04/04/2008 GAAS:159:08 FOR IMMEDIATE RELEASE Print Version | Email / Share
Gov. Schwarzenegger Backs Plan for PALCO Lands that Promotes Sustainable Forestry Management and Protects Local Jobs
Governor Arnold Schwarzenegger today sent the following
Statement of Support for the First Amended Joint Plan of Reorganization proposed
by Mendocino Redwood Company, LLC and Marathon Structured Finance Fund L.P. to
the bankruptcy court for the Southern District of Texas and other interested
parties in the Pacific Lumber Bankruptcy Case. It is based on the five
principles the Governor put forth in his Statement of Position dated January 29,
2008.
To All Parties in Interest and the
Court:
As Governor of the State of California, I am
submitting this Statement of Support for the First Amended Joint Plan of
Reorganization proposed by Mendocino Redwood Company, LLC and Marathon
Structured Finance Fund L.P. ("MRC/Marathon Plan") based on the five principles
set forth in my Statement of Position dated January 29,
2008.
California's
majestic redwood forests are among its most precious natural assets. Historian
Kevin Starr once said that the redwood tree could "almost stand alone as a
symbol of California found and lost, lost and
found."
My administration, through the California
Resources Agency, the California Environmental Protection Agency and their
boards and departments, has been active in the Pacific Lumber Company bankruptcy
case. We have an unwavering obligation to protect the environment and the
state's valuable natural resources. For the people of California and as a matter of public trust, we have a
significant commitment to safeguard the nearly $500 million investment that
California and
the federal government made in connection with the historic 1996 Headwaters
Forest Agreement. The United
States and the people of California have a vested interest in a
successful reorganization of a Pacific Lumber Company that will result in sound
management practices for the future of these lands.
In my original Statement of Position, I
indicated our strong position that any reorganization of Pacific Lumber Company
preserves the state and federal governments' interest in Pacific Lumber's
timberlands and adheres to the following
principles:
- Manage the timberlands in accordance with state and federal laws, including but not limited to the existing regulatory permits and authorizations such as the Headwaters Forest Agreement and the Habitat Conservation Plan and all other state permits, AB 1986 (Chapter 615 of statutes of 1998), the Agreement Relating to Enforcement of AB 1986 and the conditions, covenants and restrictions recorded in accordance with AB 1986.
- Manage the timberlands in a manner that complies with all required regulatory permits and other authorizations in coordination with state and federal regulatory agencies.
- Preserve the timberlands by maintaining a level of commercial harvest that will ensure sustainable, high-quality timber production over the long term while preserving and enhancing watershed and wildlife protection.
- Minimize adverse impacts to the local economy and preserve as many local employment opportunities as possible.
- Maximize the greenhouse gas reduction benefits that could be generated in timberland management.
After meeting with each of the plan
proponents, we appreciate that each plan proponent has attempted to address the
principles above. We believe that the MRC/Marathon Plan best preserves the
state and federal governments' interests in Pacific Lumber's timberlands, and
that it also best satisfies all five principles set forth in my January
statement.
The MRC/Marathon Plan best satisfies the
first and second principles - compliance with federal and state laws, permits
and agreements - because it makes concrete pledges to abide by all environmental
laws, existing permits and agreements. In addition, the MRC/Marathon Plan would
uphold and maintain the Pacific Lumber Company Habitat Conservation Plan ("HCP")
and other environmental obligations. Moreover, it demonstrates unequivocal
commitment to environmental protection by promising to obtain Forest Stewardship
Counsel certification. Furthermore, the MRC/Marathon Plan would best satisfy
the extensive regulations for forests in California. Because of their history, the
Pacific Lumber timberlands are highly regulated, and the MRC track record of
success in Mendocino County provides confidence that MRC will
comply with the extensive regulations and satisfy the many agencies and
regulators involved in those lands.
The MRC/Marathon Plan best satisfies the
third principle - maintaining sustainable, high-quality timber production while
enhancing watershed and wildlife protection - because the plan would keep the
timberlands as working timberlands under one owner that has a proven, favorable
track record for sustainable timberland management. The MRC/Marathon Plan is
based on appropriate projected timber harvest levels that meet the critical goal
of long term sustainable forest management. The projected commercial harvest
levels in the MRC/Marathon Plan have the best chance of ensuring sustainable,
high-quality timber production over the long term. Watershed and wildlife
protection is enhanced by MRC/Marathon's commitment to uphold and maintain the
HCP and other environmental obligations and the commitment to obtain Forest
Stewardship Counsel certification.
The MRC/Marathon Plan best satisfies the
fourth principle - minimizing adverse impacts on the local economy and jobs -
because the plan would proceed under the stewardship of a viable, proven timber
company that will keep the local mill operating on a long term basis, and
maintain most of the local timber-related jobs and pensions in the long term.
Critically, the MRC/Marathon Plan is the only plan that commits to make a
significant financial investment to upgrade and make the mill more efficient and
competitive. As such, the MRC/Marathon Plan has strong local support as
evidenced by the Mendocino County Board of Supervisors resolution supporting the
plan and the overwhelming support of unsecured
creditors.
In addition, the
MRC/Marathon Plan best satisfies the fifth principle - maximizing greenhouse gas
reduction benefits - because the plan would engage in long-term, sustainable
timberland management that would reduce projected harvest levels to ensure
long-term sustainability, which will retain the timberlands as working
timberlands and assure their environmentally sound management. The MRC/Marathon
group has represented that it will implement the same exemplary forestry
management practices on the Debtors' timberlands that MRC has successfully
implemented on its timberlands in Mendocino County. This is critical to successful
implementation of California's landmark climate change law and
commitment to capping and reducing carbon emissions. One of the best ways for
California to
achieve its climate change goals is to successfully maintain the forests as
viable commercial enterprises. A business plan that is built on a rate of
harvest that is below the growth rate of the forest not only maintains a large
stock of stored carbon, it sequesters additional carbon to benefit all of us as
we seek ways to reduce the carbon footprint of California. The MRC/Marathon Plan is built
around maintaining the existing forest as commercial forestlands over the long
term, adding to the carbon stored in the forest each and every year by
harvesting less than growth. The commitment to sustainable forestry management
embodied in the MRC/Marathon Plan enhances the value of the asset over the long
term.
Our recommendation addresses the five
important public interest principles from my earlier statement. I understand
that the Bankruptcy Court must decide whether the MRC/Marathon Plan meets the
other confirmation requirements of the Bankruptcy Code. For example, in
considering the question of asset value, we urge the Court to consider the value
of long-term, sustainable management practices. The MRC/Marathon Plan offers the best opportunity by far to
advance and protect both the economic and environmental value of these assets
over the long term.
While it may be
possible for an operator to harvest at elevated rates from a given forest for a
short period of time, unsustainable forestry practices will devalue the large
stock of remaining trees, degrade water quality in streams and tributaries and
impair vital habitat for salmon and endangered species - all of which result in
detrimental economic impact. Sustainable forestry, harvesting trees at a rate
that can be maintained or grown over many decades in a way that keeps or
improves the ecological values of the forest, is essential to maximize the
long-term value of the forest.
We believe that the MRC/Marathon Plan,
subject to the resolution of any remaining bankruptcy-specific issues raised by
the California State Agencies, appears to offer the best chance for a
reorganized company that is positioned for long-term success, while at the same
time enhancing the environment and protecting the local economy. We urge the
Court to confirm that plan. We appreciate the Court's consideration of our
position, as this is an issue of paramount importance to all
Californians.
Sincerely,
Arnold
Schwarzenegger
