Well, well, well. Look who they used as "Resources:" The Rose Foundation for Communities and the Environment, 510-658-0702; Environmental Protection Information Center, 707-923-2931; Bruce Babbitt, Secretary of the Interior, 202-208-7351.
Check the way things are characterized.
The Junk Bond Boss Meets the Ancient Sequoia
by Sharon Seidenstein
Ancient redwoods are priceless, from an environmentalist's point of view, but now green activists are trying to attach a price tag to the trees in order to preserve them. Texas millionaire Charles Hurwitz controls one of the last groves of old-growth redwoods in private hands, and environmentalists are lobbying for a ìdebt-for-natureî swap, with Hurwitz giving the trees to the U.S. government to pay back some of the $1.6 billion it spent bailing out a savings and loan Hurwitz managed into bankruptcy. Hurwitz says the government should either buy the land at fair market value, or get out of his way and let him log.
The direct action group Earth First! was the first to suggest that the Federal Deposit Insurance Corp. (FDIC) accept the redwoods of Pacific Lumber Company's Headwaters Forest in Northern California as payment for its 1988 bailout of depositors of Hurwitz's United Savings & Loan of Texas. In its usual fashion, Earth First! made the suggestion politely, at a 1993 demonstration at the FDIC's Washington, D.C. headquarters. A lot is at stake. The forest's Headwaters Grove is home to 1000-year-old redwoods standing hundreds of feet tall and shielding the habitats of the Northern spotted owl and other threatened and endangered species. It is a remnant of a forest that once blanketed the West Coast from Big Sur to southern Oregon, 96% of which has vanished under 150 years of liquidation logging.
Since the 1993 demonstration, Greenpeace, Sierra Club Legal Defense Fund, and Senators and Congresspeople have joined in the call for a ìdebt-for-natureî swap. They are appealing to the FDIC, the Office of Thrift Supervision (OTS) and the Clinton Administration to negotiate forgiveness of all or part of Hurwitz's debt to the federal government in exchange for 57,000 to 76,000 acres of Headwaters Forest, to be placed into public hands for long-term protection.
Debt-for-nature swaps, although rare in the United States, are not unheard of. In 1988, the Bank of America gave the state of California a nature preserve in the northern part of the state, three other properties and $27 million to clear a debt of about $54 million. In the early 1990s, Howard Hughes' estate swapped wetlands near the Los Angeles Airport in exchange for state taxes due. Outside the United States, Third World countries have traded ecologically valuable resources to relieve debt. This controversial version of the swap has helped protect tropical forests and grasslands in Bolivia, parks on the island of Palawan in the Philippines and a dozen other sites.
A swap of S&L debt for nature seems like a far-fetched plan if you ask Richard Keeton, Hurwitz's lawyer. He took time out from his busy schedule, fielding lawsuits from people seeking his client's cash, to tell me in a good-natured way that any debt-for-nature idea is ìbeating a dead horse.î Since his client is innocent of wrongdoing, he explained, there is no debt.
But it could be one of the FDIC's options, because of the convoluted and seemingly illegal connections Hurwitz created between his S&L and the go-go world of junk bond financing of the 1980s. Hurwitz bought the redwoods with his own swap ó the FDIC claims he buried his Texas S&L by having it buy junk bonds nobody wanted from Michael Milken's junk bond factory at Drexel, Burnham, Lambert in New York City. In turn, Milken helped Hurwitz engineer the takeover of Pacific Lumber and received his business issuing the junk bonds to pay for it.
The takeover has led to the equivalent of a work speedup in the forests. Because junk bonds are risky, or backed by assets of lower value, they burden the companies that issue them with high interest payments. To pay off the loans and interest on $600 million of junk bonds (and $300 million of bank loans) issued to pay for the company, Hurwitz has doubled Pacific Lumber's traditional rate of logging, sold off assets and allegedly raided the employee pension fund. Before the takeover, Pacific Lumber's relatively conservative harvesting practices had kept the forests healthy while other timber companies had destroyed theirs. But now the only thing that protects the Headwaters Grove from logging is an injunction won by an environmental group ó which is likely to end in September.
Junk Bonds for Sale Cheap
Last year, The Wall Street Journal described Hurwitz's United Savings and Loan of Texas as ìa highflying thrift heavily involved in junk bonds, arbitrage and speculative real estate plays.î Its failure was one of the most costly of the S&L bailouts of the 1980s, and centrally involved in the junk bond crisis that cost the U.S. government $134 billion to clean up.
The S&L's complicated financial transactions with Hurwitz's Maxxam Corporation essentially freed up its federally insured deposits to fund Maxxam's hostile takeover of Pacific Lumber. In effect, the government argued in a 1991 lawsuit against Michael Milken, Hurwitz transferred the assets of the federally-insured S&L to Maxxam (see box). This suggests that Hurwitz and Maxxam Corporation acquired Pacific Lumber and Headwaters Forest illegally, and the takeover of the lumber company ìled to the failure of the savings and loan and subsequent bailout,î as one environmental lawyer put it.
The Hurwitz camp categorically denies any wrongdoing. For one, they claim Hurwitz did not legally control United Savings & Loan. His lawyer also says that the FDIC cannot legally ìsecond guessî today actions taken according to Hurwitz's best business judgment in the 1980s.
If the Suit Fits. . . File It
Charles Hurwitz is a wealthy man. He is principal shareholder and CEO of Maxxam, Inc., whose assets were recently estimated at $3.8 billion. Hurwitz, or Maxxam, own Kaiser Aluminum, Federated Development Company of New York, Pacific Lumber and United Financial Group, the former holding company of United Savings and Loan of Texas. Pacific Lumber owns 189,000 acres in Northern California plus two mills. The acreage includes nearly all old-growth redwoods in private hands, some 6,000 acres. Prime old-growth redwood trees, like many of the 300-foot giants in Headwaters Grove, are worth $100,000 each at the lumber yard.
But apparently Hurwitz owes a lot of people a lot of money ó and many are finally going after it. He has faced three shareholder suits linked to Pacific Lumber alone: one an attempt to block the takeover of Pacific Lumber, the second by Pacific Lumber's original shareholders who felt they had been sold out for a ludicrous price, and a third challenging his raid of the employee pension fund. In 1995, the FDIC, the Office of Thrift Supervision and a Humboldt County community activist filed three new suits against him.
