Fred is an old-school watchdog and there is not much that gets by his keen sense of smell for political B.S... Well, here are his Public Comments on the ORC Lease and it is very informative. Rob T.
Click the link to read the letter:
Coos County Board of Commissioners
Dear Coos County Commissioners:
Regarding the proposed County - IDM / ORC “Surface Use Lease”
I understand that the Board of Commissioners has solicited and that they welcome questions, comments and concerns from Coos County citizens that are related to the proposed subject Surface Use Lease in preparation for public discussion that is planned to commence in a few weeks. This county citizen’s questions, comments and concerns are set forth below. I am among those who welcome ORC to the community and I wish them success. Like the commissioners, I am not an expert in road gravel or in mining operations; and there are parts of the proposed lease agreement that I do not understand. I do not seek or expect a response to this message.
A. The county will be entering negotiation from a position of strength in the subject matter. There is absolutely no reason to give anything of value away.
B. The proposed lease agreement, as written, recognizes IDM / ORC as the owner of certain minerals etc. that may be found in and under the surface of certain county owned property, and recognizes that IDM / ORC has a right of ingress and egress to mine those minerals, etc. on certain county owned land. The lease agreement does not appear to recognize IDM / ORC as having any right to use county owned forest roads that are not on the surface of specific property identified in Exhibit A. In this day of the GPS, shouldn’t the specific point of ingress and egress be clearly identified in the lease agreement?
C. Why is it imperative that the proposed lease agreement be entered into with an entity that has informed the world that they may be near financial collapse? Which Coos County Commissioners believe that the citizens who they represent should enter into an agreement with such a company? Is it fact that IDM / ORC require this lease to stay alive? If so, why?
D. Why isn’t the county waiting until such time as IDM International Ltd., the parent of Oregon Resources Corporation (ORC), is able to have a cure in place for their financial woes? IDM would then be in a position to offer meaningful safeguards to the citizens of Coos County?
E. Why are some county commissioners contemplating entering into a lease agreement with ORC and not the parent IDM? ORC has no assets that are not owned 100% by IDM. ORC key personnel are listed as IDM employees. IDM, not ORC, has the ability to honor contractual obligations.
F. Who is expert in mining operations outside legal counsel that is reviewing and will be negotiating the proposed lease agreement for the county?
G. Commissioner Messerle has stated that the citizens of Coos County owe ORC something. The citizens have given significantly more to ORC than what most Coos County businesses enjoy. If anything, IDM / ORC owe the citizens of Coos County. The citizens of Coos County“owe” ORC the honoring of contractual obligations, no more. What does Commissioner Messerle believe is owed by the citizens to ORC or IDM and
H. The local daily newspaper has led their readers to believe that proceeding slowly and deliberately in this matter with a company that is questionably viable has harmed the county and IDM / ORC. Commissioner Messerle has led the citizens to believe that timely execution of the proposed lease agreement will result in immediate dollar benefits and significant revenue flowing from IDM / ORC to the county treasury. The content of the lease does not appear to support those positions. Why must the lease agreement be executed soon and when “soon” will significant money start flowing to the county?
I. Why are some commissioners so eager to give away, and not sell all of the rights needed and requested by ORC that are identified in the proposed lease agreement?
J. Reading the proposed lease agreement, it appears that, at best, as the agreement is written, in the near term (perhaps eight years from now), less than $20,000 will have been received by the county (and that $20,000 in then year dollars will have less buying power than today’s dollars) - not the Commissioner Messerle suggested hundreds of thousands or millions of dollars. Am I correct?
K. Recognizing that this proposed lease agreement relates solely to minerals mining etc. (and possible forest removal to facilitate mining operations) on county owned land, somewhere in the proposed lease agreement
document it should be noted that ORC has received favorable tax relief and tax avoidance from the citizens of Coos County and at a minimum IDM / ORC must agree to employ only local people (unless the county and IDM / ORC agree that required skills level are not available in Coos County) at the highest possible wage for
mining etc. on county land.
L. Somewhere in the proposed lease agreement document it should be noted that in all IDM / ORC business dealings, that when there is a cash shortfall, and there will be, local (non - management) IDM / ORC employees must be paid by IDM / ORC first – having a priority over banks, subcontractors, suppliers, etc. This is a minimum safeguard that the commissioners can give to the local citizens.
M. There is a hold harmless section; but, where are the safeguards if IDM / ORC, operating on county owned forest land, by negligent act, causes a forest fire that ultimately destroys county, private and other county forests? Is the promise at Section7.1 by a questionably viable company meaningless?
