• The State Government may constitute any forest-land or waste-land which is the property of Government, or over which the Government has proprietary rights, or to the whole or any part of the forest-produce of which the Government is entitled, a reserved forest in the manner hereinafter provided.
• The control of all rivers and their banks as regards the floating of timber, as well as the control of all timber and other forest-produce in transit by land or water, is vested in the State Government, and it may make rules to regulate the transit of all timber and other forest-produce.

Hence only statement 2nd is correct.

The Dzukou Valley, popularly known as the ‘valley of flower’. It is located at the border of Nagaland and Manipur. It is situated at an altitude of 2,438 metres behind the Japfu mountain range, it is one of the most popular trekking spots in the North East.

• Dzukou valley and Japfu peak are located adjacent to the Pulie Badze Wildlife Sanctuary (Nagaland).
• The Pulie Badze Wildlife Sanctuary (PWS) is located at Kohima District of Nagaland. The sanctuary is a natural habitat for Blyth’s Tragopan (Nagaland’s state bird), the Rufous-necked Hornbill and the Dark-rumped Swift, among many others. 
• The valley is a source of conflict for ownership between local tribes and the state governments of Manipur/Nagaland.

Hence both statements are correct.