December 22, 1998

Deal to Save California Redwoods May Collapse

By Greg Frost

SAN FRANCISCO, Dec. 21, 1998 (Reuters) -- A proposed nearly $500 million
deal to save the world's largest remaining grove of privately owned ancient
redwood trees is in jeopardy of collapsing due to a new battle over
environmental safeguards.

U.S. Sen. Dianne Feinstein, a California Democrat who helped broker the
accord two years ago, warned Thursday that a "major impasse" had erupted
between logging company Pacific Lumber and the state and federal

With a funding deadline nearing, Feinstein scheduled a bargaining session
Monday in her San Francisco office in the hope of resolving the dispute and
putting the agreement back on track.

Under the proposal, the state and federal governments agreed to buy 7,500
acres of the Headwaters Forest, the largest privately owned stand of virgin
redwoods -- arguably the most majestic trees on Earth.

As part of the agreement, Pacific Lumber presented a plan detailing how it
would manage its remaining 210,000 acres of forest.

Environmental activists, who normally support acquiring threatened land for
the purpose of preserving it, attacked Pacific Lumber's Habitat
Conservation Plan, calling it a "license to kill" endangered fish and
wildlife. Government scientists also questioned the plan's protections for
threatened species.

The scientists' doubts led federal agencies to recently demand that the
company's conservation plan include greater safeguards for threatened
species, such as the coho salmon and the marbled murrelet, an endangered
bird that depends on the huge trees for nesting places.

But Pacific Lumber balked at the tougher environmental demands, saying they
would cause economic hardship.

"In total, the proposed changes would have left Pacific Lumber unable to
operate effectively," Pacific Lumber President John Campbell said. "We
simply could not agree to a package that would threaten our ability to
survive and provide job security to our employees."

With about two months left before the federal government's $250 million
funding share of the deal expires, negotiations are at a critical stage.

"A final agreement is going to have to happen very quickly, otherwise there
won't be time to complete the deal and capture the federal money," said
Phil Carroll, a spokesman for the U.S. Fish and Wildlife Service in
Portland, Ore.

To complicate matters further, California state Senate President pro tem
John Burton threatened last week to introduce legislation that would yank
the state's $245 million share unless Pacific Lumber complies with the new
federal requirements.

Environmentalists said they were encouraged by the tougher stance adopted
by the federal agencies and state lawmakers, but expressed dismay it had
not come sooner.

"It's frustrating that a large number of prominent biologists and an
overwhelming majority of the public have been calling for these kinds of
protections to be implemented all along, and they're only now being
demanded," said Robert Parker, an activist in Arcata, Calif.

Pacific Lumber, now a unit of Houston-based MAXXAM Inc., has been in
business for 129 years. With 1,600 employees, it is the largest private
employer in California's Humboldt County and contributed an estimated $170
million dollars annually to Northern California's economy.

Copyright 1998 Reuters Limited.

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