In a sharp rebuke to California's most controversial logging company, Gov. Pete Wilson's administration Tuesday suspended the timber operating license of Pacific Lumber Co., which is already under fire for its long-running attempts to log the ancient redwoods of Northern California's Headwaters Forest.

The timber-cutting license was suspended for the rest of 1998 because of ``continued violations of the state's forest-practice rules,'' according to state regulators.

In the past three years, Pacific Lumber has been cited 128 times by state inspectors -- more than any other large lumber company in the state -- for such offenses as logging too close to fragile streams, constructing shoddy roads and removing redwoods near the nests of the endangered spotted owl.

``This decision is not an easy one to make, considering the effects on employees, but we simply cannot allow these violations to continue,'' said Richard Wilson, director of the California Department of Forestry and Fire Protection.

``Although we are aware of the potential economic impact of this decision, our primary objective must be to enforce the rules which protect our environment along with the economy.''

The company has five days to appeal. The forestry director then has 10 days to consider the appeal. If he decides to uphold his own ruling, there is no further appeal.

Pacific Lumber, based in Scotia, 15 miles south of Eureka, is Humboldt County's largest private employer, with 1,600 workers.

Tuesday's announcement will not shut down the 129-year-old company, but it carries two serious consequences.

First, it gives environmentalists a legal tool to wield in an almost-certain lawsuit next year to overturn a $495 million public deal to buy 7,500 acres of Headwaters Forest. That deal was reached in September, on the final day of the state Legislature's session. Environmentalists have called the deal a taxpayer giveaway and one that sets a bad precedent because it includes a permit to allow the company to kill endangered species while logging on its remaining lands.

Second, it could jar Wall Street investors, who have reacted nervously when the state cracked down on Pacific Lumber, controlled by Houston financier Charles Hurwitz.

Company reaction

``We take our responsibility to the forest and to the communities of the North Coast very seriously,'' said John Campbell, president of Pacific Lumber.

``As disappointed as we are by the California Department of Forestry's decision, we remain committed to making the changes that are necessary to regain our leadership as a responsible steward of the state's timber resources.''

Campbell said the sanction will cause 180 Pacific Lumber employees to ``cease their work indefinitely.'' Those employees are people who cut
down trees -- the timber fallers, haulers and yarders.

Already, however, about half the logging on Pacific Lumber's 210,000 acres is done by independent contractors. Because they have their own
licenses, those loggers, known as ``gypos,'' will be allowed to continue. Pacific Lumber employees working in the company's massive redwood mills along Highway 101 also will be allowed to keep working.

Environmentalists were surprised and elated.

``It's about time,'' said Paul Mason, president of the Environmental Protection Information Center (EPIC) in Garberville. ``Pacific Lumber
consistently disregards the law. They break the law in order to maximize their profits.''

In fact, the company has been cited with nine misdemeanor criminal counts since 1996, Mason noted. It has paid fines to courts. And it
already was working this year on a so-called ``conditional license,'' which the state issued after suspending its license last year for repeated environmental violations. At least three criminal misdemeanor counts were filed by the Humboldt County district attorney this year and are pending.

On Aug. 16, the company was cited for removing second-growth redwood trees along Freshwater Creek in an area that its permit said was off-limits. Then on Oct. 22, the company was cited after workers drove heavy equipment through the stream for a two-week period, causing heavy erosion.

Also this fall, Pacific Lumber was cited for logging second-growth redwood too close to spotted owl nests -- into a 500-foot buffer zone that was set by the permit and flagged as off-limits.

License renewal

The repeated violations will not go unnoticed next month when the Wilson administration decides whether to issue a 1999 license for Pacific Lumber, said Gerald Ahlstrom, chief of the forest-practice program for the state forestry department.

``We do consider the last three years. So virtually everything that's happened will be looked at,'' he said. Ahlstrom also said that last month state forestry officials recommended that the Humboldt County district attorney prosecute Pacific Lumber for unfair business practices.

``Essentially that means that a company has violated the law so much that they have an unfair business advantage over those who have complied with it,'' he said. In such cases, which are civil actions, penalties can soar into the millions of dollars because companies can be forced to return ill-gotten profits.

``We think the penalty could be anybody's guess in this case,'' said Ahlstrom. ``Certainly very high.'' Some environmentalists called the crackdown a last-minute attempt by Wilson officials to keep their jobs after Jan. 4 when new Gov. Gray Davis, endorsed by the Sierra Club, takes office. Ahlstrom denied that allegation.