20140356 Ver 1_Emails_20140817

Higgins, Karen
From:Tim Sweeney <[e-mail]>
Sent:Sunday, August 17, 2014 6:11 PM
To:DJ Gerken
Cc:Amelia Burnette; [e-mail]; Higgins, Karen;
[e-mail]; Lynnette Batt; Jeff Fisher
Subject:Re: The Quartz Corp, USA -- SAW-2013-01376
Dear all,

I've received news that our mitigation proposal has been rejected by the Corps of Engineers. I thank everyone
at the Corps DENR for considering the proposal, and I'd like to offer my apologies to all for introducing a
proposal that has brought forth this controversy and potential risk of SELC litigation.
To prevent further contention, I'm withdrawing mitigation efforts in the Beaver Creek watershed from further
consideration, and advising QC that EEP would be the better source of mitigation credits.

I do hope that the opponents of this mitigation bank are right, and I'm wrong, about its rejection being good
news for the Toe River.
Best Regards,

Tim Sweeney

On Fri, Aug 15, 2014 at 12:30 AM, Tim Sweeney <[e-mail]> wrote:
Hi DJ,

Thanks for sharing your perspective! I think our disagreement is centered on two issues, so I'll share my
thoughts on those.
Of that various types of mitigation projects, I see pure preservation as bringing the highest benefit, for the
following reasons:
- The rules require a much higher ratio of permanent stream frontage conservation than restoration projects.
- The rules only allow this in the case of especially important ecological areas, hence lots of high-quality stream
frontage is protected per foot of stream impacted elsewhere.
- Compared to a labor- and equipment-intensive restoration project, a far larger portion of the cost of
establishing the bank goes into acquiring the land, thus it's a more economically efficient to ensure permanent
protection on a rolling basis.
- I have general skepticism of the benefit of typical farm stream restoration projects as generally implemented
by creating artificial meandering streams elevated up to ground level to "repair incised stream banks". I'm not
an environmental scientist, but from hiking all over North Carolina and occasionally finding a completely intact
natural stream on relatively flat land, I'm left with the impression that today's unnatural streams are not incised
into their banks, rather their banks are unnaturally elevated due to accumulation of sediment in and above the
floodplain due to erosion caused by timbering and farming. If that is the case (scientific opinions differ), then
most of these projects are not restoring natural conditions but are just creating an unstable stream arrangement
that will eventually erode away.

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Regarding whether the proposed mitigation bank falls under the defined scope of credible threats, my view is
that it does because the land's rightsholders, myself and the Town of Spruce Pine, collectively do have the legal
right to cut timber, that the mature hardwood forest there provides significant economic rationale for doing so,
and that doing so is compatible with the Town's ongoing use of the site as its reservoir since, though timber-
cutting would impact water quality, the water quality should remain adequate as a water source compared to
management of water sources elsewhere in the State. An example I'm thinking of offhand is timbering on what
appears to be Army Corps land around Lake Jordan.

Personally, I'm a fan of pursuing legally-enforceable permanent conservation of land that is presently in a state
of high ecological quality due to coincidental and potentially temporary alignments of landowner goodwill,
watershed usage, etc. This seems to me exactly the kind of scenario anticipated by the rules' explicit blessing of
preservation-only banks in exceptional circumstances.

I don't have a full understanding of the "no net loss" policy implications. It seems like a metric that needs to be
looked at probabilistically over time. Preservation doesn't necessarily have an immediate or constant-rate impact
on water quality, but does have a dramatic impact at the sporadic times when severe impacts would have
occurred due to development, timbering, etc.

If these "paper exercises" place 5-10 feet of streams under permanent conservation for each 1 foot of stream
impaired, that seems like a great arrangement to me, and a vastly better use of resources than having a bunch of
bulldozers plow together 2 feet of fake meandering streams on a farm.

Personally I think it would be valuable to go through the process and all come out with a clear understanding of
the rules and law on projects of this nature, given the potential opportunity to achieve enforceable permanent
conservation on more North Carolina land that is in good shape due to goodwill and non-permanent
arrangements.

If you'd like to chat generally/strategically, I'm available in Raleigh for meetings most mornings/evenings for
the next 3 weeks. For a detailed conversation about mitigation issues, it's better to meet with Lynette as she has
a very detailed understanding of the project specifics.

Tim

On Thu, Aug 14, 2014 at 11:26 AM, DJ Gerken <[e-mail]> wrote:
Mr. Sweeney:

Thank you for copying us on this email. We appreciated the opportunity to meet with your
consultants recently and we remain committed to an open dialogue on these issues.

First, let me start with my genuine appreciation for your substantial conservation investments in
our state. We appreciate your work to preserve important natural areas in the mountains of western
North Carolina. In general, we do not object to conservation buyers like yourself taking maximum
advantage of tax incentives, mitigation credits and any other viable funding mechanism to extend the
impact of their conservation expenditures.