FDIC v. Hurwitz, filed in August 1995, seeks a $250 million damage award from the financier directly; Maxxam is not named in the suit. It accuses Hurwitz of having United Savings & Loan buy junk bonds from Drexel in exchange for the firm financing his takeovers. He then hid the true condition of the S&L ìby a pattern of deceptive financial reporting and balance sheet manipulation.î As it sunk deeper into a hole, the S&L increased its liabilities beyond legal limits, gambled on ìcumbersome real estate projects with no realistic chance of success and invested in complex financial instruments which the officers understood poorly and which resulted in staggering losses to the association.î
The FDIC suit
Under Hurwitz's control, the financial condition of United Savings steadily deteriorated. As the institution's financial health plummeted, Hurwitz, senior officers and United Savings board members serving at Hurwitz's request undertook greater and greater risks until both the officers and board members ìbecame entirely indifferent to losses the institution might incur,î the FDIC charged in its lawsuit against Hurwitz.
But according to FDIC chair Ricki Tigert-Helfer, the lawsuit cannot compel Maxxam, Pacific Lumber or their boards of directors to consider a debt-for-nature swap since they might decide to use other assets to satisfy their liability.
"Nevertheless," she added in a letter to Jill Ratner, a lawyer with the Rose Foundation for Communities and the Environment, "the FDIC is open to any appropriate settlement of its claim, including a debt-for-nature swap."
Additional pressure for a debt-for-nature swap came from yet another lawsuit, filed in January 1995 by Humboldt activist Robert Martel in U.S. District Court. It asks that Maxxam repay losses related to the Savings & Loan and that the judge award as much as $4.8 billion in damages on behalf of U.S. taxpayers.
Nearly a year later, in December 1995, the federal Office of Thrift Supervision filed 13 claims in administrative court charging Hurwitz, Maxxam, Federated Development and former and present directors of United Savings and Loan and its holding company with contributing to the failure of the S&L by turning it into ìa vehicle for speculative, highly leveraged, high risk investmentsî from a traditional home mortgage lender. In order to keep financing takeovers while maintaining its stated net worth, the thrift had to sell off its assets.
The suit seeks civil penalties of more than $800,000, restitution and a ban on the financiers from working in the banking industry. Among its other claims: that the financiers failed to properly maintain the minimum net worth of the S&L, which regulators had made a condition for approving the merger of United Savings & Loan and another thrift in 1983; violated a ban against affiliated parties engaging in transactions when the S&L bought junk bonds from Drexel, Burnham, Lambert; failed to maintain the minimum capital required by law; and paid out ìunsafe and unsoundî bonuses, settlements and severance packages to officers and directors.
Languishing and Dying in Congress
The U.S. Congress and the Clinton Administration are well aware of Headwaters and Hurwitz. In 1994, then-Representative Dan Hamburg (D-CA) introduced a bill in the House that authorized the U.S. Forest Service to begin negotiating with Pacific Lumber and other landowners of Headwaters to attach the forest to the Six Rivers National Forest. Although the bill eventually passed the House, the Senate version introduced by Barbara Boxer (D-CA) did not come up for a vote.
Hurwitz has a close ally in Frank Riggs (R-CA), the Congressman who defeated Hamburg in the Republican sweep of 1994. In June, Riggs was soundly rebuffed by his colleagues when he tried to win passage of a rider limiting enforcement of the Endangered Species Act on Pacific Lumber land. Perhaps Pacific Lumber was tired of being challenged by a local environmental group for its violations of environmental law. The Environmental Protection Information Center won nine suits that overturned Headwaters timber harvest plans.
The House also defeated a bill Riggs introduced that would have opened Headwaters to logging if negotiations between the Forest Service and the landowners fell through within an 18-month period.
Meanwhile, environmentalists, senators, representatives, Vice President Al Gore and high-level administrators in the departments of the Treasury and the Interior have been busy exchanging letters and holding meetings. One of the most hopeful meetings took place in February in Sacramento with Deputy Interior Secretary John Garamendi, California state officials and Hurwitz.
Searching for Cover
It's now June.
Pacific Lumber is busy logging. They have already cut a large swath through Headwaters Grove and logged significant portions of second-growth and residual-growth forest. Suits filed by the Environmental Protection Information Center have largely kept the chainsaws out of the most pristine groves, but the court injunction that currently protects the Headwaters Grove will probably be lifted in time for autumn logging.
The neighboring Elk River Timber has indicated it is willing to sell its land to public trust, but in the meanwhile is logging in a threatened species' habitat.
The Environmental Protection Information Center continues its legal battles, challenging a timber harvest plan along the South Fork Elk River drainage in a June lawsuit.
The FDIC suit against Hurwitz and his cohorts is pending in Judge Lynn Hughes' federal court in Houston, awaiting rulings on various motions, including one filed by Hurwitz's lawyers to dismiss the case. The Office of Thrift Supervision's suit is scheduled for a hearing in May 1997 in Houston, but OTS has not frozen Maxxam's assets, as it has the power to do if it thinks they will not be around once the lawsuit is over. Martel's suit seeking damages on behalf of U.S. taxpayers has been transferred, also to Texas.
One possible sign of hope: Deputy Interior Secretary Garamendi recently said that the federal and California governments are discussing with Hurwitz the acquisition of Headwaters Forest ó although they are not specifically talking about a debt-for-nature swap or settling the lawsuits. It will be several months before the public can expect to hear of a possible agreement.
That's about the time the young Coho salmon of Headwaters will be searching for rapidly declining cool waters and scarce adequate cover.
Resources: The Rose Foundation for Communities and the Environment, 510-658-0702; Environmental Protection Information Center, 707-923-2931; Bruce Babbitt, Secretary of the Interior, 202-208-7351.
Issue #207, September-October 1996
Showing posts with label Headwaters. Show all posts
Showing posts with label Headwaters. Show all posts
5.01.2007
NCJ - 5/96 Riggs' Forest Bill: A Headwaters solution, Forest Service shakeup
SPECIAL REPORT - MAY 1996
Riggs' Forest Bill: A Headwaters solution, Forest Service shakeup
by Jim Hight
Photo by Doug Thron
THE CONTROVERSY OVER PACIFIC Lumber's Headwaters Grove hasdragged on for nearly 10 years, through protests and lawsuits, ballot measures and several rounds of state and federal legislation.
Now Congressman Frank Riggs proposes a land-swap in which the public would "buy" the grove of ancient redwoods northeast of Fortuna with U.S. government land. Riggs and his staff say HR 2712 will provide a fair resolution to the Headwaters standoff. But the environmental groups who have used lawsuits and injunctions to prevent the logging of Headwaters don't agree.
