek. That process came to a stand-still last week when word made its way to the Commissioners about new discussions excluding the county.
“It’s shifting things without public process,” Curtiss said.
Plum Creek’s Budinick said several different organizations were involved, including the USDA’s Division of Natural Resources and Environment, the Office of General Counsel, the Forest Service’s office of the Chief, and attorneys and officials in the Forest Service offices in Regions 1 and 6.
Budinick said county officials were not notified because they were not parties to these easements and were not responsible for any maintenance costs associated with the roads.
“The discussions took place between the parties who were responsible for the roads, for the maintenance costs for the roads,” Budinick said.
Curtiss disagrees and stands by her judgment despite a harsh reprimand via conference-call by Mark Rey for not consulting the Forest Service first before airing the matter publicly.
“It’s just really frustrating to think that normally these decisions are made at the local level by the local forest ranger who lives here and knows the people, knows the country, knows the resources. But this went right up to the top,” Curtiss said.
When asked why, Curtiss answered frankly:
“It’s the people in leadership in the federal government and a company with lots of money and big lawyers, I think,” she said. “This goes right against the Forest Service’s own plan of protecting natural resources. Why do you think there are gates across those roads now? It’s to protect wildlife, it’s so that you aren’t out there walking around at the time of year when elk are having calves or when grizzly bears aren’t waking up.”
Rey told Curtiss and others that because the original document doesn’t say “only” (as in the roads can only be used for resource extraction), then everything (including residential development) can be included.
But the county sees it differently.
“We don’t believe that’s true,” she said. “So what we asked from them today is give us your legal brief to back up what you believe so we can look it over.”
Then, she added, “If it was so, why are they updating the plan?”
According to Plum Creek and Budinick, the previous agreement had already allowed for road access beyond timber management, but discussions started back in 2006 because existing uncertainties in the FRTA needed to be clarified.
Sen. Tester’s sudden denouncement came as a surprise to Plum Creek, and Budinick said they plan to talk with him and clarify some of the inaccuracies portrayed in that letter.
One of the major inaccuracies, according to Businick, is the suggestion that new agreements between Plum Creek and the Forest Service would allow the company to sell forestry land for housing and development.
“For one thing, it’s been suggested that Plum Creek and the Forest Service entered into an agreement for new rights of access over Forest Service land for new uses of Plum Creek land, and that is inaccurate,” Budinick said. “No new rights have been granted to Plum Creek through these amendments. The scope of permitted-use of existing easements has not been changed.”
Conversely, Curtis refutes such uncertainty in the FRTA.
“When somebody does come in for a subdivision in any county in Montana, one of the things they have to prove is legal and physical access,” she said. “It’s been our legal council’s interpretation that accessing through Forest Service land on a Forest Service road is not legal and (nor is) physical access for residential purposes.”
Flathead County Commissioner Joe Brenneman isn’t against Plum Creek developing their land per se, but he would like to see them go about it the right way.
“My concerns have to do entirely with the affects on counties like Flathead County and even Missoula County where we are expected to provide services to these residential areas including structure protection for wildland fire,” he said. “If land is going to be developed, most of us who believe strongly in property rights think that that’s fine and dandy, but the adverse affects have to be mitigated.”
Brenneman agreed that the discussion between Forest Service and Plum Creek has been anything but out in the open. In a case like this, where significant impact hangs in the balance, people need to be as informed as possible, he said.
The public discourse is also important because of looming threats, like wildfire, which the county is responsible, in part, for fighting, Curtiss said.
“One of our goals is to try and guide growth so that you put growth where the infrastructure is and don’t just spread it hilter-kilter, especially with all the wildfires we’ve been having every year,” she said. “Those folks that build a house out there are going to think someone’s going to protect it. And the roads aren’t necessarily going to be built to do that.”
Curtiss pointed to a map of Western Montana and located each of the volunteer fire departments responsible for Missoula and Flathead County protection.
“We can’t provide all those services and we can’t maintain those roads,” she said. “It’s not good planning.”
