Friends of the Van Duzen River
A Grass Roots community organization comprised of residents and visitors to the Van Duzen Region. We are Dedicated to helping to restore the river for future Generations

Time to bust some myths about PALCO

The Eureka Reporter


Time to bust some myths about PALCO

by by Robert Manne

(Editor’s note: There has been a lot written about The Pacific Lumber
Co. in media. PALCO contends that some of this information has been
correct, but believes much of it has not. This is the first of a
two-part series from PALCO’s perspective. The same courtesy will be
shown to PALCO’s critics if they choose to make a submission.)

Myth Busting

We all have read various books about Greek mythology, which were great
books to stimulate our imaginations by discussing the 12 Olympian gods,
creatures, places, heroes, figures and creation.

We need a new book about “Humboldt County Mythology” when it relates to
The Pacific Lumber Co.

Webster defines a “myth” as: an unfounded or false notion or a person or
thing having only an imaginary or unverifiable existence; something like
an urban legend or an urban myth.

There are many myths that have been promulgated in the county and
throughout the state about our company, our owner, the Headwaters
Agreement, the everyday business practices on our forest lands, our
mills and our town of Scotia. Our opponents have spent many years and
many dollars to promulgate these myths to benefit their cause and we
have not effectively addressed them to the citizens of Humboldt County.

My sole purpose with this series is to present “the facts,” away from
all the hype, to clear away and dispel the myths that have existed for
far too long and way too many years.

Myth No. 1

“PALCO is asking to renegotiate its habitat conservation plan.” This is
not true.

The “Headwaters Agreement” was a series of agreements and permissions
emanating back to Sept. 28, 1996, between the United States, the state
of California and The Pacific Lumber Co. The agreement was the result of
trying to resolve two “takings” lawsuits brought by PALCO against the
United States and the state of California for preventing PALCO from
harvesting its timber due to the presence of endangered species.

Essentially, the agreement included the transfer of the Headwaters and
Elkhead forests to the United States and California. In exchange, PALCO
received a small piece of property and $300 million, Sierra Pacific
Industries received $80 million, the Humboldt County Headwaters Fund
received approximately $22 million to make up for the lost tax base, and
finally the state of California got an option to purchase two additional
pieces of land from PALCO (Owl Creek and Grizzly Creek with an estimated
value of $100 million).

The state did exercise its option and purchased these lands from PALCO
in 2001, 2002 and 2003. The federal and state governments also promised

1. An incidental take permit for the multi-species habitat conservation
plan to enable PALCO to work in certain areas, protect habitat and
provide mitigation on its remaining lands for 17 aquatic and terrestrial

2. A sustained yield plan issued by the state of California that defined
allowable harvests on PALCO’s total property for the next 120 years to
ensure predictable and sustainable harvest levels to provide certainty
for PALCO’s log supply.

3. A state and federal “no surprises” policy assurance clause to provide
certainty that no new laws, under a wide spectrum of potential changed
conditions, would change the agreement once signed and could not place
new restrictions and limitations upon PALCO’s ability to harvest.

4. An implementation agreement was also signed on Sept. 28, 1996, and
federal legislation was passed in October 1997 that ensured the
conditions above.

The Habitat Conservation Plan

The HCP is a comprehensive scientific and administrative document,
designed to ensure that PALCO would conduct its forest management and
timber harvesting with the most stringent restrictions in the state,
which were more restrictive than the standard forest practice rules used
by every other timber company in the state, including:

• 50 percent of its timberlands and 60 percent of its volume to be
off-limits to harvesting until more detailed science was completed.

• A streamlined, simplified, “one-stop” shopping process for THP

• The White House and the secretaries of the Interior and Commerce
departments assured PALCO in writing that economic concerns and
feasibility and viability would be taken into account and balanced with
biological necessities.

• A “science-will-drive-policy” approach provided two processes for
making changes to the HCP when science dictates (watershed analysis and
adaptive management).

• No harvesting in areas prone to landslides.

• Either “no harvest” and/or “limited harvest” only would be allowed in
wide buffers along all watercourses.

• Harvest restrictions in both Elk River and Freshwater watersheds of
600 and 500 acres annually were imposed.

• “Leave trees” are to be scattered throughout the harvest area for
wildlife habitat.

• 6,000 acres, including a large portion of old growth, was set aside
for 50 years to protect marbled murrelet habitat.

• Large buffers were retained around 108 spotted owl sites each year.

• Detailed scientific watershed analysis is to be conducted in all PALCO
watersheds to determine appropriate protections.

• 85 percent of PALCO’s old-growth timber was conserved in the
Headwaters Forest and the marbled murrelet conservation areas.

What has happened to the agreement?