The bill actually deals with much more than Headwaters. It contains eight sections addressing forest issues large and small, from conveying a tiny parcel of Forest Service land to the Del Norte County Unified School District to turning most of the Six Rivers National Forest operations over to the private sector.
Riggs hopes the bill will soon be heard before the Subcommittee on National Forests, Parks and Public Lands, then move through the Natural Resources Committee, pass the House and Senate, be signed by President Clinton and become law. He and his staff have martialed wide support in the forest products industry, and they believe most of their constituents will back the bill as a vehicle to boost North Coast jobs while protecting the Headwaters Grove as a National Biological Diversity Reserve.
North Coast forest-protection activists promise an all-out, national campaign to defeat Riggs' bill if it moves forward as written.
To resolve the Headwaters issue, Riggs' legislation would set up a process in which the Interior Department would exchange federal lands with PL for the 3,000-acre Headwaters Grove and up to 1,700 acres of contiguous land that would be a "buffer" between the grove and PL's surrounding timberlands.
Bureau of Land Management lands in Humboldt County, or timber harvesting rights on those lands, would be the first priority for exchange. Along with these, any other federal lands that have been designated as available for disposal could be exchanged.
"We'll accept other federal dormant assets, RTC properties (taken over from failed S&Ls), military bases," says PL President John Campbell, who was consulted by Riggs' staff in the bill's drafting.
To compensate for the value of Headwaters, PL "could either turn around and sell these properties as private land or go ahead and develop them," says Campbell.
The lands identified by Riggs and the BLM for exchange include Lacks Creek, a couple miles southeast of the southern border of Redwood National Park; Iaqua Buttes and Big Bend, on either side of the Mad River, southeast of Kneeland; and Butte Creek, off Highway 36 east of Bridgeville.
Used by some backpackers and hunters, the lands contain about 8,000 acres, mostly Douglas fir, with a lot of old growth. Their total value, however, is far less than that of Headwaters' huge redwoods, so a great deal of other land would have to be exchanged for Headwaters, which was valued by a Forest Service appraiser in 1993 at $500 million.
"The secretary (of the Interior) can look all over California for land or marketable timber harvest rights," says Jason Conger, Riggs' point man on resource issues. "Any property that is already surplus can be offered."
But bartering the BLM lands in question is objectionable to the bill's opponents. "The reason that land has a large volume of timber on it is that it is some of the last of the little bit of old growth that remains on BLM property," says environmental attorney David Krueger, a board member of the Northcoast Environmental Center. "It's all critical habitat (for the spotted owl and other old growth-dependent species)."
The other major objections to the bill focus on the process outlined for negotiating an exchange. The legislation gives PL and the feds equal control over a new appraisal process, but it mandates that "no reduction shall be made in the appraised fair market value" to reflect critical habitat restrictions. This angers environmentalists who say that Headwaters' value for timber harvesting is diminished by the fact that under federal and state endangered species laws, it can't be harvested until PL comes up with a "habitat conservation plan" for the marbled murrelet, listed as "threatened" under the Endangered Species Act and "endangered" under California law.
But to do otherwise wouldn't be fair, says Conger. "It would be like passing a law that reduces something's value and then going in and buying it. A single landowner should not bear the cost of the public's benefit in protecting endangered species."
But most alarming to those who have opposed PL's efforts to log in Headwaters is a provision of Riggs' bill that sets a time limit of 18 months on negotiations between PL and Interior; after that PL can begin to harvest timber even if it "results in a taking otherwise prohibited by the Endangered Species Act."
"After 18 months of negotiation, if PL doesn't get the price they want, which could be a king's ransom, they're given an incidental take permit without any public review or any third-party review," says Cecilia Lanman of Environmental Protection Information Center in Garberville, the main Headwaters litigant against PL over the last eight years.
The species that would be "incidentally taken" is the marbled murrelet.
"They were once called 'fog larks' because people would hear them crying to their mates in the fog," says Lanman. They nest on the flat branches of old redwoods, depending on dense canopies to protect their eggs from ravens, jays and other predators. According to Lanman, Headwaters is one of three murrelet habitats in the state. And though other populations live in Washington, Oregon and British Columbia, preserving the local habitat is critical because geographically diverse populations are required for long-term viability.
In a Feb. 15 meeting with forest-protection activists in Arcata, Riggs conceded that their concerns about the 18-month time limit were valid. "It's clear from the feedback today that (the time line) should be modified," Riggs said after the meeting. Conger says that's likely to happen as the bill moves through committee, but he insists some deadline is needed "or this could go on for another 10 years."
Behind the disagreements over this bill are deeper divisions over property rights and environmental protection.
"Like everybody else we'd like to see Headwaters saved, but in a way that will give Pacific Lumber value for what is rightfully their property," says Patricia Murphy, president of Alta California Alliance. "This bill is a step in the right direction."
Environmentalists are hoping that the FDIC is successful in levying fines against Maxxam Chairman Charles Hurwitz for his role in the failure of United Savings of Texas in 1988. Then they'd like that debt forgiven in exchange for Headwaters, the "debt-for-nature" swap.
PL's Campbell maintains that even if Hurwitz is found culpable in the Texas case and is fined, "suing Mr. Hurwitz is not the same as suing Maxxam or PL you can't take corporate assets to pay off a personal debt. That would make the shareholders very unhappy."
Six Rivers National Forest is the target of two major sections of Riggs' bill. The legislation would mandate that a large chunk of the forest budget be diverted to hiring private contractors; and on two of the SRNF ranger districts -- Mad River and Lower Trinity -- it would accelerate timber harvest in a massive "experiment" to gauge the effects of old-growth logging on the northern spotted owl. That's the critter whose potential extinction shut down the public forests of the Pacific Northwest in 1990 and set in motion the massive reordering of forest priorities known as Option 9, or the Northwest Forest Plan. HR 2712 would take apart much Option 9 as it applies to SRNF.
After the Northwest Forest Plan (NWFP) was finalized in April 1994, the SRNF developed its own forest plan to cover the next 10 to 15 years. It set massively reduced timber outputs -- 15.5 million board feet per year down from a typical cut of 140 million per year in the 1980s.
Huge areas of the 960,000-acre forest have been set aside as "late successional reserves"; containing a mixture of old growth and mature second growth, they are off limits to large-scale timber sales. Only selective harvesting that improves old-growth characteristics will be allowed. Virtually all land along streams and rivers are likewise protected as "riparian reserves" to revive the dwindling salmon runs. And even the "matrix" lands where timber sales will go forward must be managed to provide habitat for a range of species from the lowliest fungus to the grandest salamander.
