Posted on 03/03/2005 2:07:26 AM PST by calcowgirl
The most expensive conservation acquisition in California history could soon prove to have been a bad deal for taxpayers, illustrating a potential weakness of public preservation efforts that rely on the good faith of private companies.
Resurrection of one of the nation's most bitter, drawn-out and violent disputes over forest management also finds Gov. Arnold Schwarzenegger in a distinctly awkward position. He campaigned as a staunch supporter of the business community, but has also pledged to fight hard to defend California's environmental interests. And now, with those interests on a collision course in the state's forests, he's being pressed to take sides, which would be a delicate balancing act under any circumstances but is made much harder by the fact that former timber-industry lobbyists and executives occupy key positions in his administration.
The immediate controversy involves the 1999 Headwaters purchase, through which the state and federal governments paid a combined $480 million to acquire about 7,500 acres of old-growth redwood forest in Northern California from Pacific Lumber Co. The deal included a commitment by the company to adopt a 50-year habitat conservation plan for its remaining 200,000 acres of Humboldt County property, limiting logging to protect such species as coho salmon and the marbled murrelet.
The breathtakingly high price tag for the relatively small Headwaters parcel -- 7,500 acres is a little more than half the area of Camarillo -- dwarfed the commercial value of the land and the trees. The high price was justified only by the leverage the purchase gave the public over logging on Pacific Lumber's remaining land, through the associated conservation plan.
Since the company signed off on the habitat plan, it has been cutting every tree it can. Between September and January alone, the North Coast Regional Water Quality Control Board approved 40 of the company's timber harvest plans. (The board has jurisdiction over the plans because logging can expose slopes to erosion, contaminating waterways with sediment.)
In January, Pacific sought water board approval for 11 additional timber plans, asking the board to relax restrictions on streamside logging in the Elk River and Freshwater Creek watersheds so the company could cut even more trees. Board staff balked, and company executives met privately with the governor and his top advisers to plead their case, threatening to declare bankruptcy, close mills and lay off hundreds of employees unless granted more lenient logging permits. Bankruptcy, the company warned, would effectively dissolve the habitat agreement.
The back-door contacts posed a distinct public-relations risk for the governor. Pacific Lumber's former director of external relations, James F. Branham, is the No. 2 administrator in the California Environmental Protection Agency, which oversees the state's regional water quality control boards. Melinda Terry, deputy secretary for legislation in the Resources Agency, was vice president of legislative affairs for the California Forestry Association until the governor hired her earlier this year.
The board subsequently approved the plans, but did not give the company everything it sought. Pacific Lumber vowed to continue pushing for expanded logging.
Regardless of whether it bears fruit, the political maneuvering came as no surprise to anyone who's familiar with the Pacific Lumber's recent history. And it serves as a warning about the limitations of public-private deals to conserve habitat when that habitat also happens also to have significant commercial value.
Once a model of sustainable forestry, the family-owned Pacific Lumber Co. was acquired in 1996 through a hostile takeover by corporate raider Charles Hurwitz, whose Maxxam Inc. promptly began liquidating old-growth redwoods to retire the junk bonds used to finance the takeover. That led to protests and occasionally violent reprisals, culminating in the Headwaters deal.
Environmental activists regard the bankruptcy threat as a ploy, and it is, indeed, an odd time for the company to be claiming financial hardship. Most publicly owned timber companies in the West are posting fat profits, thanks to record U.S. lumber demand driven by the red-hot housing market. American firms also are benefiting from the falling dollar, which has made imported wood more expensive.
Like most corporations, however, Pacific lumber is about maximizing profits. And when a company's narrow private interests conflict with the broader public interest, it should surprise no one when profits take precedence.
John Krist is a senior reporter and Opinion page columnist for The Star. His e-mail address is jkrist@VenturaCountyStar.com.
ping
This article is biased as hell. Of course the are going to cut every tree possible as allowed under a sustainable timber harvest plan. The so-called "habitat" plan sets the cut level. The real question is: has the State made it tougher for the company to reach those harvest levels? If so, the State is the one that is breaking the agreement, not the company.
(snip)Hurwitz himself came to Sacramento a few weeks ago to plead his case to high-ranking officials of the Schwarzenegger administration, the Los Angeles Times reported. Specifically, the company wants the regional water quality board to speed up action on the 12 disputed timber harvesting plans, saying that they comply with the standards laid out in the 1999 agreement, and relying on a clause that would allow logging closer to streams if it does not have adverse environmental effects.
Pacific Lumber has shut down one mill shift and laid off 38 workers, saying a lack of logs forced the action.
"We've been unable to harvest at our sustainable level," said company President Robert Manne.
