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Headwaters Heats Up

  (please distribute freely)
  September 10, 1996
  	The battle to save the largest privately owned stand of old 
  growth redwoods has recently heated up, not coincidently it seems, just 
  before the presidential election. The Clinton Administration has been 
  looking at a number of ways to bring the Headwaters Forest into federal 
  	Unfortunately, Clinton's point man on this issue, John Garamendi,
  has shown no interest in long-term worker and ecosystem protection plans
  nor in pursuing the possibility of a debt-for-nature swap for the
  Headwaters. The present owner of the Headwaters Forest, corporate raider
  Charles Hurwitz, has two suits pending at the Federal Deposit Insurance
  Corporation (FDIC) and the Office of Thrift Supervision (OTS) regarding a
  failed Savings and Loan which Hurwitz controled. The failure of United
  Savings Association of Texas (USAT) cost taxpayers $1.6 billion dollars.
  The savings and loan launched many of Hurwitz's takeover ventures
  including Pacific Lumber, the previous owner of the Headwaters Forest.
  Many community and forest activists working on this issue would like to
  see the government take Headwaters as payment for the S&L debt. 
  	In their haste to get a quick environmental victory (for both 
  Clinton before the election and Garamendi who will likely run for 
  Governor in California), the Administration has overlooked important 
  criteria for a plan that would truely protect Headwaters Forest. These 
  issues are summarized in the following letters to President Clinton and 
  Deputy Secretary of Interior John Garamendi from Ralph Nader.  
  If you would like some background on the Headwaters issue, check out:
  					Ned Daly
  *	*	*	*	*	*	*	*	*	*
  William Jefferson Clinton 			September 9, 1996
  President of the United States
  1600 Pennsylvania Ave. 
  Washington, DC 20500
  President Clinton,
  Thank you for your response to my letter regarding the Headwaters Forest 
  in California. I would like to reiterate my concerns about certain 
  government negotiations with Mr. Hurwitz and, in response to some 
  misconceptions expressed by Deputy Secretary Garamendi, suggest several 
  ways to safeguard the Headwaters Forest.
  Publicly owned assets like national forests or Treasure Island are 
  beneficial to citizens for a variety of reasons. Whether it is a new 
  lifesaving cancer drug developed at the National Institutes of Health 
  from a plant found on public lands or recreational opportunities 
  available in our national forests, these public assets improve the 
  quality of life for local residents and visitors, offer communities 
  economic opportunity and diversity, and greatly benefit our society.
  An important element in the equitable acquisition of the Headwaters 
  Forest is a full review of the financial proceedings against Mr. Hurwitz 
  at the FDIC, OTS and any other relevant agencies. It was this point which 
  Mr. Garamendi had the most difficulty understanding. There are many 
  recommendations and inquiries your Administration can make regarding the 
  proceeding at the FDIC and the possibility of a debt for nature exchange. 
  The concept of two agencies working together cooperatively to solve a 
  problem is certainly not unique (see attached letter to Deputy Secretary 
  John Garamendi), and such an approach would clearly benefit the public 
  interest in this case. Such inquiries and recommendations should be made 
  simultaneously with any other plans for acquisition  of the Headwaters 
  The economic future of the region's workers must also be taken into 
  account when considering any action on the Headwaters Forest. Like so 
  many changing economies in the West, the opportunity to diversify and 
  strengthen local economies in Northern California while protecting land, 
  resources and recreational opportunities has never been greater. With the 
  help of the Department of Labor, an economic diversification strategy 
  should accompany plans to acquire the Headwaters Forest.
  Along with economic diversification, a long term strategy for the 
  protection of the entire redwoods ecosystem-- one of our country's most 
  magnificent and most endangered public assets is necessary. Saving a 
  portion of the Headwaters Forest will certainly serve some aesthetic 
  value, but your actions should also address the broader ecological 
  requirements of keeping this asset intact for future generations.
  Page 2
  And perhaps most importantly, any agreement entered into with Mr. 
  Hurwitz, whether to obtain or swap publicly owned assets, must have full 
  public disclosure regarding appraisals and other environmental 
  ramifications, and the agreement should be subject to a public comment 
  period. There are time pressures presently in place, but surely Mr. 
  Hurwitz would not damage the redwoods and diminish the value of the 
  property during a public comment period. Mr. Hurwitz may be the "Houdini 
  of High Finance" as he has been called, but he has shown himself 
  vulnerable to environmental regulation, conservation lawsuits, and the 
  volatility of the timber market, all reasons which make Mr. Hurwitz a 
  willing seller. Your Administration should use all the tools available to 
  make sure that taxpayers' interests are served in the acquisition of 
  Headwaters Forest.
  Thank you for you attention to this matter.