To put it in the dry language of the SRNF forest plan, "The forest will be managed to maintain ecosystem components, structure and processes."
Few environmentalists celebrated Option 9; in fact, it's been challenged in court for not providing enough habitat protection for the owl, particularly in Oregon and Washington where old-growth sales that were contracted before the spotted owl injunction are now being harvested under the 1995 "salvage" law. But with a few complaints here and there, most North Coast forest activists support the NWFP and the Six Rivers Forest Plan.
By contrast, it's hard to find anyone in the forest products industry with a positive thing to say about either the regional or local plan.
"Any forester looking at a million acres would see that there is no problem to harvest over 200 million board feet a year on a sustainable basis and retain environmental values," says Bruce Taylor, president of Blue Lake Forest Products. "The Six Rivers' recent level was about 145 million. That was less than industry wanted, and more than the environmentalists wanted. What's being projected now is not even in the same zip code. It's ludicrous."
Like other local mills that bought Forest Service timber, Blue Lake cut back its production and work force after 1990. Others didn't even survive, and many timber-dependent workers and their families have suffered as a result.
And while the NWFP promised money for job retraining and economic development in timber-dependent communities, many feel these promises weren't kept. "I don't know one unemployed logger who's been retrained and put into a job that lasted more than three months," says Mary Fattig of Salyer, a vice president of California Women in Timber.
She says she sees the economic fallout every time she drives through Willow Creek. "People who've been in business for 30 to 50 years have had to close Willow Creek Meat Market, which had been there since the '20s, had to close. So did Hodgson's Department store."
Fattig supported some of the goals of the NWFP, however, and she joined a unique committee formed under the plan which was charged with developing new approaches to using the forest in a certain part of the SRNF and Shasta-Trinity National Forest called the Hayfork Adaptive Management Area. Her proposal was to selectively log all the old growth trees in a small area and track the effects on the spotted owl.
Her idea was endorsed by the Forest Service's Pacific Southwest Research Station, which started to develop a research program. Then she learned it was in Rep. Riggs' bill, but on a much larger scale: covering two entire ranger districts, nearly 50 percent of the forest.
At first she was shocked at how large Riggs' "experiment" was. Then she realized that in the process of legislation, "sometimes you have to ask for 20 percent if you're going to end up with 3 percent."
"Right now we're shutting down the national forest because of the spotted owl," says Conger, in defense of a larger experimentation area. "Is it necessary? If, as we think, the owls are not negatively impacted by management activity, then we can restore much of the Forest Service land base and reduce our growing imports of logs from as far away as New Zealand. We wouldn't have any need for Option 9."
The "Adaptive Management of Timber Resources for Old Growth Dependent Species" section of the bill would hand over management of the two ranger districts to the research branch, and mandate that half of the SRNF budget be turned over, 75 percent of which must be used "for payment to private contractors for planning, implementation and monitoring of the research plan."
Combined with another section of the bill which orders the SRNF to "contract out" field work related to preparing timber harvests for a five-year "demonstration period," the arithmetic of the bill seems to cut the SRNF down from a $15 million agency to one with a budget near zero.
Here's where Conger acknowledges that his boss may be "asking for 20 and hoping for 3," in Fattig's words.
"If both parts passed as they are written now, a substantial amount of the Six Rivers' budget authorization would be transferred into the contracting program or the research project. That's one of the issues that the Forest Service would have to analyze and report to Congress on during the legislative process During the hearings we would be able to find out exactly how much it would transfer and (make revisions accordingly)."
But Conger makes no excuses for putting the Six Rivers feet to the fire. "If you endorse having a formerly active land-management agency becoming a planning and documentation agency, they're on the right track. But if you think they should be active stewards of the land, as we do, this idea is to take some steps to get them back on track."
Disagreement over exactly what track the Forest Service should get back on is why environmental activists are upset about these elements of Riggs' bill.
"We've already had an acceleration (of timber harvesting) and there's a tremendous amount of damage that needs to be repaired from the era of acceleration that existed from the mid-1940s to 1990," says Tim McKay, director of the Northcoast Environmental Center in Arcata. "The road building associated with clearcutting accompanied so much watershed damage that we're going to be dealing with effects of acceleration well into the next century."
McKay and others believe strongly that the SRNF's projected 15.5 million board feet of annual production is reasonable, given what they say was overharvesting during earlier years. They say that the regional NWFP and the Six Rivers Forest Plan are designed to meet environmental laws -- the same kinds of environmental laws that resulted in the forest being hammered by legal challenges to timber sales and ultimately shut down when the spotted owl was "listed" as endangered. A major rollback in environmental protections to increase timber harvest, as they envision under Riggs' bill, would put the forest back into gridlock, they say.
"All of the Forest Service planning resources have been directed toward designing a new generation of timber sales for the last couple years," says Krueger, the attorney who has followed Forest Service activities for years, sometimes challenging its timber sales. "We've been in a position where the old timber sales that have been in the pipeline are exhausted and the new timber sales are just getting going.
"Unlike private timber companies, the Forest Service has to take into account other uses of the land, and they're required to do their work publicly. As a consequence, the procedures in terms of inventorying, getting public input and complying with the laws simply require a couple of years for a typical timber sale to be put together. They can go faster in an emergency but that means some other project gets slowed down.
"Here we are at the point where new timber sales are just starting and Riggs is coming up with a proposal that says 'Start over.' The result will be that you now postpone timber sales."
SRNF personnel confirm that for several years virtually no timber was offered for sale. It's this "drought" of trees that has caused mounting frustration among people in the industry who once relied on forest service timber work.
They say they'll be offering their targeted 15.5 million board feet by 1997, and without directly criticizing Riggs' legislation (something federal employees are discouraged from doing) they back up Krueger's point.
"If we get into a situation where we're back in court, litigation will grind us to a halt," says Six Rivers public information officer Bill Padonick. "This has been demonstrated in the past. We don't want to be there again, we want to be productive and moving forward."
"Probably what we'll see is that by managing and using the land and resource strategy that we have in place, we will be able to do more (timber harvest) than the current forest plan says because will find down the road that we will be able to manage for viable habitat without having to depend on the large reserves."
Less dramatic components of HR 2712 include adding some land to the Hoopa Valley Indian Reservation and increasing slightly the annual limits on timber cutting in the Smith River National Recreation Area.
More controversial is a section that would adopt the BLM's recommendation for designating "wilderness" in the King Range National Conservation Area. After a long study period, the BLM recommended that 24,660 acres be designated as wilderness. The area is primarily on the ocean-facing slopes of the range, running from Sea Lion Gulch in the north to the Sinkyone Wilderness in the south, with a large break around the Shelter Cove area.
