20050661 Ver 1_Emails_20050725

[Fwd: [Fwd: Re: [Fwd: Penland agmt]]]
Subject: [Fwd: [Fwd: Re: [Fwd: Penland agmt]]]
From: Cyndi Karoly <[e-mail]>
Date: Mon, 25 Ju12005 15:19:38 -0400
To: Ian McMillan <[e-mail]>
add to file
Subject: [Fwd: Re: [Fwd: Penland agmt]]
From: Mary Penny Thompson <[e-mail]>
Date: Mon, 25 Ju12005 09:24:08 -0400
To: Mell Nevils <[e-mail]>, Gray Hauser <[e-mail]>, Janet Boyer
<[e-mail]>, Danny Smith <[e-mail]>, Kevin Barnett
<[e-mail]>, Cyndi Karoly <[e-mail]>
What do you all think?
Subject: RE: [Fwd: Penland agmt]
From: "Levitas, Steve" <[e-mail]>
Date: Thu, 21 Ju12005 19:33:24 -0400
To: "Mary Penny Thompson" <[e-mail]>, "McCorcle, Justin P SAW"
<Justin.P.McCorcle @ saw02.usace.army.mil>
CC: "William Clarke \(E-mail\)" <[e-mail]>
One of the reasons for pursuing a comprehensive settlement agreement was to be sure that my client
could deal comprehensively with issues of restoration, mitigation and civil penalty payment, all of which
involve costs. Our understandable concern was that we did not want to make a commitment in one area
and then find that one of the agencies was imposing significantly greater costs than anticipated in one of
the other areas. My response to Justin's comment the other day about mitigation for secondary and
temporary impacts is illustrative of this point. My client's current willingness to pay the very large sum of
$250,000 in civil penalties is based on the expectation not only that the permits/certification will be issued,
but also that the restoration and mitigation obligations will consistent what we have committed to in the
application. I don't have all of these items costed out in detail, but when you add up the civil penalties, the
restoration projects, the mitigation costs, the transactional costs (me for example), and the cost of
reengineering and rebuilding the dam, you wind up way north of $1 million dollars. So I am amenable to
putting the Settlement Agreement on hold until the permits are issued. If you think it would be helpful, we
could go ahead and redraft it for signature following permit issuance, so that everyone knows what it will
look like. I am also willing to recommend that my client go the additional step and commit orally or in
writing that it will in fact execute the agreement upon permit issuance. We could even sign the agreement
and hold it in escrow. (Those latter ideas are not necessary as far as I'm concerned, but if there is any
discomfort on DENR's part about the delay, we might consider them.) We have responded to the 401
unit's questions about the application, so I am hopeful we will have a 401 in less than 60 days (perhaps we
can expedite that). Justin seems to think the 404 is on track (perhaps if we can get a signal that the 401 is
coming we can get the 404 processing going in parallel. The Dam Safety permit was supposed to be
issued this week. The trout buffer variance submittal cannot be made until we have the 404 permit
approved and know exactly what the development and restoration plan will look like, but we can get it done
pretty quickly upon permit issuance. Let me know how you want to proceed. Thanks. Steve
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-----Original Message-----
From: Mary Penny Thompson [mailto:[e-mail]]
Sent: Wednesday, July 20, 2005 3:51 PM
To: McCorcle, Justin P SAW
Cc: Levitas, Steve
Subject: Re: [Fwd: Penland agent]
It seems we have a fundamental conflict in our approach to settlement in that Communities of
Penland wants permitting issuance before penalty payment and DENR won't make one contingent
upon the other. Steve's comments seem to indicate that Communities of Penland would consider
obtaining permits absent an agreement. DENR also proposed the same concept as an alternative
to settlement. I wonder whether we can just agree to pursue permits first then deal with
enforcement as a separate matter, abandoning our efforts at preparing a settlement agreement?
