State water board approves logging plan on north coast
FIRM HAD THREATENED BANKRUPTCY
By Terence Chea
Associated Press
California water officials agreed Friday to allow Pacific Lumber Co. to conduct limited logging in environmentally fragile areas after the timber giant threatened to declare bankruptcy if it wasn't allowed to cut more trees.

The Scotia-based company had said a bankruptcy filing would undermine environmental protections negotiated under the landmark 1999 Headwaters deal, which spared thousands of acres of redwood forests along the state's northern coast.

The decision by the North Coast Regional Water Quality Control Board allows the company to cut up to 50 percent of the annual 1,100-acre harvest limit in two Humboldt County watersheds. Residents there had complained that logging operations have caused flooding and property damage.

``Staff inspections have assured me that excess sediment will not run off from those operations,'' said the water board's executive officer, Catherine Kuhlman.

Earlier this week, residents told the water board that they believe logging in the two watersheds, Freshwater Creek and Elk River, has ruined water supplies, damaged septic tanks and caused flooding that trapped them in their homes.

The water board's decision was criticized by all sides Friday as an unsatisfactory compromise.

``We're disappointed,'' Pacific Lumber official Chuck Center said. ``We're not ready to comment right now on the financial impact on the company.''

Center said the company, which is owned by Houston-based Maxxam, would continue to negotiate with the water board and hoped to get additional timber-harvest plans approved. He said the company also is working with the local communities to address concerns about flooding and drinking-water quality.

Mark Lovelace, president of the Humboldt Watershed Council, called the decision arbitrary. He said the water board should not issue any logging permits until Pacific Lumber releases complete information about the effects of its logging operations on the watersheds.

``People's lives are at risk, and those people's lives must be seen as more important than Pacific Lumber's bottom line,'' Lovelace said.

The 1999 Headwaters deal ended one of the country's most vicious environmental battles. Pacific Lumber agreed to sell 7,500 acres of its oldest, tallest trees to state and federal agencies for $480 million. The deal created the Headwaters Forest Preserve just south of Eureka.

In exchange, the company agreed to limit logging on its remaining 217,000 acres. The two watersheds at issue in Friday's decision are included in that acreage.

The California Department of Forestry and Fire Prevention allows Pacific Lumber to harvest up to 1,100 acres -- equivalent to about 640 clear-cut acres -- in the Freshwater Creek and Eel River watersheds.

The company, Humboldt County's biggest private employer and taxpayer, had hoped to start logging in those areas in January, but couldn't begin until they secured permits from the water board, the state agency that regulates water quality in those areas.

In response to complaints about Pacific Lumber's logging operations, the water board wanted to develop new rules regulating wastewater discharge and asked the company to submit data on environmental conditions in the watersheds. Water-board officials planned to have the new permit requirements ready by Jan. 1, but didn't receive the data they needed to meet that deadline.

Earlier this month, Pacific Lumber released a statement saying that if the board didn't approve its timber harvest plans it would face a ``liquidity shortfall.'' The company warned it might not be able to make interest payments on $750 million in debt, and said the delay in permit approvals had hurt its credit rating.

The company, which has reduced its workforce from 1,500 to 900 employees over the past five years, said it might have to lay off more workers if it couldn't secure the logging permits.

But critics blamed Pacific Lumber's financial problems on mismanagement of the company and the resource. They said environmental safeguards guaranteed under the Headwaters deal would have to be followed even if the company declared bankruptcy, and accused the company officials of bluffing to get what they want.

``They're like bullies playing the victims,'' said Sharon Duggan, staff attorney at the Environmental Protection Information Center in Garberville.