The BLM says it made the recommendation after considering how much work it would take to manage popular wilderness areas and analyzing to what extent lands were already used for ranching and other uses. They acknowledge that the acreage designated was below what the majority of people commenting on the issue wanted. "Most did favor the all-wilderness alternative," says BLM spokeswoman Jan Bedrosian.
Environmentalists say public opinion ought to carry the day in this case. "At hearings for the wilderness study, it was 500 to 3 speaking in favor of a larger wilderness designation," says Lanman of EPIC. She adds that her group favors a wilderness bill that looks at all the BLM lands in the state.
Riggs' Forest Bill: A Headwaters solution, Forest Service shakeup
by Jim Hight
Photo by Doug Thron
THE CONTROVERSY OVER PACIFIC Lumber's Headwaters Grove hasdragged on for nearly 10 years, through protests and lawsuits, ballot measures and several rounds of state and federal legislation.
Now Congressman Frank Riggs proposes a land-swap in which the public would "buy" the grove of ancient redwoods northeast of Fortuna with U.S. government land. Riggs and his staff say HR 2712 will provide a fair resolution to the Headwaters standoff. But the environmental groups who have used lawsuits and injunctions to prevent the logging of Headwaters don't agree.
The bill actually deals with much more than Headwaters. It contains eight sections addressing forest issues large and small, from conveying a tiny parcel of Forest Service land to the Del Norte County Unified School District to turning most of the Six Rivers National Forest operations over to the private sector.
Riggs hopes the bill will soon be heard before the Subcommittee on National Forests, Parks and Public Lands, then move through the Natural Resources Committee, pass the House and Senate, be signed by President Clinton and become law. He and his staff have martialed wide support in the forest products industry, and they believe most of their constituents will back the bill as a vehicle to boost North Coast jobs while protecting the Headwaters Grove as a National Biological Diversity Reserve.
North Coast forest-protection activists promise an all-out, national campaign to defeat Riggs' bill if it moves forward as written.
To resolve the Headwaters issue, Riggs' legislation would set up a process in which the Interior Department would exchange federal lands with PL for the 3,000-acre Headwaters Grove and up to 1,700 acres of contiguous land that would be a "buffer" between the grove and PL's surrounding timberlands.
Bureau of Land Management lands in Humboldt County, or timber harvesting rights on those lands, would be the first priority for exchange. Along with these, any other federal lands that have been designated as available for disposal could be exchanged.
"We'll accept other federal dormant assets, RTC properties (taken over from failed S&Ls), military bases," says PL President John Campbell, who was consulted by Riggs' staff in the bill's drafting.
To compensate for the value of Headwaters, PL "could either turn around and sell these properties as private land or go ahead and develop them," says Campbell.
The lands identified by Riggs and the BLM for exchange include Lacks Creek, a couple miles southeast of the southern border of Redwood National Park; Iaqua Buttes and Big Bend, on either side of the Mad River, southeast of Kneeland; and Butte Creek, off Highway 36 east of Bridgeville.
Used by some backpackers and hunters, the lands contain about 8,000 acres, mostly Douglas fir, with a lot of old growth. Their total value, however, is far less than that of Headwaters' huge redwoods, so a great deal of other land would have to be exchanged for Headwaters, which was valued by a Forest Service appraiser in 1993 at $500 million.
"The secretary (of the Interior) can look all over California for land or marketable timber harvest rights," says Jason Conger, Riggs' point man on resource issues. "Any property that is already surplus can be offered."
But bartering the BLM lands in question is objectionable to the bill's opponents. "The reason that land has a large volume of timber on it is that it is some of the last of the little bit of old growth that remains on BLM property," says environmental attorney David Krueger, a board member of the Northcoast Environmental Center. "It's all critical habitat (for the spotted owl and other old growth-dependent species)."
The other major objections to the bill focus on the process outlined for negotiating an exchange. The legislation gives PL and the feds equal control over a new appraisal process, but it mandates that "no reduction shall be made in the appraised fair market value" to reflect critical habitat restrictions. This angers environmentalists who say that Headwaters' value for timber harvesting is diminished by the fact that under federal and state endangered species laws, it can't be harvested until PL comes up with a "habitat conservation plan" for the marbled murrelet, listed as "threatened" under the Endangered Species Act and "endangered" under California law.
But to do otherwise wouldn't be fair, says Conger. "It would be like passing a law that reduces something's value and then going in and buying it. A single landowner should not bear the cost of the public's benefit in protecting endangered species."
But most alarming to those who have opposed PL's efforts to log in Headwaters is a provision of Riggs' bill that sets a time limit of 18 months on negotiations between PL and Interior; after that PL can begin to harvest timber even if it "results in a taking otherwise prohibited by the Endangered Species Act."
"After 18 months of negotiation, if PL doesn't get the price they want, which could be a king's ransom, they're given an incidental take permit without any public review or any third-party review," says Cecilia Lanman of Environmental Protection Information Center in Garberville, the main Headwaters litigant against PL over the last eight years.
The species that would be "incidentally taken" is the marbled murrelet.
"They were once called 'fog larks' because people would hear them crying to their mates in the fog," says Lanman. They nest on the flat branches of old redwoods, depending on dense canopies to protect their eggs from ravens, jays and other predators. According to Lanman, Headwaters is one of three murrelet habitats in the state. And though other populations live in Washington, Oregon and British Columbia, preserving the local habitat is critical because geographically diverse populations are required for long-term viability.
In a Feb. 15 meeting with forest-protection activists in Arcata, Riggs conceded that their concerns about the 18-month time limit were valid. "It's clear from the feedback today that (the time line) should be modified," Riggs said after the meeting. Conger says that's likely to happen as the bill moves through committee, but he insists some deadline is needed "or this could go on for another 10 years."
Behind the disagreements over this bill are deeper divisions over property rights and environmental protection.
"Like everybody else we'd like to see Headwaters saved, but in a way that will give Pacific Lumber value for what is rightfully their property," says Patricia Murphy, president of Alta California Alliance. "This bill is a step in the right direction."
Environmentalists are hoping that the FDIC is successful in levying fines against Maxxam Chairman Charles Hurwitz for his role in the failure of United Savings of Texas in 1988. Then they'd like that debt forgiven in exchange for Headwaters, the "debt-for-nature" swap.
PL's Campbell maintains that even if Hurwitz is found culpable in the Texas case and is fined, "suing Mr. Hurwitz is not the same as suing Maxxam or PL you can't take corporate assets to pay off a personal debt. That would make the shareholders very unhappy."