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While the purpose to which you will put these mitigation dollars is laudable (preservation), the
source of the mitigation funds in this context is problematic. At root, there is a real environmental harm
here – the activities that prompted this application for a Department of the Army permit . The
unpermitted and illegal fill of mountain streams with mining waste and the relocation and fill of other
streams in the service of an expanding mining operation is not innocuous. Although quartz mining in
Spruce Pine is economically important, there are tradeoffs. As a result, our environmental laws require
industries to legitimately offset every foot of stream we lose to the march of progress. It is for good
reason that the law requires avoidance and minimization of stream impacts as a first priority, and
mitigation only as a last resort. It is for that same good reason that real investment in work to enhance
and restore impaired streams is presumptively required to meet mitigation standards. The danger of
preservation alone as a mitigation strategy is, in part, the great risk that mitigation will become a paper
exercise without a net benefit to water quality. Maintaining the status quo through a preservation credit
deprives the public of a promised environmental benefit to offset an impact and, crucially, eliminates an
important incentive to avoid and minimize impacts to mountain streams.

That is what happened here. The Town of Spruce Pine had the foresight to acquire and protect its
watershed. The legislature had the foresight to provide it a protective water supply watershed
classification. We believe the record shows that the first step in the process for this mitigation plan was
an approach by your consultants to the town of Spruce Pine with an offered financial incentive to remove
those protections – not for the purpose of implementing a destructive land use, but rather to create the
perception of such a threat, in order to extract more mitigation credits. The Town, in agreeing to sell the
watershed, insisted that the buffers must be protected through a restrictive covenant that significantly
curtails any tree cutting and requires no negative impact on water quality. Now the mine seeks
mitigation credit for donating back to the town a conservation easement on the buffers it once owned
outright and has already protected through a restrictive covenant. This same washing of mitigation
dollars through purpose-built financial transactions could be used by any number of noxious and
environmentally damaging and uses to avoid mitigation responsibilities, with real environmental
consequences. That is why it is illegal.

I am grateful to you for your important conservation work in the mountains. And I am happy to
work with you to find innovative strategies to further that mission. But we can’t achieve that good
outcome by blessing what appears to be an illegal attempt to work around or “game” the laws that
protect our mountains streams. I would welcome the opportunity to meet with you in person and
explore other approaches to this mitigation plan. I also remain willing to meet with the mine to look for
cost-effective strategies for completing their work in compliance with the law.

Sincerely,

DJ Gerken

DJ Gerken
Senior Attorney
Southern Environmental Law Center
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[e-mail]
22 S. Pack Square, Suite 700
Asheville, North Carolina 28801-3494
Tel: [phone]
Fax: [phone]

From: Tim Sweeney \[mailto:[e-mail]\]
Sent: Wednesday, July 23, 2014 10:54 PM
To: Amelia Burnette; DJ Gerken; [e-mail]; [e-mail]; [e-mail]
Cc: Lynnette Batt; Jeff Fisher

Subject: The Quartz Corp, USA -- SAW-2013-01376

Dear all,
As the sole owner of Rocky River Hydro LLC, holder of the land around and including the Spruce Pine
Watershed, I'm writing to share my thinking on the topic that the SELC folks recently brought up: credible
threat.
I fully acknowledge that RRH's purchase of this tract, and the Town of Spruce Pine's sale of the tract, were
guided by a shared desire to protect and preserve the beautiful forest and streams there.
I state no intent to cut any trees. My basis for believing that this site falls under the defined scope of credible
threat is that (a) the 50-300ft range of the stream buffers may lawfully be timbered; (b) the net value of the
mature, harvestable timber on the site is sufficiently high to provide a clear economic motive for the parties
jointly in control of the buffers (being Rocky River Hydro as the fee-simple land owner, and the Town of
Spruce Pine as the holder of the current restrictive covenant) to agree to allow timbering there; and (c)
timbering so close to the buffers would impact water quality.
If the conservation-mindedness of a landowner or renegotiable covenant holder becomes a determining factor in
establishing credible threat, then it will be impossible for conservation-minded folks to participate in mitigation,
either individually or through collaborative relationships like that between RRH and the Town of Spruce
Pine. Surely that's not the intent!
To preserve the equality of rights regardless of a person or entity's beliefs or goals, I think credible threat must
be judged on basis of joint legal rights (what the various land rights-holders together are allowed to do by law)
and economic feasibility (whether there is a clear economic motive for them doing it).
As conservation-minded entities, both RRH and the Town of Spruce Pine entered into the land transactions and
restrictive covenants with a desire to preserve the land, and explicitly named mitigation banking rights in that
bargain. Other possible structures were explored (such as permanent conservation easements held by SAHC)
but this structure was agreed upon, and mitigation rights were explicitly negotiated as part of the bargain.
If anybody has any comments or questions for me personally, feel free to email me.
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Best Regards,
Tim Sweeney
(Note: I'm the sole owner 130 of Chatham LLC and Rocky River Hydro LLC, and CEO of Epic Games, all
separate and unrelated entities)

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