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Headwaters Forest Agreement
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TAXPAYER ASSETS PROJECT - NATURAL RESOURCES POLICY ADVISORY
(please distribute freely)
TAP-RESOURCES
October 2, 1996
INTRODUCTION
The Clinton administration recently announced an agreement had
been forged to save the Headwaters Forest. This agreement has been
praised by some government officials and condemned by many environmental
organizations, who want all 60,000 acres of the Headwaters Forest area
protected from logging. Below is the text of the agreement.
For more information on Headwaters and the Agreement, point your browser
to this address: http://www.impactonline.org/baa/rallycry/
Arthur Clark
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AGREEMENT
WHEREAS, MAXXAM Inc. ("Maxxam"), The Pacific Lumber
Company, on behalf of itself, its subsidiaries and its affiliates
("Pacific Lumber," and together with MAXXAM, the "Pacific Lumber
Parties"), the United States of America ("United States") and the
State of California ("California") (all of the foregoing
collectively, the "Parties")have been negotiating a possible land
exchange of the Headwaters Forest for valuable federal and state
considerations; and
WHEREAS, Pacific Lumber desires to obtain a permit under section
10(a) of the Endangered Species Act ("ESA");
WHEREAS, the United States Fish and Wildlife Service, and agency
within the United States Department of the Interior, and the National
Marine Fisheries Service, and agency within the United States
Department of Commerce (collectively, the "Services"), are required to
comply with their responsibilities under the ESA and the National
Environmental Policy Act ("NEPA");
WHEREAS, the Parties desire to seek resolution of the pending
takings lawsuits and the possible land exchange by entering into this
Agreement (the "Agreement");
NOW, THEREFORE, the Parties agree as follows:
1.The Pacific Lumber Parties will not enter the approximately 4,500
acres of Pacific Lumber's timberlands commonly referred to as the
Headwaters Forest (the "Headwaters Forest") or the approximately
1,125 acres commonly referred to as the Elk Head Forest to conduct
logging operations, including salvage logging (the "Moratorium"),
provided that the Moratorium shall terminate, unless extended by
agreement of the Parties, if within 10 months from the date of this
Agreement (the "Expiration Date") the Parties have not achieved the
following items to their respective satisfaction, such achievement to
be evidenced by written instrument(s) in form and substance
satisfactory to all of the Parties. The Parties agree to use their
respective best, good faith efforts to achieve such items:
a. Transfer of the Headwaters Forest and the Elk Head Forest to
the United States and California in exchange for (i) the Exchanged Elk
River Property (as defined below) and (ii) property and other
consideration from both the United States and California (including
cash) having an aggregate fair market value of $300 million;
b. Acquisition by the United States and California of the
approximately 9,600 acre Elk River Timber Company property ("Elk
River Property") to serve, in part, as an additional buffer zone of
approximately 1,845 acres (the "Preserved Elk River Property") for the
Headwaters Forest, with the remaining approximately 7,755 acres (the
"Exchanged Elk River Property") to serve as additional consideration to
be received by Pacific Lumber in exchange for the Headwaters Forest
and the Elk Head Forest under Subparagraph 1.a, above.
c. The Parties agree to use their respective best, good faith efforts
to achieve expedited development and submission by Pacific Lumber
and processing
(i).by the United States of an incidental take permit ("Permit")
under section 10(a) of the ESA, 16 U.S.C $A4; 1539(a), based upon a
multi-species Habitat Conservation Plan ("HCP") covering the remaining
lands of Pacific Lumber, the Exchanged Elk River Property, any other
timberlands or timber harvesting rights acquired by Pacific Lumber as a
result of the herein-described transactions (collectively, the
"Resulting Pacific Lumber Timber Property"), the Headwaters Forest and
the Elk River Forest, and
(ii). by California of a Sustained Yield Plan ("SYP") covering
the Resulting Pacific Lumber Timber Property.