While looking at LegInfo, I also found this bill you might be interested in:
AB 1705 - Keene - * Forestry: timber harvesting plans.
That is putting it mildly. He whines about industry connected members of these boards but fails to mention who heads them. The NCWQC board approved less then half of PL's THPs. Everyone needs to know that these plans were approved by scientist in the Calif Dept of Forestry almost 2 years ago.
When PL closes it will impact the larger local economy in ways unimaginable, from power plants to the Pulp Mill. If the pulp mill fails it will bankrupt the area wide water district just to name a couple...
The News-Review, OR - Mar 1, 2005
SAN FRANCISCO (AP) -- California water officials agreed Friday to allow Pacific Lumber Co. to conduct limited logging in environmentally fragile areas after the timber giant threatened to declare bankruptcy if it wasn't allowed to cut more trees.
The Scotia-based company had said a bankruptcy filing would undermine environmental protections negotiated under the landmark 1999 Headwaters deal, which spared thousands of acres of Redwood forests along the state's northern coast.
The decision by the North Coast Regional Water Quality Control Board allows the company to cut up to 50 percent of the annual 1,100-acre harvest limit in two Humboldt County watersheds. Residents there had complained that logging operations have caused flooding and property damage.
"Staff inspections have assured me that excess sediment will not run off from those operations," said the water board's executive officer, Catherine Kuhlman.
Earlier this week, residents told the water board they believe logging in the two watersheds, Freshwater Creek and Elk River, has ruined water supplies, damaged septic tanks and caused flooding that trapped them in their homes.
The water board's decision was criticized by all sides Friday as an unsatisfactory compromise.
"We're disappointed," Pacific Lumber spokesman Chuck Center said. "We're not ready to comment right now on the financial impact on the company."
Center said the company, which is owned by Houston-based Maxxam Inc., would continue to negotiate with the water board and hoped to get additional timber harvest plans approved. He said the company also is working with the local communities to address concerns about flooding and drinking water quality.
Mark Lovelace, president of the Humboldt Watershed Council, called the decision arbitrary. He said the water board should not issue any logging permits until Pacific Lumber releases complete information about the effects of its logging operations on the watersheds.
"People's lives are at risk, and those people's lives must be seen as more important than Pacific Lumber's bottom line," Lovelace said.
The 1999 Headwaters deal ended one of the country's most vicious environmental battles. Pacific Lumber agreed to sell 7,500 acres of its oldest, tallest trees to state and federal agencies for $480 million. The deal created the Headwaters Forest Preserve just south of Eureka on the far Northern California coast.
In exchange, the company agreed to limit logging on its remaining 217,000 acres. The two watersheds at issue in Friday's decision are included in that acreage.
The California Department of Forestry and Fire Prevention allows Pacific Lumber to harvest up to 1,100 acres -- equivalent to about 640 clear-cut acres -- in the Freshwater Creek and Eel River watersheds.
The company, Humboldt County's biggest private employer and taxpayer, had hoped to start logging in those areas in January, but couldn't begin until they secured permits from the water board, the state agency that regulates water quality in those areas.
In response to complaints about Pacific Lumber's logging operations, the water board wanted to develop new rules regulating wastewater discharge and asked the company to submit data on environmental conditions in the watersheds. Water board officials planned to have the new permit requirements ready by Jan. 1, but didn't receive the data they needed to meet that deadline.
"We've had problems with cooperation," said Robert Klamt, acting chief of the water board's timber harvest division.
Earlier this month, Pacific Lumber released a statement saying that if the board didn't approve its timber harvest plans it would face a "liquidity shortfall." The company warned it may not be able to make interest payments on $750 million in debt, and said the delay in permit approvals had hurt its credit rating.
The company, which has reduced its work force from 1,500 to 900 employees over the past five years, said it may have to lay off more workers if it couldn't secure the logging permits.
"We're a timber company," Center said. "We need logs in order to sell timber."
But critics blamed Pacific Lumber's financial problems on mismanagement of the company and the resource. They said environmental safeguards guaranteed under the Headwaters deal would have to be followed even if the company declared bankruptcy, and accused the company officials of bluffing to get what they want.
"They're like bullies playing the victims," said Sharon Duggan, staff attorney at the Environmental Protection Information Center in Garberville. "Their strategy is to keep pounding and pounding until they get what they want. That's how they operate."
The water board will hear Pacific Lumber's request to approve more logging permits when it meets in Santa Rosa on March 1999. In the meantime, agency officials believe limited logging won't cause more environmental problems.
"We feel confident that it protects the resource and allows for a recovery," Klamt said.
Thanks for the additional info. I have heard through the grapevine that the headwaters deal would eventually bankrupt PL due to the restrictions placed on their harvesting.
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