State seeking 'side pact' in Headwaters deal

Associated Press Writer

GARBERVILLE, Calif. (AP) -- California
fearful that long-term environmental
protections in the
$480 million Headwaters Forest agreement may be

inadequate, are quietly seeking an agreement
Pacific Lumber Co. to protect wildlife habitats
for at least
50 years.

State officials described the potential accord
as a "side
contract" or "side agreement" over and above
the 1996
Headwaters Forest accord. It would ensure that
environmental protections remain in effect on
Lumber's 200,000-plus acres of holdings after
the state
pays its $230 million share to purchase a
portion of an
ancient redwood forest and turn it into a
public preserve.

The Davis administration, which Capitol sources
inspired the new round of negotiations,
declined to
discuss the issue.

The president of Pacific Lumber said he was
unaware of
any "sidebar agreement" with the state. The
company is
negotiating on a site-by-site basis as part of
the larger
agreement with the state and federal
governments, he

The negotiations gained momentum last week.
have created political tension in Sacramento,
Washington and Scotia, Calif., where Pacific
Lumber is
based, as the deadline nears for the Headwaters
deal to go into effect.

One problem: The federal government, including
U.S. Sen. Dianne Feinstein
and the Interior Department, want the
controversial transaction consummated.
But the state, beginning to echo the concerns
of environmentalists, is moving far
more cautiously. If the deal isn't concluded by
Feb. 28, government funding will

A state senator said California Justice
Department lawyers are drafting the
contract, which must be signed by the state and
Pacific Lumber before the
California's $230 million share is disbursed by
the Wildlife Conservation Board.
The terms of the contract are expected to be
disclosed the final week in
February, just days before the deadline, in

At that special meeting of the board -- the
final major hearing of the Headwaters
negotiations -- the board also is expected to
formally spend the money.

The side contract was not part of the main
Headwaters Forest deal, under which
the state and federal governments jointly would
purchase some 10,000 acres of
Pacific Lumber timber, including 3,000 acres of
ancient redwoods.

But state sources believe the deal could
collapse if the contract, pushed by new
Resources Secretary Mary Nichols, isn't signed.

Environmentalists agree, and believe the
contract is an opportunity to protect
the public.

"This is absolutely a necessary thing. It is
necessary for the state to actually
implement the conditions they had in mind, to
ensure that what they intended in
the legislation is actually going to happen,"
said Paul Mason of the
Environmental Protection Information Center of

Generally, Maxxam Corp., Pacific Lumber Co.,
the Interior Department and
Feinstein -- who brokered the Headwaters pact
-- support the agreement and
the federally written Habitat Conservation
Plan, or HCP. That revised
environmental document, a crucial part of the
deal, describes Pacific Lumber's
long-term logging and forest-management
strategy on its holdings in Humboldt

But the newly installed administration of
Democratic Gov. Gray Davis has raised
questions about whether Pacific Lumber or the
federal government could
weaken or amend the HCP after the state has
paid its money.

At issue are environmental restrictions on all
of Pacific Lumber's property, not
just the 10,000 acres encompassed by the deal.

The side contract is viewed by the state as an
ironclad guarantee that
environmental safeguards wouldn't be weakened
over time, said state Sen.
Byron Sher, D-Stanford, a key legislative
player in the Headwaters negotiations.

"In our view, that's what we are paying for,"
Sher said. "It's not just to acquire
public ownership of 10,000 acres, but also we
are buying 50-year protection on
220,000 acres that will remain in private

"You need to have protections on how the
company manages its land, and you
can't do that just by looking at the final
HCP," he said. "The protections have got
to be built in."

"They want it bulletproof. No loopholes," added
one person familiar with the
negotiations who spoke on condition of

The contract restricts for 50 years how close
to streams the company can log,
the impact on watersheds and the so-called
"lesser cathedrals" of old-growth
timber, how its logging roads would be
constructed, whether fowl and wildlife
habitats would be disturbed and other issues.

But the company believes the proposed
environmental restrictions are driven at
least in part by politics rather than sound

"Our idea is to get away from
one-size-fits-all, which is in the document at the
moment. We are designing site-specific
restrictions to replace the one
size-fits-all," said John Campbell, president
of Pacific Lumber. "We think this
should be a science-driven procedure, rather
than a politically driven one."

He said the company wanted to make sure it
remained economically viable.

"This is something we've said all along: The
company will not accept a bad deal,
and when I say bad, I mean bad for our
employees, bad for the local economy
and the economic viability of our company,"
Campbell said.

As the deadline nears, several more
bureaucratic steps remain. In the final
week, federal authorities are likely to issue
several documents -- one is known
as a "biological opinion" examining the HCP's
impact on wildlife, another is a
"record of decision" examining the deal in
detail. Finally, the government will
issue an "incidental take permit," which in
effect is the final authorization for the

Also to be decided are the state and federal
tax impacts on Maxxam Corp. and
Pacific Lumber after the $480 million changes

The original Headwaters agreement says the
Internal Revenue Service and the
state Franchise Tax Board will work out what
the accord describes as an
"acceptable" tax arrangement. No details were
provided, and Maxxam and the
government declined to discuss the issue

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