Six Rivers National Forest is the target of two major sections of Riggs' bill. The legislation would mandate that a large chunk of the forest budget be diverted to hiring private contractors; and on two of the SRNF ranger districts -- Mad River and Lower Trinity -- it would accelerate timber harvest in a massive "experiment" to gauge the effects of old-growth logging on the northern spotted owl. That's the critter whose potential extinction shut down the public forests of the Pacific Northwest in 1990 and set in motion the massive reordering of forest priorities known as Option 9, or the Northwest Forest Plan. HR 2712 would take apart much Option 9 as it applies to SRNF.
After the Northwest Forest Plan (NWFP) was finalized in April 1994, the SRNF developed its own forest plan to cover the next 10 to 15 years. It set massively reduced timber outputs -- 15.5 million board feet per year down from a typical cut of 140 million per year in the 1980s.
Huge areas of the 960,000-acre forest have been set aside as "late successional reserves"; containing a mixture of old growth and mature second growth, they are off limits to large-scale timber sales. Only selective harvesting that improves old-growth characteristics will be allowed. Virtually all land along streams and rivers are likewise protected as "riparian reserves" to revive the dwindling salmon runs. And even the "matrix" lands where timber sales will go forward must be managed to provide habitat for a range of species from the lowliest fungus to the grandest salamander.
To put it in the dry language of the SRNF forest plan, "The forest will be managed to maintain ecosystem components, structure and processes."
Few environmentalists celebrated Option 9; in fact, it's been challenged in court for not providing enough habitat protection for the owl, particularly in Oregon and Washington where old-growth sales that were contracted before the spotted owl injunction are now being harvested under the 1995 "salvage" law. But with a few complaints here and there, most North Coast forest activists support the NWFP and the Six Rivers Forest Plan.
By contrast, it's hard to find anyone in the forest products industry with a positive thing to say about either the regional or local plan.
"Any forester looking at a million acres would see that there is no problem to harvest over 200 million board feet a year on a sustainable basis and retain environmental values," says Bruce Taylor, president of Blue Lake Forest Products. "The Six Rivers' recent level was about 145 million. That was less than industry wanted, and more than the environmentalists wanted. What's being projected now is not even in the same zip code. It's ludicrous."
Like other local mills that bought Forest Service timber, Blue Lake cut back its production and work force after 1990. Others didn't even survive, and many timber-dependent workers and their families have suffered as a result.
And while the NWFP promised money for job retraining and economic development in timber-dependent communities, many feel these promises weren't kept. "I don't know one unemployed logger who's been retrained and put into a job that lasted more than three months," says Mary Fattig of Salyer, a vice president of California Women in Timber.
She says she sees the economic fallout every time she drives through Willow Creek. "People who've been in business for 30 to 50 years have had to close Willow Creek Meat Market, which had been there since the '20s, had to close. So did Hodgson's Department store."
Fattig supported some of the goals of the NWFP, however, and she joined a unique committee formed under the plan which was charged with developing new approaches to using the forest in a certain part of the SRNF and Shasta-Trinity National Forest called the Hayfork Adaptive Management Area. Her proposal was to selectively log all the old growth trees in a small area and track the effects on the spotted owl.
Her idea was endorsed by the Forest Service's Pacific Southwest Research Station, which started to develop a research program. Then she learned it was in Rep. Riggs' bill, but on a much larger scale: covering two entire ranger districts, nearly 50 percent of the forest.
At first she was shocked at how large Riggs' "experiment" was. Then she realized that in the process of legislation, "sometimes you have to ask for 20 percent if you're going to end up with 3 percent."
"Right now we're shutting down the national forest because of the spotted owl," says Conger, in defense of a larger experimentation area. "Is it necessary? If, as we think, the owls are not negatively impacted by management activity, then we can restore much of the Forest Service land base and reduce our growing imports of logs from as far away as New Zealand. We wouldn't have any need for Option 9."
The "Adaptive Management of Timber Resources for Old Growth Dependent Species" section of the bill would hand over management of the two ranger districts to the research branch, and mandate that half of the SRNF budget be turned over, 75 percent of which must be used "for payment to private contractors for planning, implementation and monitoring of the research plan."
Combined with another section of the bill which orders the SRNF to "contract out" field work related to preparing timber harvests for a five-year "demonstration period," the arithmetic of the bill seems to cut the SRNF down from a $15 million agency to one with a budget near zero.
Here's where Conger acknowledges that his boss may be "asking for 20 and hoping for 3," in Fattig's words.
"If both parts passed as they are written now, a substantial amount of the Six Rivers' budget authorization would be transferred into the contracting program or the research project. That's one of the issues that the Forest Service would have to analyze and report to Congress on during the legislative process During the hearings we would be able to find out exactly how much it would transfer and (make revisions accordingly)."
But Conger makes no excuses for putting the Six Rivers feet to the fire. "If you endorse having a formerly active land-management agency becoming a planning and documentation agency, they're on the right track. But if you think they should be active stewards of the land, as we do, this idea is to take some steps to get them back on track."
Disagreement over exactly what track the Forest Service should get back on is why environmental activists are upset about these elements of Riggs' bill.
"We've already had an acceleration (of timber harvesting) and there's a tremendous amount of damage that needs to be repaired from the era of acceleration that existed from the mid-1940s to 1990," says Tim McKay, director of the Northcoast Environmental Center in Arcata. "The road building associated with clearcutting accompanied so much watershed damage that we're going to be dealing with effects of acceleration well into the next century."
McKay and others believe strongly that the SRNF's projected 15.5 million board feet of annual production is reasonable, given what they say was overharvesting during earlier years. They say that the regional NWFP and the Six Rivers Forest Plan are designed to meet environmental laws -- the same kinds of environmental laws that resulted in the forest being hammered by legal challenges to timber sales and ultimately shut down when the spotted owl was "listed" as endangered. A major rollback in environmental protections to increase timber harvest, as they envision under Riggs' bill, would put the forest back into gridlock, they say.
"All of the Forest Service planning resources have been directed toward designing a new generation of timber sales for the last couple years," says Krueger, the attorney who has followed Forest Service activities for years, sometimes challenging its timber sales. "We've been in a position where the old timber sales that have been in the pipeline are exhausted and the new timber sales are just getting going.
"Unlike private timber companies, the Forest Service has to take into account other uses of the land, and they're required to do their work publicly. As a consequence, the procedures in terms of inventorying, getting public input and complying with the laws simply require a couple of years for a typical timber sale to be put together. They can go faster in an emergency but that means some other project gets slowed down.
