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Logging push a dilemma for Schwarzenegger
(Sacramento Bee)

Monday, February 7, 2005


Logging push a dilemma for Schwarzenegger

Environmental activists played right into the hands of Texas corporate takeover artist Charles Hurwitz a few years ago.

Hurwitz's Maxxam Corp. had grabbed control of Pacific Lumber Co. and its immense stands of redwood trees on California's North Coast in 1986, using junk bonds brokered by Michael Milken and financed by Executive Life, a company later seized by the state Department of Insurance. Maxxum immediately announced plans to ramp up redwood logging to generate money to service the bonds, setting aside

Pacific Lumber's much-heralded low-intensity logging.

Under Hurwitz, the company noisily declared its intention to cut what came to known as "Headwaters Forest," a stand of old-growth redwoods -- but Hurwitz's true intention, evidently, was to induce state and federal officials to buy the tract, and anti-logging protesters willingly, if naively, did the tycoon's work

by staging demonstrations that raised the issue's public profile immensely.

Clearly, Hurwitz didn't mind being portrayed as an environmental villain as long as it resulted in a sweet deal from the politicians, and a sweet deal is exactly what he got in the late 1990s. Govs. Pete Wilson and Gray Davis, Sen. Dianne Feinstein and members of the Clinton administration agreed to pay Maxxam almost a half-billion dollars for Headwaters Forest, more than half of what Maxxam had paid for Pacific Lumber, even though Headwaters represented less than 4 percent of the company's acreage.

And to boot, Hurwitz won the right to log remaining Pacific Lumber lands with relatively light state regulation -- a right that was partially placed on record, and partially contained in informal political agreements.

The sweet deal reverberated through the regulatory bureaucracy during the Davis administration, including the departments of Fish and Game and Forestry and Fire Protection and the regional water quality board. Repeatedly, when rank-and-file regulators were tougher than the company wanted, emissaries from the administration would jerk their chains.

Fast-forward to 2005. Pacific Lumber now wants to more-or-less renege on the deal, saying it must accelerate logging beyond what the 1999 agreement envisioned or it could go bankrupt. Hurwitz himself came 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 12 timber harvesting plans that it has filed -- plans that would push logging operations much closer to streams than the earlier agreement had allowed -- although it is relying on a clause in the

agreement that would allow closer-to-the-water logging if it can be done without environmental effect.

To underscore its demand, Pacific Lumber has shut down one mill shift and laid off 38 workers, saying a lack of logs forced the action. "We're running out of logs," one company official was quoted as saying. But if the company is truly in financial peril, servicing those infamous junk bonds may be one cause.

Pacific Lumber's push to ramp up logging, however it may be framed for public

relations purposes, creates a political dilemma for Gov. Arnold Schwarzenegger, who has positioned himself as both an advocate for business and a protector of the environment, and has champions for both within his official family -- including a one-time Pacific Lumber executive.

Logging redwoods, no matter how and where, is not just another regulatory dispute; it's an emotional touchstone for environmental activists and the involvement of Hurwitz and Pacific Lumber throws more fuel onto the political fire. The Humboldt County district attorney -- whom Pacific Lumber attempted to

recall at the polls -- has filed a lawsuit against the company, alleging that it submitted fraudulent documents on environmental effects of logging when it was negotiating the 1999 Headwaters deal.

Any action by the administration that environmental groups label as softening regulation will touch off a firestorm of opposition and criticism.


Is a columnist for the Sacramento Bee.

E-mail him at>

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