Since the close of the Headwaters transaction in 1996 and signing the
HCP in 1999, the following events have altered the agreement and have
put PALCO in a jeopardy financial position:

• Starting on Jan. 1, 2003, a new law SB390 (passed in 2000) went into
effect which declared that all waivers of waste discharge ­ which were
granted by the regional water boards ­ would be vacated. All industries
­ including cattle, dairy, grape growers and the building industries
which previously had waivers ­temporarily lost their waivers as of that
date. Most all boards re-enacted the waivers for 2003. For 2004 the
North Coast Regional Board instituted a policy allowing general waste
discharge permits if certain standards were met. Almost all other timber
companies easily met these standards, which required an erosion control
plan for each THP. Only PALCO and one other small timber company from
the Sonoma area did not qualify for general permits but were required to
seek a unique set of standards which called for watershed wide permits.

• On Sept. 30, 2003, the U.S. District Court for the District of
Columbia, in a lawsuit brought by a group called the Spirit of the Sage
Council, issued an order invalidating the federal “no surprises” rule.
This decision raises serious questions as to whether the “no surprises”
provisions of PALCO’s federal incidental take permit, habitat
conservation plan and Implementation Agreement are valid.

• On Oct. 12, 2003, the California Legislature passed and Gov. Gray
Davis signed SB 810. Prior to that time, CDF was the final authority to
approve or deny all THPs. Regional water quality control boards were
allowed input with respect to the impacts of the proposed plan on water
quality, but the Forest Practices Act stipulated that differences of
opinion between the regional water quality control boards and CDF were
resolved by CDF as the lead agency. With SB810, THPs can be stopped by
the regional water quality control board if it can show with
“substantial evidence” that timber operations cause discharges into
impaired watercourses. Veto power now rests with the regional water
quality control boards.

• On Oct. 31, 2003, the Humboldt County Superior Court (Judge Golden),
in lawsuits filed by EPIC/Sierra Club/United Steelworkers of America,
invalidated the SYP, invalidated the state ITP, invalidated the state
streambed alteration permit that was part of the original agreement, and
stopped PALCO from harvesting on any THPs that relied on the SYP; all
due to minor deficiencies in the state’s approval procedures.

Although the early years of operating under the HCP were difficult at
best, we did manage to work through the issues and were making
significant progress. We were seeing increases in harvest levels
approaching our agreed to sustainable harvest levels and were becoming
more efficient at logging and conducting science under the HCP.

Relationships with the other state and federal agencies were positive
and mutually supportive. In 2002 we were able to harvest at our
sustained level for the first and only time in the six years since the
signing of the HCP.

Our HCP receives great recognition from many regulatory agencies.

Mike Long, of the U.S. Fish and Wildlife Service, recently stated, “It
is the service’s conclusion that the aquatic conservation measures
contained in the HCP are superior in the level of protection they
provide to aquatic resources compared to what would be afforded under
the current Forest Practice Rules. Continued implementation of PALCO’s
HCP will result in overall improvements in water-quality conditions in
watersheds covered by the plan.

“Early results from the Freshwater Creek aquatic monitoring indicate
there already may be a reduction in turbidity and sediment delivery as a
result of implementing the HCP’s conservation measures. Continued
implementation of the conservation measures of the HCP will, over time,
lead to better aquatic habitat conditions and will substantially benefit
all aquatic resources within the watersheds.”

Starting in late 2002 and continuing to this day, the regional board
refuses to accept the Headwaters Agreement and permits as a binding on
the Regional Board with respect to review and approval of PALCO’s THPs
and has little to no regard for the importance and results of the
environmental protection of the HCP. These actions have delayed and
limited approval of THPs, prevented harvesting pursuant to approved
THPs, and led to litigation between PALCO and the regional board and
sate board.

The regional board and its staff are seeking to further limit and
restrict PALCO’s THPs beyond the conditions imposed by the Headwaters
Agreement by reducing PALCO’s harvest to a level substantially below
that authorized by the SYP and below that necessary for the company to
survive economically.

PALCO has managed to receive third-party validation of the sustainable
activities from independent auditing firms. Our recent sustainable audit
findings were summarized by Mike Ferrucci, independent audit project
leader, as follows: “PALCO has demonstrated an extraordinary commitment
to implementing a science-based forestry and land-management program
that is consistent with the principles of sustainable forestry,” stated

“Our independent findings confirm that PALCO is doing a remarkable job
of practicing sustainable forestry by using and promoting responsible
practices, protecting special sites and by investing in science to drive
continual improvement in their forest management practices.”

Taken individually and in combination, the impacts of the legislative,
regulatory and judicial developments since the signing have denied PALCO
of the benefits of the Headwaters transaction. We are not asking for
anything more than what was in the agreement in terms of regulatory
certainty; all we want is what we agreed to. There must be a reason that
there have not been other HCPs signed with the state of California.

The real question is did we make a smart business decision in dismissing
our federal and state takings lawsuits and selling the Headwaters Forest
at less than its fair-market value. The answer will be determined by the
behavior of the state of California and its various agencies and

(Robert Manne is PALCO’s chief executive officer and president.)

Friends of the Van Duzen River
PO Box 315
Carlotta, CA 95528
Home | About | Educational Projects | Water Monitoring |
Water Quality Board |Salmon Watch | Timber Watch | VD Defense |Watershed Analysis