FOR MORE THAN a decade during the 1950s and early 1960s, a cordial young Tennessee lawyer from the Cumberland hills tried to get the federal government to let his coal company client strip-mine its holdings under national forest lands. Failing that, the lawyer and his client sought federal compensation for the mineral rights. The government, through the Forest Service, consistently declined these overtures.
Then, in 1967, the young lawyer came to Washington as a member of the U.S. Senate, having been helped in his campaign by executives of the same coal company. Near the end of his first term, the senator sponsored a bill that became law in 1974 and created the Big South Fork National River and Recreation Area -- which happened to cover much of his former client's mineral rights in Kentucky plus land in Tennesse that would otherwise have been hard to unload.
The law pleased environmentalists immensely because it would preserve a natural gorge area and 80 miles of streams. But the act -- and subsequent interpretations that received the senator's blessing -- also required the government to buy the long-fought-over mineral rights from the coal company as well as the Tennessee land.
Thus Howard H. Baker Jr., Senate majority leader of the 97th Congress, accomplised through legislation what he had failed to do in more than 10 years of private advocacy for Stearns Coal and Lumber Co.
The story of lawyer Baker, Sen. Baker and Stearns Coal and Lumber is a chronicle of life in Washington and the narrow path trod by politicians who push legislation benefiting former business associates, political allies or ex-clients.
In a town where one man's constituent service is another man's political payoff, Baker sees his contribution in this matter as unquestionably public spirited. More than any other accomplishment of his Senate career, Baker says, the creation of the Big South Fork park will be his most remembered. "I think the region will benefit," he remarks.
But the case does raise some intriguing questions, even though there is no indication that Baker violated any laws or profited financially himself. Was Baker, for example, the best arbiter of key legislative decisions in light of his longtime association with the coal company and its executives? Were the coal company's mineral rights really worth the additional millions that Washington paid? Indeed, will the public in the end really get its monmey's worth?
In 1979, Baker guided through the Senate a $16.5 million appropriation for his former client as compensation for 53,000 acres of land and mineral rights in the proposed 125,000-acre park.
Before the government purchase, Stearns' total assets were valued at $3 million. The company had stopped mining coal, its timbering operations had all but ceased, and officials had been trying to sell off the company's holdings after nearly 80 years of operations. (The Stearns tracts, largely depleted of commercial timber, are located in inaccessible hill country where similar land had gone begging for years.) After the government purchase, Stearns' assets climbed to $20.4 million.
In one stroke, the legislation also overruled the Forest Service's longstanding position against purchasing Stearns mineral rights beneath the federally owned portion of the land. The law relieved the Forest Service of control over much of the land and turned it over to the U.S. Army Corps of Engineers, which reversed the policy and included Stearns' mineral rights as an indeterminate portion of the $16.5 million acquisition.
Coal company officials -- and Baker -- had insisted for years that if the company could not strip-mine the coal, the government ought to purchase the mineral rights, which Stearns had retained after selling the land to the Forest Service in the 1930s. The government had always replied that Stearns could use other mining methods, or at least promise to reclaim the land, but the company dismissed that proposition as uneconomical.
Now that the government owns the mineral rights, it is an open question whether the coal could have been mined profitably at all. The coal company chairman, Robert E. Gable, acknowledges that the coal reserves beneath the proposed park might never have been extracted because they contain extremely high levels of sulphur pollutants and lie in inaccessible seams under rugged terrain.
"We had never built the railroad up the river that far," says Gable. Of the coal, he adds: "It's one of the highest sulphur coals in the eastern coalfield . . . and as you know, the Clean Air Act came along in the early '70s and just about caused these power plants to stop burning coal of that sulphur content. It's awful hard to move it . . . [and] our lessees just can't sell it."
Of central importance in the case, of course, are Baker's motives, which are impossible to determine beyond his public pronouncements. But what is clear -- after months of tromping through rural courthouses, county libraries, Forest Service and Corps of Engineers offices, where many records relevant to these events are gathering dust on both sides of the border in eastern Tennessee and Kentucky -- is this: Baker's version of events is at odds with the documentary record on sensitive points in a tale that covers several decades.
The story begins in the early 1950s, a few years after Baker finished law school and joined his father's law firm, the longtime outside counsel to the coal company.
During that decade, young Baker wrote legal reports, testified before at least one public hearing and represented the coal company in several negotiating sessions -- all in the unsuccessful attempt to convince the Forest Service to allow strip mining or else pay compensation for the unrecovered coal.