McCorcle, Justin P SAW wrote:
I'll be busy from 4-5 this afternoon, and unfortunately in Portland, OR all
of next week for training. My training class starts at 8:00 AM Pacific time
(assuming my conversion is correct, that's 11 for y'all) -- so, because I
love y'all so much, I could do a call before then -- say 9:30 on Tuesday?
Just let me know where to call in.
-----Original Message-----
From: Levitas, Steve [mailto:[e-mail]]
Sent: Wednesday, July 20, 2005 2:33 PM
To: Mary Penny Thompson
Cc: McCorcle, Justin P SAW
Subject: RE: [Fwd: Penland agent]
I could talk between now and 3:30 and between 4:15 and 5:00 today or any
time
Monday or Tuesday. Let me know. Thanks.
-----Original Message-----
From: Mary Penny Thompson [mailto:[e-mail]]
Sent: Wednesday, July 20, 2005 2:26 PM
To: Levitas, Steve
Cc: McCorcle, Justin P SAW
Subject: Re: (Fwd: Penland agent]
Steve and Justin,
I'm available this afternoon if you want to run through the issues.
I'll be out Thursday and Friday, but will be available again on Monday
afternoon, Tuesday any time and Wednesday morning. Will any of those
times work for you?
Mary Penny
Levitas, Steve wrote:
Thanks for these comments, Justin. I have been trying to reach Mary
Penny
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for some time to discuss her draft and am awaiting a reply. My client and I
do not seek to negotiate further on the monetary terms of the settlement
agreement (i.e., we accept DENR's terms), but issues like the ones you raise
do need to be thought through and resolved, and I am ready to talk about
them
whenever Mary Penny and you are available. As we have discussed, we
especially need to get the sequencing straight. My client has no money or
assets and no access to capital without permits. Thus, the obligation to
make civil penalty payments, as we have said all along, needs to be
contingent on the permits being issued. In addition, it seems unfair to ask
my client to voluntarily pay one of the largest civil penalties in DENR
history (even though there have been many violations with far greater
impacts
to the environment) and without having gotten resolution of its permitting
issues. If the permits are not issued and the development killed, the
regulatory agencies can attempt whatever enforcement action they deem
appropriate against what will be a bankrupt entity. As you suggested, the
simplest thing might be to wait to execute the agreement until the permits
are issued, but DENR may have some uneasiness about that.
To respond to your specific points:
(1) We should probably reference the "prior unpermitted or unapproved
impacts" in an exhibit (two actually -- one for jurisdictional waters and
one
for trout buffers), which we have already prepared and submitted to DENR
(and, at least with respect to the first, to USACE as well). I believe it
is
accurate to say that, if the 404 permit is issued, all jurisdictional
impacts
will either be permitted or remediated/restored. However, we do not intend
to agree to additional restoration if the permit is not issued. In that
case, the agencies would be free to seek whatever recourse they choose.
This
language appears to need some further work to capture that intent. I also
think the language may not be quite accurate with respect to the trout
buffers, since there are some past unapproved activities that may not be
approved after the fact but also may not be subject to restoration. I'll
sort that out with Mary Penny and her client. All proposed restoration is
described in the restoration plan included in the permit application.
Detailed construction drawings will be submitted to UASCE and DWQ if an when
the permit is issued.
(2) I agree with you that it does not make sense to start placing
restrictive covenants on the property before the permit is issued, nor is
that is something we, or any other similarly situated landowner, could agree
to. I also need to point out that the buffer on Diamond Lake, while
depicted
in a figure in the permit application, was not discussed as part of the
preservation mitigation for the project that would be accomplished through
restrictive covenants. We are willing to talk about treating it that way,
but I don't think that's what we proposed initially. We are also willing to
talk about conservation easements rather than restrictive covenants, if we
can find a willing grantee, but we may run into a problem given that much of
the area to be protected has been conveyed to third party owners. Our
thinking has been that we have a better shot of imposing the necessary
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restrictions through a change in the restrictive covenants on the property
than by getting each owner to convey an easement to some third party. On
the
other hand, if we can get our permit and get our financing turned back on,
there is a chance that we could buy the conveyed parcels back from their
current owners, which would make the conservation easement option more
feasible.
