Timber firm license lost; Headwaters deal at risk

By Patrick Hoge and Nancy Vogel
Bee Staff Writers
(Published Nov. 11, 1998)

State forestry regulators yanked Pacific Lumber Co.'s license to
cut trees Tuesday, accusing the company of egregious environmental
violations that include covering up an illegal logging operation.

The license suspension -- Pacific Lumber's second within a year -- comes as
the federal and state governments rush to finish a deal to buy old-growth
redwood groves from the Humboldt County company for almost half a billion
dollars in taxpayer money.

The action by forestry regulators strengthens the contention of
environmentalists that the company can't be trusted to obey the law on its
300 square miles of redwood and Douglas fir forest, home to some of the
state's richest concentrations of endangered marbled murrelet, a seabird,
and threatened coho salmon.

And it raises legal questions that could unravel a state and federal plan
to give Pacific Lumber $480 million and a permit to log its lands for the
next 50 years in exchange for public title to 9,500 acres, including a
grove of virgin old-growth trees called Headwaters.

Environmentalists question whether a company with as many violations as
Pacific Lumber can legally get a federal permit to harm endangered species
in the course of logging trees. Such a permit, known as an "incidental take
permit," is a critical element in the deal to save Headwaters and is vital
to Pacific Lumber's long-term security. The permit must be issued based
upon a "habitat conservation plan" that shows how the company will minimize
harm to endangered species.

"This really bolsters that argument that Pacific Lumber Company's criminal
activities make it ineligible for a habitat conservation plan," said Karen
Pickett, director of the Bay Area Coalition for Headwaters.

Government officials have been gathering public comment on such a plan for
Pacific Lumber. The last of four hearings was held Tuesday in Eureka.

People familiar with the effort said they weren't sure what the latest
crackdown on Pacific Lumber's logging practices would mean for the
Headwaters deal.

"Obviously, we're real troubled by it," said Tim Ahern, a U.S. Department
of Interior spokesman.

Pacific Lumber spokeswoman Mary Bullwinkel called the license suspension
and the company's effort to get a permit "two separate issues."

As of noon today, Pacific Lumber logging crews can no longer cut trees. As
they returned from the woods Tuesday, 180 loggers were told they would be
laid off indefinitely, Bullwinkel said.

Pacific Lumber may still hire outside firms to cut trees on its property.
About half the company's logging is typically performed by independent
contractors, Bullwinkel said.

Regulators said the firm's latest violations are remarkable, given that it
had agreed to tighter scrutiny last year in order to keep its license. Its
license was pulled briefly in December 1997 for violations of laws designed
to protect streams, wildlife and soil.

"We believe that we ought to have had their undivided attention and
undivided effort to comply with the rules," said Gerald Ahlstrom, chief of
forest practice for the California Department of Forestry and Fire

Instead, he said, Pacific Lumber gave regulators no choice but to suspend
its logging license for the rest of the year and warn the company that it
may not be renewed in 1999. The firm may appeal the suspension to
department officials within five days.

"They used heavy equipment inside a spotted owl nesting territory,"
Ahlstrom said. "It was . . . well laid-out, and they simply drove (heavy
equipment) into that area."

At another site, on the Bear River, Ahlstrom said, the timber harvest plan
required that Pacific Lumber put in culverts and gravel to minimize impact
to the salmon stream. Instead company loggers simply forded the creek.

"It was right near the end of the season and they thought they could just
drive through it for a month or two," said Ahlstrom.

The company's third major violation involved a hired firm, Rounds Logging,
that cut a 500-foot swath of trees on both sides of Freshwater Creek -- a
violation of buffers designed to protect threatened coho salmon.

A Pacific Lumber supervisor told an employee who knew of the violation not
to report it, according to the Department of Forestry and Fire Protection.

"As a result," says a department memo written Monday, the company
"concealed the violation from CDF for two weeks until the logs were hauled
to the mill and the site was cleaned up."

Pacific Lumber later fired Rounds Logging for crossing a stream without
installing proper erosion controls, and company officials cited that as
evidence of their commitment to comply with state law.

But Michael Kindred, a former deputy sheriff who builds roads for Rounds
Logging, said he and his fellow workers warned Pacific Lumber of the need
to protect the creek. Instead, he said Pacific Lumber ordered them to go

"We were set up," Kindred said. "I think they (Pacific Lumber) just needed
somebody to make an example of."

In all, the department accused Pacific Lumber of 16 violations of the
state's forestry rules, including two misdemeanors referred to Humboldt
County prosecutors.

Ahlstrom said the county could choose to prosecute the company on criminal
grounds, with a maximum fine of $1,000 per violation, or try for more
substantial fines by alleging unfair business practices.

Department of Forestry and Fire Protection director Richard A. Wilson
personally approved the license suspension.

"This is an unusual situation, obviously," said department spokeswoman
Karen Terrill. "The director doesn't make these decisions lightly."

One day before the suspension, Pacific Lumber's president, John A.
Campbell, told state legislators that logging laws are tough to interpret
in the woods.

"I just want people to keep in mind how difficult it is for a young man
driving a bulldozer in the field to understand all these regulations,"
Campbell said during a hearing on the Headwaters deal. "We are not perfect,
but we are striving to be perfect."

But Paul Mason, president of the Environmental Protection Information
Center in Garberville, said the latest violations show that Pacific Lumber
"shouldn't be allowed to run a chain saw in their own forest."

He said he'd rather see the Headwaters deal fall apart than have Pacific
Lumber be allowed to log its 200,000 acres under the habitat conservation
plan now under review. Environmentalists have long questioned why taxpayers
should pay a half billion dollars to a company owned by Charles Hurwitz, a
Houston billionaire implicated in the 1988 collapse of a Texas savings and
loan that cost taxpayers $1.6 billion to bail out.

"The way the plan is now," said Mason, "it's an unmitigated liquidation
strategy for 50 years. The sacrifice for all that other forest is too high
a price to pay for a (9,500 acre) park."

Still unclear is whether, under federal regulations that carry out the U.S.
Endangered Species Act, Pacific Lumber is even eligible for a permit to
continue logging on its land where endangered fish and birds live.

Environmentalists argue that companies that are fined or criminally
convicted for the way they do business must be denied permits to operate in
endangered species habitat.

Patricia Foulk, a spokeswoman for the U.S. Fish and Wildlife Service, one
of the agencies working on such a permit for Pacific Lumber, said attorneys
will have to investigate the issue.

"We have to look at the specific claims against Pacific Lumber and see
whether or not there is anything that would validly disqualify them from
receiving a permit," she said.

"Our attorneys aren't going to go any further. We can't talk about this
until . . . we actually have to look at this."

Federal and state agencies are rushing to complete a habitat conservation
plan before March 1999 to take advantage of congressional funds. The draft
plan would allow Pacific Lumber to log 500 acres of virgin old-growth
forest, and another 8,000 acres with scattered stands of old-growth trees.
In return, the company would, for 50 years, set aside 8,500 more acres
considered important for nesting marbled murrelets.

Other state regulators are also targeting the company.

The North Coast Regional Water Quality Control Board recently ordered
Pacific Lumber to clean up landslide damage to the north fork of the Elk
River. Along the river, 23 residents have sued the company for property
damage that they contend was caused by logging-related landslides. Nearly
50 other people are suing the company over a landslide that destroyed seven
homes in the town of Stafford.

Company officials deny any link between its logging and the landslides,
citing earthquakes and torrential rains instead.

David M. Walsh
P.O. Box 903
Redway, CA 95560
Office and Fax(707) 923-3015
Home (707) 986-1644

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