"Here we are at the point where new timber sales are just starting and Riggs is coming up with a proposal that says 'Start over.' The result will be that you now postpone timber sales."
SRNF personnel confirm that for several years virtually no timber was offered for sale. It's this "drought" of trees that has caused mounting frustration among people in the industry who once relied on forest service timber work.
They say they'll be offering their targeted 15.5 million board feet by 1997, and without directly criticizing Riggs' legislation (something federal employees are discouraged from doing) they back up Krueger's point.
"If we get into a situation where we're back in court, litigation will grind us to a halt," says Six Rivers public information officer Bill Padonick. "This has been demonstrated in the past. We don't want to be there again, we want to be productive and moving forward."
"Probably what we'll see is that by managing and using the land and resource strategy that we have in place, we will be able to do more (timber harvest) than the current forest plan says because will find down the road that we will be able to manage for viable habitat without having to depend on the large reserves."
Less dramatic components of HR 2712 include adding some land to the Hoopa Valley Indian Reservation and increasing slightly the annual limits on timber cutting in the Smith River National Recreation Area.
More controversial is a section that would adopt the BLM's recommendation for designating "wilderness" in the King Range National Conservation Area. After a long study period, the BLM recommended that 24,660 acres be designated as wilderness. The area is primarily on the ocean-facing slopes of the range, running from Sea Lion Gulch in the north to the Sinkyone Wilderness in the south, with a large break around the Shelter Cove area.
The BLM says it made the recommendation after considering how much work it would take to manage popular wilderness areas and analyzing to what extent lands were already used for ranching and other uses. They acknowledge that the acreage designated was below what the majority of people commenting on the issue wanted. "Most did favor the all-wilderness alternative," says BLM spokeswoman Jan Bedrosian.
Environmentalists say public opinion ought to carry the day in this case. "At hearings for the wilderness study, it was 500 to 3 speaking in favor of a larger wilderness designation," says Lanman of EPIC. She adds that her group favors a wilderness bill that looks at all the BLM lands in the state.
NCJ - 9/15/96 Headwaters Rally
There's Shellenberger's buddy and partner, Adam Werbach... did they know each other back then?
This was when all the pressure was being exerted.... Bonnie Raitt, Woody Harrelson...
PHOTO PAGE/ESSAY - OCTOBER 1996PHOTO PAGE/ESSAY - OCTOBER 1996
9/15/96 Headwaters Rally
Photos by Brandi Easter
Essay by Jim Hight
At the press conference Sept. 15, singers Don Henley and Bonnie Raitt,
Adam Wehrbach of the Sierra Club and Cecilia Lanman of Environmental Protection Information Center
A section of the crowded rally site on Highway 36
"I'm a logger and I'm here to stand up for the rights of my job," said Bryan Chipps of Eureka, one of this group of counter-protesters.
Giant puppets brought by demonstrators keep watch over the portable toilets.
County sheriff's deputies, Highway Patrol officers and Fortuna police were ready, but the only arrests occurred at the pre-determined trespassing site.
Headwaters forever?
FOR A JOURNALIST, THE "largest protest against logging in U.S. history" provided a wealth of images and telling moments.
A mass of colorful humans bumped and squeezed together onto the shoulders of Highway 36 for five hours. Flags and banners danced above their heads and turkey buzzards soared across the blue sky.
Darryl Cherney sang "You can't clearcut your way to heaven," with Judi Bari on fiddle and Francine and Nymiah singing harmony.
The loudest applause of the day went not to visiting celebrities Bonnie Raitt and Don Henley but to Cecilia Lanman, the local activist who seems to have risen to the rank of general in the Headwaters Army.
On Fisher Road, three generations of a family stood in quiet defiance at the front of their driveway, a logging crane parked behind them, as protesters walked and danced toward the PALCO property line.
When someone crossed that line, an officer said, "Ma'am, you're trespassing. Please step back across the line." She said "No," and the officer said, "You're under arrest" before slipping a plastic tie around her wrists and leading her off.
In contrast to some characterizations on North Coast TV news, I witnessed much to admire about the way protesters -- and the organizers -- conducted themselves.
Before and during the rally on Highway 36, the riot-ready police stood back while scores of volunteer security people kept order. "Please stay to the side of the white line" was heard more often than "Save Headwaters."
When pickups full of timber fallers drove back and forth -- one throttling a chain saw -- I saw friendly waves, not middle fingers, extended by people in the crowd.
People of all ages were there, including Rex Rathbun, 76, of Petrolia. On his way to get arrested he told me his first act of civil disobedience had occurred in the same place last year. "That was 50 years to the day after I walked the streets of Tokyo after World War II. And I didn't fight that war so Charles Hurwitz could log the last of the old forests."
But for the cynic in me, there was some meaty material to chew on.
In the staging area where protesters prepared to cross PALCO's "green line," I asked a 10-year-old boy from Mill Valley why he was going to get arrested.
"For the cause," he said, then nodded toward the green hills surrounding us: "Imagine if all of that was logged." He was looking at healthy second- and third-growth conifers.
In the "press tent" and from the stage speakers mentioned their concern for timber workers and predicted new jobs in "restoration and ecosystem management" after Headwaters is protected. They said Hurwitz revved up PALCO's timber harvest, hastening the day when the company will shut down the old-growth mill in Scotia. "Can we count on Mr. Hurwitz to take care of us after the timber is gone?" asked one speaker.
"Can we count on you to be honest about the economic impacts of your demands?" a fast-talking heckler could have yelled back.
Protection of PALCO's six remaining old-growth groves will surely shut down PALCO's Mill A years before even Hurwitz had planned.
Watershed restoration jobs pay well and are important to the recovery of fisheries, but the money for them trickles into Humboldt County by the hundreds of thousands. And how generous will the federal government be with the North Coast after sacrificing some $300 million to purchase just the main Headwaters Grove?
People who know a lot more than I about the subject say PALCO's old-growth groves and the tens of thousands of acres connecting them must be preserved. With only a tiny percentage of untouched forests left in the lower 48 states, there seems to be common sense in the environmentalists' claims.
Whether you call it "God's Creation" or the "Web of Life," there is a natural order. In the last 150 years, we humans have acquired the ability to quickly and massively intervene in this order.
Headwaters' defenders believe we must restrain timber harvesting and preserve 60,000 acres of the coastal redwood ecosystem. With the momentum of the times and a national constituency behind them, it looks like they'll slowly but inevitably win most of the battles.