(3) To my knowledge, no one has ever previously suggested that there
would
be a separate component of this agreement dealing with additional mitigation
for temporary or secondary impacts from the unpermitted activities. My
assumption throughout has been that those issues were being resolved by the
payment of a very large civil penalty. In any case, I think the agreement,
not the permit, is the place to address these issues (so I don't see a need
to consider what happens with respect to these issues if the permit doesn't
issue).
Thanks again for your comments. I hope we can arrange a time to talk
soon.
Steve
-----Original Message-----
From: McCorcle, Justin P SAW
[mailto:[e-mail]]
Sent: Friday, July 08, 2005 4:52 PM
To: Mary Penny Thompson; Levitas, Steve
Subject: RE: [Fwd: Penland agmt]
Mary Penny and Steve,
Sorry to have not commented on earlier drafts of this agreement. I do
have a
few questions/comments:
1. Part II says that "COP agrees to resolve prior unpermitted or
unapproved
impacts on the Property by removing impacts, restoring disturbed areas,
mitigating disturbed areas, obtaining after-the-fact permits or
approvals,
and/or providing mitigation for impacts in accordance with federal and
state
permits and approvals and with this Agreement." Does this mean that any
filling or other "violation" activity that is not eventually permitted
will
be restored? If so, what are the parameters for such restoration? What
happens in the event that permits are denied, in full or in part?
2. You mention deed restrictions for buffer areas around the lake, to be
put
in place within sixty days. I think that putting real estate restrictions
on
the property before permits are issued may be a logistical hassle. It may
be
easier to add the restrictions afterward. Additionally, inasmuch as the
restrictions are part of the mitigation for 404 impacts, we would prefer
a
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conservation easement to restrictive covenants or a declaration of
restrictions, and would prefer the use of our model document, linked
here:
http://www.saw.usace.army.mil/WETLANDS/Mitigation/Documents/conservation~2C
a
sement~20r8-03.pdf.
3. Finally, I'm assuming that the mitigation ratios outlined in the
February
17 mitigation proposal are to compensate for the impacts applied for, and
do
not necessarily reflect mitigation for the primary and secondary effects
of
the violation, or the effects of the violation on resources before the
temporary cleanup was done. Some impacts to consider include
sedimentation
of
downstream waters, thermal impacts associated with removal of vegetation,
surface water drawdown associated with pond creation, disruption of
aquatic
life movement and organic material processing, and temporal effects on
aquatic resources associated with the violation being allowed to remain
in
place for some time. If these are not to be addressed in the permit
mitigation plan, they should be addressed in the agreement. Again, if
permits
are denied, in full or in part, provisions should be made for addressing
this
mitigation component.
Thanks for the chance to provide input. Hopefully we can address these
issues
within the appropriate timeframe.
Justin
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[Fwd: [Fwd: Re: [Fwd: Penland agmt]]]
-----Original Message-----
From: Mary Penny Thompson [mailto:[e-mail])
Sent: Thursday, July 07, 2005 3:44 PM
To: McCorcle, Justin P SAW
Subject: [Fwd: Penland agmt]
Justin,
I'm sorry that I forgot to include you in the original list of
recipients. It is an e-mail to Steve Levitas giving our final
substantive counter-offer. Of course, let me know if you have any
problems with the agreement and I will work with you to iron them out
before July 31st.
Thanks,
Mary Penny
***DISCLAIMER***
Treasury Department Circular 230 Disclosure: To ensure compliance with
requirements imposed by the Treasury Department, we inform you that any U.S.
federal tax advice contained in this communication (including any
attachments) is not intended or written to be used, and cannot be used, for
the purpose of (i) avoiding penalties under the Internal Revenue Code or
(ii)
promoting, marketing or recommending to another party any transaction or
matter addressed herein.
Mary Penny Thompson <[e-mail] '.
Assistant General Counsel
N.C. Department of Environment and Natural Resources
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