Baker denies taking any larger role beyond testifying at a public hearing on behalf of Stearns in 1955 and offering, several years later, what he calls a piece of "gratuitous" legal advice. "I have never . . . attended a single meeting of negotiating that I can recall," according to the senator.
The record, however, shows otherwise. On March 18, 1959, according to a memorandum on the coal company's stationery written by chairman Gable, four Stearns representatives, including Baker, met with Forest Service officials "to further discuss a proposed cooperative agreement between the Stearns Coal and Lumber Company, and the Forest Service for strip mining . . ."
That meeting concluded on a disappointing note for the coal company men and their lawyer. "It was the general consensus of opinion expressed by the foresters present that the possibility of obtaining permision for . . . indiscriminate strip mining and 'destruction' of National Forest lands . . . was very doubtful."
There is also the memory of Robert F. Collins, chief forester in that part of the country from 1953 to 1979. Collins says that he recalls up to a half-dozen negotiating sessions that Baker attended on behalf of Stearns in the years immediately before Baker's election to the Senate.
By 1962, Baker had joined the Stearns board of directors, largely on the strength of his legal advice in the strip mining case, according to Gable. tAs a board member until 1966, Baker acknowledges that the mineral rights battle with the government was a subject of frequent attention.
"I thought that the Foreset Service refusing to let them mine those minerals by surface [strip] mining methods . . . was an unconstitutional taking of property and that it ought to be litigated," Baker says.
But Baker's relationship with the coal company men was more than just lawyer to client. Indeed, Baker's first arrival in the Senate was due in part to months of free campaign management and fund-raising services donated by Stearns chairman Gable in 1964 and 1966. On each occasion Gable in 1964 and 1966. On each occasion Gable took leave from his job and moved from his Kentucky home into an apartment in Knoxville to help manage Baker's race. Baker also received several thousand dollars in personal contributions from top Stearns executives.
Could Baker's later actions, therefore, be viewed as repayment of a political debt? "If you've ever been active at all before you went to Congress, there is always the danger of somebody saying, 'you did that because of past relationships,' and all that you can say is, 'I didn't,'" Baker said in a 1976 interview for a historical research project, a transcript of which is on file at the McCreary County (Ky.) library.
Baker was answering questions then following a 1974 attack by the United Mine Workers of America. The allegations related chiefly to Baker's own ownership of land south of the planned Big South Fork park in partnership with Republican Party contributor John Rollins. The mine workers charged that the value of Baker's land stood to gain from its proximity to the park. There were other allegations that coal from Baker's land was being sold improperly to the Tennessee Valley Authority, which is forbidden from doing business with members of Congress.
The senator denied these charges, saying the coal sales were made by an unaffiliated subcontractor. Nevertheless, Baker announced that he would put his land in a blind trust, with instructions that it be sold. The land, however, had not been sold by 1976, when Baker was on the final list of possible running mates for President Ford. (He sold it the next year).
During the mine workers' attack, only passing attention was given to Baker's relationship with Stearns.
Before Baker's arrival in the Senate in 1967, then-Sen. John Sherman Cooper (R-Ky.) had for years attempted to persuade Congress to fund a dam project on the Big South Fork River as an economic stimulus to one of the poorest regions in the country. But within months of Baker's election, the new senator became the driving force behind development proposals for the area.
In his first year in office, apparently while he still was a partner in the law firm that represented the coal company, Baker called a meeting of key government officials to discuss the best development strategy for the area. From that meeting came a congressional appropriation for an interagency study of various park, forest and recreation area possibilities.
Baker and his press aide, Ron McMahan, say that Baker ended his relationship with the Knoxville-based law firm when he entered the Senate in 1967. The record, however, shows otherwise. According to files cited by the firm's senior partner, Robert F. Worthington Jr., Baker remained a partner through 1969 and received $8,774.97 in 1970 to close out his partnership account.
By 1970, Baker had recruited Richard E. Herod, a young lawyer in the Knoxville law firm, to come to Washington to work on the Big South Fork legislation as associate minority counsel on the Senate Public Works Committee. Herod completed a draft of the legislation in early 1972. Among other things, it required the purchase of mineral rights beneath the proposed park.
Hearings were held on the bill in May and June of 1972. When the coal company's general manager, Frank C. Thomas, was called to testify about the impact of the bill on his business, Baker made his only public statement about the company. The senator noted that he had never held stock in Stearns and that he had resigned his director's seat upon entering the Senate. "So, I will make no further remarks in connection with this company's policies or concern, except I will make a self-serving statement that it is a good company."