  							Ralph Nader
  28, 1996
  Mr. John Garamendi
  Deputy Secretary
  Department of the Interior
  Washington, DC 
  Dear John:
  Having had a good things to say about your past work as Insurance 
  Commissioner of California, I regret having to express my dismay at your 
  behavior yesterday following receipt of President Clinton's letter 
  responding to my communication regarding the Headwaters Forest Area.
  It is as if you planned the whole sequence. You called Monday 
  afternoon and I returned your call shortly thereafter. You kept repeating 
  that a "debt for nature" swap involving the Federal Deposit Insurance 
  Corporation (FDIC) could not occur at the _demand_ or _order_ of the Clinton 
  Administration because it would be "inappropriate, illegal and wrong." 
  You stated this was the case because the FDIC is an independent agency. 
  Again and again I responded that I was not urging the Department of 
  Interior,  in its negotiations with Charles Hurwitz, et. al. over the 
  stand of redwoods, to order or demand that the FDIC settle with Hurwitz, 
  et. al. so as to include a debt for nature swap. No matter how many ways 
  I attempted to have you drop this "straw man," you kept repeating the phrase.
  For example, I indicated that Interior could consult and cooperate with 
  FDIC as the FDIC was pursuing its own litigation and negotiations with 
  Hurwitz, et. al. regarding the failed savings and loan which cost 
  taxpayers over a billion dollars. Then I cited the letter which the 
  acting chairman of the FDIC sent to Congressman Ronald Dellums (attached) 
  on January 12, 1994 wherein the FDIC _itself_ stated:
  "Although there is no direct relationship between the USAT failure and 
  the redwood forest currently owned by the Pacific Lumber Company, we are 
  mindful of the possibility that, if Pacific Lumber's parent companies can 
  be held liable for USAT losses, issues involving the redwood forests 
  might be brought into play. You may be assured that we are following this 
  issue closely."
  My words were going into John Garamendi's one ear and out the other 
  because you had another agenda-- namely a telephone press conference from 
  Chicago with California reporters to once again deliver the "straw man." 
  Unfortunately, these reporters did not call me to hear my account of our 
  conversation-- that neither in my letter nor in my exchange with you did 
  I suggest, as you claim, that the president "direct negotiations of a 
  settlement" of the suits pending against Hurwitz.
  What I asked was that the President ask the FDIC to consider seeking the 
  Headwaters from Hurwitz if the litigation is to be settled. To claim that 
  such a request by the President would be "wrong and illegal" is just silly.
  Your brief time in Washington may explain your lack of familiarity with 
  how the government works in such areas. Yes, the independent agencies are 
  insulated from direct Presidential control in that their heads typically 
  can be removed only for "just cause" and not on the presidents whim, but 
  historically the insulation was thought necessary because the independent 
  agencies served dual roles as both law enforcement and adjudicatory 
  entities. To be sure, for that reason, it might be inappropriate (but 
  hardly illegal) for President Clinton to insist that the FDIC go after 
  the Headwaters forest in its action against Hurwitz.
  But you confuse adjudicatory "orders" with guidance. Nothing in the 
  Constitution or any other law suggests that federal agencies must remain 
  hermetically sealed and avoid contact with one another or the President. 
  Since the creation of the independents, every president has guided their 
  actions through OMB 
  Letter from Ralph Nader
  to Deputy Secretary John Garamendi
  Page Two
  directives, guidance documents and other instructions. Moreover, every 
  day in Washington, the so-called "independent" agencies like the FDIC 
  work together on problems of mutual interest. For example, the 
  Federal Trade Commission (FTC) (another independent agency) coordinates 
  all of its enforcement cases against food and drug companies that engage 
  in false advertising with the Food and Drug Administration (FDA) (an 
  "executive branch" agency). No one would be foolish enough to suggest 
  that cooperation of that kind is wrong.
  My proposal to the President took the same tack. He should ask-- not 
  order-- all federal agencies with potential claims against Hurwitz to 
  consider the possibility of seeking the Headwaters property in lieu of 
  cash. The decision as to the remedy to seek would remain precisely where 
  the law puts it-- with the FDIC. The notion that the President is 
  powerless to advise the independent agencies of his views would so 
  emasculate the presidency that I can't imagine that President Clinton 
  would be happy with your position.
  John, clearly you work better when you are essentially your own boss 
  elected by the populace, as was the case with the Insurance Commissioner's 
  position after Proposition 103. A transparent, coordinated maneuver that 
  you were asked to conduct on Monday is not becoming of you, even though 
  you slipped one past what must have been several astonished reporters 
  that you networked so suddenly. I am sending them this letter so that 
  they can be informed about what happened on Monday.
  							Ralph Nader
  P.O. Box 19312
  Washington, D.C. 20036 
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