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Comments
were given land to build the transcontinental railroad AND
didn't give back the land NOR
the mineral rights of this land TO
THE PEOPLE OF MONTANA
Plum Creek's land DOES NOT BELONG TO Plum Creek.
http://www.landgrant.org Take your blood pressure medicine first.
"Plum Creek Timber was spun off in 1989 from the Burlington Northern Railroad, which still held two million acres of public land that was supposed to be sold to settlers during the 19th century. (website on the railroad land grants)
Plum Creek cut ancient forest in Montana and Idaho and Washington and used the windfall profit to buy another 6 million acres of land in other states, including more than half a million acres in each of the states of Maine, Arkansas, Georgia, Mississippi, Michigan, Florida, Louisiana, and Wisconsin. Land owned by state."
The largest of the Railroad Land Grants was to the Northern Pacific Railroad: 40 million acres in a 100-mile wide band running 2,000 miles from the Great Lakes to Puget Sound. A century later, much of this land is controlled by Plum Creek Timber, Weyerhaeuser and other timber and mining corporations.
It's interesting to note that President Abe Lincoln had been a lawyer for the railroads before becoming president. The Northern Pacific Railroad Land Grant (again, the one that covers Plum Creek lands here in W. Montana) was signed by Lincoln on July 2, 1864.
To learn more about this issue, go to http://www.landgrant.org/. Also, a good book on the subject is called Railroads & Clearcuts: Legacy of Congress's 1864 Northern Pacific Railroad Land Grant.
But make no mistake, Plum Creek Timber Co selling off these former public lands for real estate development is one of the biggest multi-billion dollar boondoggles in US history. Millions of acres of public land intended for homesteaders was instead given to timber, mining, and real estate corporations. The failure of the railroad land grant policy is the cause of many of today's economic, political, and environmental problems, including deforestation, toxic waste, and taxpayer subsidies.
So what if the Northern Pacific was granted land? Without railroad access, darn few of the communities we live in would exist...and the only way to get anyone to build a railroad into the unknown was, yep, land grants.
Do I think it was a good deal? Probably too generous in hindsight.
So then, when the railroad business stank, the holding company decided to spin off the railroad from the land and away we go.
I have a suggestion....go buy some PCT stock. It's based on land, has some great tax spiffs, and God ain't making any more.
Suggested topics for discussion:
#1 Access
#2 Wildlife
#3 fire and the WUI
#4 taxpayers
#5 government accountability and transparency
#6 if we don't stop this we'll need to talk about zoning, and we don't want to talk about zoning, so....
So, when the railroad business stunk, and it really DID stink in the postwar period, railroads sought to diversify, including divestiture of the underperforming railroad asset. BN spun off its railroad while keeping the land, that became Plum Creek. That's just "outside the box" thinking.
Post 1989 spin-off, PC could have possibly stayed in their box, but a 1986 (I think) tax reform enabling Real Estate Investment Trusts opened another avenue. Rather than stay integrated, if a company de-integrates and allocates its revenues and expenses within the law, then taxes are paid at a lower rate than straight corporate tax and dividend double-dip.
So now, these Timber Companies are, you bet, no longer forestry outfits first and foremost. They are real estate developers, some of whom incidentally keep a few sawmills around to capitalize the wood growing on ground that probably isn't ripe to market as something else.
The primary profit stream now is real estate. Period. And we can now expect a completely different set of behaviors from entities that USED to be forest products producers. Entities which furthermore have the law on their side and tons of money to hire lawyers and lots of trees to process into legal briefs.
Like I said, go buy some PCT stock if you want to have some benefits to go along with the consequences.
The history major in me also finds these quotes of interest:
"I now wish to prevent a perpetual monopoly of over 50,000,000 acres of lands by an immense railroad company... I hope that the American Senate... will not by their action here to-day cause their posterity to curse their memories for thus building up such an immense monopoly to the detriment of the country, to the oppression and injury of all who may settle in that region." - U.S. Senator Howell, arguing against additional subsidies to the Northern Pacific Railroad, in 1870.