(iii). In order to facilitate processing of the Permit and SYP,
the parties agree to follow the procedures set forth below:
A. Development of HCP. Pacific Lumber and the Services
shall within 30 days of the date of this Agreement begin good faith
negotiations for a multi-species HCP covering all of the Pacific Lumber
Timber Property and the Elk River Property, including Headwaters
Forest, the Elk Head Forest, and the buffer. Such HCP shall be
prepared in full compliance with the requirements of the ESA and other
applicable laws and regulations and shall be consistent with the
regulations applicable to the critical habitat for the marbled
murrelet, 50 C.F.R $A4; 17.95(b). The HCP shall provide for the
management and harvest of the Resulting Pacific Lumber Timber Property
consistent with the requirements of the ESA and other applicable laws and
regulations. The HCP shall be subject to the Department of Interior's "No
Surprises" policy.
B. Submission of HCP and Application for Permit. Withing 120 days from
the date of this Agreement, Pacific Lumber intends to submit to the
Services an application for a Permit and a proposed multi-species HCP
that covers the Headwaters Forest, the Elk Head Forest and the Resulting
Pacific Lumber Timber Property.
C. Review and Approval of the HCP and Permit. The Services will
expedite consideration of the application for the Permit and will use
their best efforts to review and decide upon the application for the
Permit as soon as practicable after Pacific Lumber submits the
application to the Services. The Parties recognize and understand that
the Services must make their decision on the application for the Permit
based on sound science and in full compliance with the requirements of
the ESA and all other applicable laws and regulations.
D. Public Involvement. The Parties understand that Pacific Lumber can,
by involving the public in the HCP planning process, facilitate early
public review of the HCP and expedite development and consideration of
the HCP. The Services are responsible for ensuring that the public
involvement requirements in the ESA, NEPA, and other applicable laws and
regulations are met.
E. NEPA Compliance. The Parties understand and agree that issuance of
an incidental take permit requires compliance with NEPA and that the
Services are responsible for this compliance. It is Pacific Lumber's
intent to submit an HCP that will not significantly affect the quality of
the human environment and to prepare a draft Environmental Assessment
("EA") for review by the Services. The Services will (I) assist Pacific
Lumber in outlining the type of information required by the EA, (II)
independently evaluate the environmental issues, (III) make and changes
necessary, and (IV) take responsibility for the document's scope and
content. The Services will promptly advise Pacific Lumber if, at any
point, the Services believe an environmental impact statement ("EIS") is
required. The Parties will pursue the HCP and NEPA processes concurrently.
F. Submission Review and Approval of SYP. Pacific Lumber will submit
to the State of California a proposed SYP which (I) covers the Resulting
Pacific Lumber Timber Property, and which the Parties agree will be
amended to include and timberlands or timber harvesting rights received
by Pacific Lumber in Elk River Property, and (II) complies with the terms
and specifications to be agreed upon by Pacific Lumber and California as
soon as practicable, such agreement to be evidenced by an instrument in
form and substance satisfactory to Pacific Lumber and California (the
"SYP Terms Condition"). The State of California will expedite
consideration of such SYP upon its formal submission to California. Such
SYP shall provide for management and harvest, consistent with applicable
and legal requirement, of all the Resulting Pacific Lumber Timber
Property and shall be with respect to the marbled murrelet, the coho
salmon, the northern spotted owl and all other species specifically or
generally identified in the SYP (whether now or hereafter listed as
threatened or endangered under the laws of the United States or
California). The State of California shall use its best efforts to review
and approve the SYP.
d. The dismissal with prejudice at closing by Pacific Lumber of the
following pending legal actions: Pacific Lumber Co. v. United States,
No. 96-257L (Fed. Cls.) and Salmon Creek Corp. v. California Board of
Forestry, No. 96-CS-1057 (Cal. Super. Ct.), such dismissals to be
evidenced by instruments in form and substance satisfactory to each of
the parties to those cases.
e. All property furnished by the United States and/or California to
Pacific Lumber pursuant to Subparagraph 1.a. having been freed of all
mortgages, liens, pledges, security interests or encumbrances of any
kind (other than permitted encumbrances to be agreed upon by the Parties).
f. All consents, approvals, opinions, or similar items from third
parties necessary to consummation of the transactions described in the
Agreement having been furnished,
g. In addition to the documents and instruments specifically
referred above, execution by the Parties of appropriate documents and
instruments, in form and substance satisfactory to the Parties,
evidencing the transactions described in this Agreement.