N. IDM / ORC may remain a less than financially secure company during the life of the proposed lease agreement. There should be a section that says assignment by IDM / ORC of any mineral etc. rights in and under county owned land and under any lease agreement must be approved by the county. This may be covered by section 10.3. Does 10.3 cover mineral rights that are a part of a different lease agreement with Kimberly Clark?
O. In consideration of receiving the county agreements that are included in the proposed lease agreement, if IDM / ORC is found to be in default of any provision of the lease agreement, all mineral etc. rights should pass to the county.
PREAMBLE– In the interest of the citizens of Coos County, the lease agreement should be between the county and IDM, the parent company, not with ORC.
RECITALS A - Add words to state that Exhibit A is made a part of the lease agreement. Other exhibits also.
RECITALS F - Generally, in the legal world, “surface” means width and length and has nothing to do with depth. There is nothing in the lease agreement that states the depth ORC may dig for minerals nor how high the stockpiled mined material may be. The proposed lease agreement, as written, may make it possible that Coos County may one day have the largest deep pit mine in the country. Perhaps, thanks to heavy Oregon rain, the county will have a new county lake. A mutually agreeable definition of “SURFACE” should be included in the
Section 1.1 - The proposed lease agreement, as written, gives IDM / ORC permission to use the surface - what is surface? Also, the citizens give IDM / ORC the right to build or use roads as unilaterally deemed necessary by IDM / ORC as they may be needed for mining operations on other non- county owned lands. Why? Why is this give away and not a sale of rights?
Section 2 - Why are some commissioners willing to tie up the citizens land under the proposed lease agreement for 17 years? Why not in and out in five years? Commissioner Messerle has led citizens to believe that lease execution is paramount so the mining operations can commence soon after lease signing with immediate dollar benefits to the county. Yet, a review of the proposed lease agreement shows that ORC has 10 years and 364 days following lease execution during which they may do no mining but must pay the county two dollars an acre annually. If they lift a shovel full of minerals on the last day of year 11, they may extend the agreement by up to six more years. As written, this is not in the best interest of the citizens of Coos County.
Section 3.1 / 3.2 - It appears that the only money that the county will be receiving is $11,639 when the agreement is signed; $11,639 when mining starts (and that could be 11 years from now) and $932 annually ($2 per acre) commencing year one. It appears that it is possible that during the next 17 years the county would receive about $39,000 - max. Is this fact? Where is the significant revenue that the citizens were led to believe would be flowing to the county treasury soon?
Is it possible that $39,000 could be offset by hundreds of thousands of citizens dollars in damaged lands, destroyed forests, required clean up, all when IDM / ORC declares Chapter 7 and walks away?
Also, the term BLOCK MODEL should be defined in Section 3.1.
Section 4.1 - Requires plans, lots of plans. But nowhere is there a penalty clause that states what happens when IDM / ORC deviates from plans. The citizens learned a big lesson from MasTec. Include an enforceable Liquidated Damages clause with daily monetary assessments and / or a Penalty clause to protect the citizens?
Section 4.5 – Define “EXCAVATION CELLS”
Section 4.8 - IDM must provide the county with a Performance Bond. When they are bankrupt, this company
can easily walk away from a mess.
Section 4.10 - Somewhere it should be defined what the timber on the 500 acres is worth today and maybe adjust that number in the agreement annually until IDM / ORC starts mining. The timber value should increase annually.
Section 7.2 - $250,000 is about 10 times too small.
Section 10.1 - IDM / ORC is stretching the intent of a Force Majeure clause here. Generally a Force Majeure clause covers Acts of GOD - lightning caused fires, hurricanes, floods, earthquakes, etc. Often they cover natural or human induced disasters that cause either party to fail in its contract performance. IDM / ORC want a
Force Majeure clause that covers foreseeable delays. This request should be rejected.
Section 10.2 - As recently as a few weeks ago, ORC notified the Oregon Secretary of State that their primary place of business is 63776 Mullen Road, Coos Bay. The company web site today says Mullen - not Central Avenue. Also, hopefully, the county forester is not the person responsible for managing this proposed complex lease agreement with timely acts and notices required of both parties throughout the 17 or more year life of the
agreement. Notices should go to the county contract manager - perhaps the lawyer - with a copy to the
forester. GOD help the citizens if any of the many dates are missed.
Exhibit C – This is a worthless piece of paper. When the company has nothing, how can they guarantee the county something? Also company name is IDM International Ltd. And, nobody should expect the county to attempt to recover anything from IDM / ORC, with 100% of their assets pledged to others, in the event of company financial collapse.
Thank you for your time and consideration of my message. I look forward to viewing the commissioner’s discussion of this matter with concerned citizens and to the finished lease agreement that benefits the citizens.