"The possibilities of power involved in such a concentration of land ownership, irrespective of the timber, hardly require discussion. The danger of abuse of that power, in the absence of restrictive regulation, is obvious. This danger, moreover, is greatly increased because a few of the largest owners of this land also occupy dominating positions in railroad transportation over great sections of the country." - U.S. Bureau of Corporations, 1913-14.
"The historian is less interested in whether the government drove a sharp bargain than he is in the fate of the 174,000,000 acres of Federal land and the approximately 49,000,000 acres of state lands which were offered to the railroads." - Historian David Maldwyn Ellis, 1946
"The lesson of the railroad land grants after more than one hundred years is that the government has been incapable of dealing affirmatively and at arms length with powerful economic interests." - Attorney Sheldon Greene, 1976.
Look closely at the Bush Interior appointees who gave away the nation's treasure to, say, Exxon, and then took the high paying jobs as rewards. Rey can expect incredible rewards in the near future for his closed-door services now.
This is the beginning. Better stop arguing over the history of the giveaway, and address the new giveaway, which will make the original one look paltry in comparison.
I'm reading PCT's annual report 2007. Interesting statement within that puts MN's "Plum Creek cut ancient forest in Montana and Idaho and Washington and used the windfall profit to buy another 6 million acres of land in other states, including more than half a million acres in each of the states of Maine, Arkansas, Georgia, Mississippi, Michigan, Florida, Louisiana, and Wisconsin. Land owned by state."
in a bit of context:
From PCT Endangered Species Act comment:
"A number of species on our timberlands have been and in the future may be protected under these laws. Protection of threatened and endangered species may include restrictions on timber harvesting, road building and other forest practices on private, federal and state land containing the affected species."
Now, if you had timber assets "at risk" of shutdown equivalent to, say what has happened in re spotted owls or grizzly bears -- what would you do?
Do
Anything
To
Be
Able
To
Slick
It
Off,
Go
Buy
Ground
Someplace
Safe.
Has it occurred to any of you environ"mentalists" that perhaps that HCP that Babbitt put up with PCT, while co-opting PC political support of ESA reform by vesting PC in ESA as well as putting others without HCP's at a competitive disadvantage, wasn't really in the long term the smart thing to force upon PC and other companies? When you threaten an entity's asset base, they will seek to escape the threat. And they still are.
And here come the consequences. Did you intend them? Hmmmm?
Weyco is hard at becoming a REIT, just like Plum Creek. The Congress is not going to reduce taxes nor are they going pass the TREE Act which would reduce capital gains on timber at severance. Weyerhaeuser changed its business plan accordingly.
To become a REIT or TIMO (timber investment management organization), you have to deal with your mills, your conversion facilities. They are a drag on profits due to tax structures, inherent operating inefficiencies, unions, and constant need for upgrading.
Like Plum Creek, Weyco is going to start to sell or close down mills in at an ever increasing rate. As soon as the Willamette Industries purchase timber is brought into their rotation schedule, the mills will go. The packaging unit is already gone and with it the pulp mills that made Kraft paper. The plywood end is on its way out, and then the panel units will go. I see them keeping the big fine paper plants on the East coast, but shedding all the sawmills and other conversion operations. And then the west coast sawmills. Weyco is going to be a real estate company, holding a big chunk of land that on its fringes, has great value in the amenity market. And Plum Creek is already way ahead of them, and more Plum Creek mills will close.
There will be opportunity for small, independent owners to mill logs produced by the REIT. Those producers have more leeway to work in volatile markets, and don't have the union drag or the bulky overhead a Weyco seems to grow at every chance. Weyco has been laying off 10% of their workforce, at all levels and pay grades, for the last 40 years on about a 5 year schedule and still their overhead numbers grow in the interim. Big business can't help itself. The joke will be that their REIT will do the same thing, and they will find that they are not good at that, either. The retiring CEO was a pulp and paper expert, who had the Willamette Industries management culture in his past as CEO of that outfit, and still Weyco was able to roll over the WI management culture in just 5 years, and the Weyco management model again prevailed. Jabba the Hut won the war against the lean WI model.