However, this was not the end of Baker's involvement in the matter. Confidential records of the coal company -- extracts of which are part of the historical file at the McCreary County library -- show that Baker had later, private discussions with the coal company's general manager relating to the purchase of mineral rights. In addition, Baker then met with a federal official in charge of buying land for the recreation area and gave his blessing to the purchase of mineral rights.
The final Baker bill, signed into law in March 1974, required the Corps of Engineers to acquire land and develop the roads, campsites and other facilities of the recreation area and then turn it over to the National Park Service to operate. The task of interpreting the act fell, therefore, to the Corps of Engineers.
Stearns officials were still not certain, they say, that the government was committed to purchasing their mineral rights. A month after the bill was passed, the coal company dispatched a Louisville attorney to Washington to meet with Baker's legislative aide. The Stearns lawyer reasserted the company's position that the government should buy mineral rights as well as surface land for the park.
Baker's former aide, Herod, says that he does not recall meeting with the Stearns lawyer. The record, however, again shows otherwise. In a July 12, 1974 letter, the lawyer informed Stearns officials of the results of the meeting: "Rick Herod felt Stearns' . . . interests were fully protected because of the relationship between Stearns and Howard Baker."
By August 1975, the Corps of Engineers was nearing its deadline to come up with cost estimates for acquiring land for the recreation area. During that month, Baker met personally in the offices of his former law firm with the coal company general manager and discussed compensation for the company's land and minerals.
Baker remarked jokingly to other people in the law office that the Stearns man was there "to see how much money he could get for his land," according to a coal company memorandum that memorialized the meeting. But the coal company manager turned the discussion to a more familiar theme: whether the government would purchase -- in addition to the land -- all mineral rights underneath the park site.
"[Baker] asked how much for us [Stearns] to be properly compensated," according to the Stearns account.The coal company president repied, $28 million. "I explained to him that I was proposing they take the land in fee simple [land and mineral rights] . . ."
Baker acknowledges that conversation, but he insists that after he met with Stearns' general manager, "There was no contact with anybody in a position of authority" that could be construed as an attempt to influence decision-making on the mineral rights issue.
The record, however, tells a different story. Within two months of meeting with the Stearns official, Baker met with a Corps of Engineers official, Col. Henry J. Hatch, who was in charge of making the final decision on whether mineral rights, as well as land, would be purchased. The purpose of that meeting, according to the Corps official, was to get Baker's consent and support for new cost estimates for the park that included the purchase of mineral rights.
As the original patron of the project and author of the legislation, Baker's support was crucial for any decision that raised the cost of the project; funding depended directly on his ability to sell its cost on Capitol Hill.
According to Stearns memo, Hatch said he had had an "interesting" meeting in which he briefed Baker on "the Corps' opinion" that mineral rights should be purchased beneath the recreation area. "Baker understood this and made no objection."
Partially as a result of the mineral rights purchase, Hatch told Baker that the project's cost had ballooned in one year from the original estimate of $32.8 million to $90 million. "The senator indicated the project was 'go' even with the new price tag," the Stearns memo states.
As a follow-up to the meeting with Hatch, Baker in 1976 successfully introduced legislation in Congress raising the public funding authority for the project to $103 million. The project's expense has continued to rise in subsequent years. The Corps now puts the fully funded cost at $278 million.
One unanswered question in the cost figures is how the Corps determined the price to pay Stearns. The Corps declines to release appraisal reports on which its $16.5 million offer was based. Since the offer was made as a lump sum -- not distinguishing "per acre" values for land or minerals -- it is impossible to compare the Corps' purchase with other sales in the area.
The Corps' Hatch says the decision to buy the mineral rights was based on a belief that the environmental restrictions of the recreation area would make coal mining uneconomical. There was no study of the coal's value.
"As far as I know, that [decision to purchase mineral rights] was not an outgrowth of any economic analysis," Hatch acknowledges. "What [information] we were getting was the result of our preliminary contact with Stearns," he says, adding: "I listened to them . . . Hell, I didn't have nay coal experts on my staff."
The first congressional appropriation for property acquisition on the Big South Fork project -- used almost exclusively to buy the Stearns land and mineral rights -- was sponsored by Baker in 1979. Few other landowners have been compensated thus far for the tracts they will be expected to contribute to the park.
Now, under Reagan administration budget plans, most of the next $25 million appropration for the Big South Fork has been cut in the interest of balancing the budget. Prolonged government frugality, therefore, could create a situation where the promised park -- originally scheduled for completion sometime before 1990 -- recedes farther and farther from reality.
In the meantime, the taxpayers will continue to be the owners of 53,000 acres of depleted Appalachian scrub land and of mineral rights to coal that is of arguable economic value.