2. It is a condition to the continued effectiveness of the Moratorium
that the United States and/or California provide to Pacific Lumber,
within 60 days of this Agreement, a list of property interests owned or
controlled by the United States and/or California with a good faith
estimated fair market value equal to or in excess of $300 million which
are available and acceptable to pacific Lumber for exchange under
Subparagraph 1.a. above (the "Presenting Properties"). Such list shall
be accompanied by sufficient background information (including, where
available, appraisals and any other valuation information) regarding
the Presented Properties as will enable Pacific Lumber to make a
determination as to the commercial viability of such property interests
and the ability to monetize such property interests; Pacific Lumber
shall also be give access to enter and inspect such Properties. Should
California and/or United States fail to perform the obligation within
120 days from the date of this Agreement, the Moratorium shall terminate.
If the United States and/or California do furnish the required amount and
type of Presented Properties (together with access and sufficient
information to evaluate the Properties) by such date, (a) the PArties
shall have a ten-day period of time commencing on the date that the
Presented Properties list is provided during which to agree upon the
procedures to be used in determine the fair market value of the
Presented Properties (the "Appraisal Procedure Period"), such agreement
to be evidenced by an instrument in form and substance satisfactory to
all of the Parties, and (b) Pacific Lumber shall have an additional
30-day period following the Appraisal Procedure Period in which to
evaluate the Presented Properties (the "Evaluation Period"). If
at the end of the Appraisal Procedure Period, all of the Parties hereto
have failed to execute an instrument indicating their agreement as to
the procedures to be use in determining the fair market value of the
Presented Properties, the Moratorium shall terminate. Furthermore, if
at the end of the Evaluation Period, Pacific Lumber has failed to identify
$300 million in fair market value of Presented Properties which it
finds acceptable for exchange, the Moratorium shall terminate. The Parties
further agree to supplement this Agreement to provide for an effective
exchange at closing.
3. As soon as practicable, the Parties shall file appropriate joint
motions to stay the litigation (the "Litigation") referenced in
Subparagraph 1.d. above; provided, that each Party shall retain and
have the right, at any point after the presentation of the Presented
Properties list, to move to terminate the stay (a) at any time when the
Moratorium has terminated, or (b) if such Party has a reasonable belief
that the matters provided for under Paragraph 1 of the Agreement will
not be achieved. The Parties also agree to cease and desist all
activities in connection with the Litigation, except as ordered by the
court, until the motions are granted.
4. All discussion relating to, or arising from, this Agreement,
including but not limited to all negotiations and final products shall be
subject to the Principles Governing Discussions dated August 23, 1996,
notwithstanding and stated termination date thereof.
5. The exercise by any Party of its right of termination under this
Agreement or to end the Moratorium shall be preceded by two weeks
written notice to the other Parties.
6. It is agreed that the following shall each be a consideration to
closing of this Agreement:
a. Completion of each of the matters described in Subparagraphs
1.a., 1.b. and 1.d. through 1.g. above;
b. Approval of an HCP and SYP and issuance of a Permit, each
in a form and substance satisfactory to Pacific Lumber, such
satisfaction to be evidenced by a written instrument by Pacific Lumber
satisfactory in form and substance to all of the Parties;
c. The issuance on or before the closing date by the Internal
Revenue Service and the California Franchise Tax Board of closing
agreements in form and substance sought by an satisfactory to the
Pacific Lumber Parties, setting forth acceptable federal and California
income tax consequences of the transactions;
d. The absence of a judicial decision in any litigation brought by
third parties that and Party reasonably believes will significantly
delay or impair the transactions described in this Agreement; and
c. Approval by the Boards of Directors (and any special committee
thereof) of the applicable Pacific Lumber Parties, and as appropriate,
their affiliates, of the transactions described in this Agreement.
7. In the event that a claim or action is brought or threatened by a
third party challenging the legality, enforceability or validity of
this Agreement, or any portion thereof, including the HCP, Permit or SYP,
the Parties agree to cooperate and act in good faith to preserve
diligently this Agreement, HCP, Permit, or SYP against such third party
challenge.
IN WITNESS WHEREOF, the Parties agree to the foregoing as of
September __, 1996.
THE UNITED STATES OF AMERICA
By:
THE STATE OF CALIFORNIA
By:
MAXXAM, INC.
By:
THE PACIFIC LUMBER COMPANY
By:
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