All of industrial timberlands are due to become TIMOs or REITs. The business model resulting from a lefty Congress, a piss poor president, an assessment of who will be the next President and Congress, and the current US tax system drives that response. The economics of holding land to grow a crop of trees that you might lose to the new USFS regime of "let 'er burn", which always seems to end up on private land consuming trees that have value in the private sector, and pay taxes, along with burning all those trees with no value on the public sector lands, no longer lend themselves to owning timberland for publicly owned companies. The loss potential now, against the possible gains, is too great. Remember, a capital loss can only be used to lessen a future capital gain, with limits. That is not going to let private trees stand for long when addressing the risk of the Feds burning your land and trees as collateral damage to the idiocy of their current management direction. And if you think otherwise, show me one estimate, official, showing a USFS loss of value, of assets, on their land to fires. They don't keep a record, nor do they assign value to fire destroyed assets. But cut one tree on the property line you share, and they have all sorts of values to assign at triple stumpage plus criminal filings. One wonders if turnabout is fair play, that they could be sued for rampant wastage of public resources? So if the Timber Baron's future is bleak, the trees perhaps not going to be there, the ability to log them tied up in court even though they own them, why bother? Viola'! The REIT, the TIMO. Sell those lands most likely to burn, to be impacted by federal busy body interference. They have the best access, the most amenity value. Take the money and invest in Crown timber in Canada, or in African rainforest with mineral rights. There are better ways to make money now than to spend your efforts dealing with a country that does not want to use its resources, wants to export its jobs, wants to turn its food supply in fuel. Sell the land to the people who have the money, and put their money in your bank account, pay it to your stockholders.
The current model is that insurance companies can hold timber with few bad tax ramifications. Or the REIT or TIMO can sell shares in a block of timberland to insurance companies needing a return a ways down the road. It will be hedge funds, public employee retirement funds, and insurance companies that own timberland and sell logs and real estate. The Timber Barons will be school teachers and firemen, blue collar life insurance holders, scholarship funds, all in need of timber being sold and land going into high value development.
That was the beauty of the Roseburg Lumber Company founder's great charity. He moved the manufacturing facilities to one ownership, and kept the timberlands in his and his wife's trust. The trust for education, the trust that has scholarships for single working mothers, for local mill hand kids, for putting as many kids as possible through advanced education, is totally dependent upon cutting trees on the now trust owned lands. Sue to stop tree cutting, and you stop needy and deserving folks from getting education help, a chance to improve their lives. I hope that model is used by others in the future.
Get used to the Plum Creek attempts to clarify their ownerships and easements, their rights of way, what can be transferred and how to who. They have the full weight of the Timber Barons now behind them, and the Timber Barons are your neighbor, the cop writing the speeder a ticket, Grandpa's life insurance, your maiden aunt's teacher retirement. It is the economy, stupid. And the economy of institutional timberland has changed to meet a new era, a new paradigm. The American tax structure and the Sierra Club don't always get what they seek, if only because of the rule of unintended consequences. Plum Creek has a new ally in its venture: Weyerhaeuser. Jabba the Hut. They intend to market their land to institutional buyers, to the public retirement funds, the insurance companies, to anyone wanting a piece of America. Public policy drives private decisions. If you don't like that, change poor public policies, restrictions, tax laws, to meet your goal of what the end product should look like. I bet you won't recognize it for what you intended. It never works that way. There is always someone way smarter in the private sector looking for the holes, the wiggle room, the escape routes. And they find them. Just look at how little Timmy Blixeth changed the whole of the Gallatin country's economics, and then tell me how much was saved in the rigged USFS trades in the end. How much wildlife value was enhanced, really. You got Jabba's vacation retreat and Jabba's appetites for environmental changes. Now it is Plum Creek and Weyco who will change things in the New West.