But as a newcomer to a county built on timber jobs, I can't help but think about what will be lost and who will lose it, and how much we all lose in the ongoing conflicts.
This was when all the pressure was being exerted.... Bonnie Raitt, Woody Harrelson...
PHOTO PAGE/ESSAY - OCTOBER 1996PHOTO PAGE/ESSAY - OCTOBER 1996
9/15/96 Headwaters Rally
Photos by Brandi Easter
Essay by Jim Hight
At the press conference Sept. 15, singers Don Henley and Bonnie Raitt,
Adam Wehrbach of the Sierra Club and Cecilia Lanman of Environmental Protection Information Center
A section of the crowded rally site on Highway 36
"I'm a logger and I'm here to stand up for the rights of my job," said Bryan Chipps of Eureka, one of this group of counter-protesters.
Giant puppets brought by demonstrators keep watch over the portable toilets.
County sheriff's deputies, Highway Patrol officers and Fortuna police were ready, but the only arrests occurred at the pre-determined trespassing site.
Headwaters forever?
FOR A JOURNALIST, THE "largest protest against logging in U.S. history" provided a wealth of images and telling moments.
A mass of colorful humans bumped and squeezed together onto the shoulders of Highway 36 for five hours. Flags and banners danced above their heads and turkey buzzards soared across the blue sky.
Darryl Cherney sang "You can't clearcut your way to heaven," with Judi Bari on fiddle and Francine and Nymiah singing harmony.
The loudest applause of the day went not to visiting celebrities Bonnie Raitt and Don Henley but to Cecilia Lanman, the local activist who seems to have risen to the rank of general in the Headwaters Army.
On Fisher Road, three generations of a family stood in quiet defiance at the front of their driveway, a logging crane parked behind them, as protesters walked and danced toward the PALCO property line.
When someone crossed that line, an officer said, "Ma'am, you're trespassing. Please step back across the line." She said "No," and the officer said, "You're under arrest" before slipping a plastic tie around her wrists and leading her off.
In contrast to some characterizations on North Coast TV news, I witnessed much to admire about the way protesters -- and the organizers -- conducted themselves.
Before and during the rally on Highway 36, the riot-ready police stood back while scores of volunteer security people kept order. "Please stay to the side of the white line" was heard more often than "Save Headwaters."
When pickups full of timber fallers drove back and forth -- one throttling a chain saw -- I saw friendly waves, not middle fingers, extended by people in the crowd.
People of all ages were there, including Rex Rathbun, 76, of Petrolia. On his way to get arrested he told me his first act of civil disobedience had occurred in the same place last year. "That was 50 years to the day after I walked the streets of Tokyo after World War II. And I didn't fight that war so Charles Hurwitz could log the last of the old forests."
But for the cynic in me, there was some meaty material to chew on.
In the staging area where protesters prepared to cross PALCO's "green line," I asked a 10-year-old boy from Mill Valley why he was going to get arrested.
"For the cause," he said, then nodded toward the green hills surrounding us: "Imagine if all of that was logged." He was looking at healthy second- and third-growth conifers.
In the "press tent" and from the stage speakers mentioned their concern for timber workers and predicted new jobs in "restoration and ecosystem management" after Headwaters is protected. They said Hurwitz revved up PALCO's timber harvest, hastening the day when the company will shut down the old-growth mill in Scotia. "Can we count on Mr. Hurwitz to take care of us after the timber is gone?" asked one speaker.
"Can we count on you to be honest about the economic impacts of your demands?" a fast-talking heckler could have yelled back.
Protection of PALCO's six remaining old-growth groves will surely shut down PALCO's Mill A years before even Hurwitz had planned.
Watershed restoration jobs pay well and are important to the recovery of fisheries, but the money for them trickles into Humboldt County by the hundreds of thousands. And how generous will the federal government be with the North Coast after sacrificing some $300 million to purchase just the main Headwaters Grove?
People who know a lot more than I about the subject say PALCO's old-growth groves and the tens of thousands of acres connecting them must be preserved. With only a tiny percentage of untouched forests left in the lower 48 states, there seems to be common sense in the environmentalists' claims.
Whether you call it "God's Creation" or the "Web of Life," there is a natural order. In the last 150 years, we humans have acquired the ability to quickly and massively intervene in this order.
Headwaters' defenders believe we must restrain timber harvesting and preserve 60,000 acres of the coastal redwood ecosystem. With the momentum of the times and a national constituency behind them, it looks like they'll slowly but inevitably win most of the battles.
But as a newcomer to a county built on timber jobs, I can't help but think about what will be lost and who will lose it, and how much we all lose in the ongoing conflicts.
NCJ - THOSE DISAPPEARING TIMBER JOBS 9/97
THOSE DISAPPEARING TIMBER JOBS
GUEST OPINION by Jerry Partain
If you follow the debate over forestry policies in the Pacific Northwest, you've probably heard from environmentalists who say that job losses in the timber industry have been caused by the new sawmill technology rather than environmental regulations.
Recently my attention was called to a study by Bill Freudenburg at the University of Wisconsin-Madison. He studied employment trends between 1947 and 1993 and found no "statistically believable evidence of a 'spotted owl' effect on logging jobs." He concluded that if environmental laws had any effect on jobs in the timber industry, it was to increase them.
My first clue to Freudenburg's biased outlook on this subject was his use of the terms "chopping down trees" and "mowing down trees." Like a lot of people, he doesn't approve of harvesting trees as an agricultural crop. I'm sure he would not refer to a wheat harvest as "chopping down" wheat stems.
Employment in the period Freudenburg studied certainly did drop, and it dropped partly because of technology changes that saved lives and reduced operating costs. It dropped also because companies harvested old growth timber at a rapid rate, thus reducing the availability of this resource.
After World War II returning servicemen were intent on resuming their peacetime lives after four years of war. Logging and timber manufacturing expanded rapidly throughout the Northwest beginning in 1945. The rapid harvesting was done not because loggers love to "chop down" trees, but because they responded to an unprecedented demand for homes, furniture, paper and a thousand other valuable products made from trees.
The large increase in logging just after the war set the stage for a significant reduction of logging jobs when the demand was met. It's what we expected. It's what happened in the Northeast, the Great Lakes states and the Southeast in much earlier times.
In 1960 I predicted at an economic development seminar that the 300 or so sawmills we then had in Humboldt County would drop to about 10 or 15 by 1980. We knew that the industry needed to make the transition from harvesting residual old growth to the management and harvesting of young growth. It was the pattern followed all across the country at different times in our history. The difference was that all of the old growth had been cut in the rest of the country, while we still had millions of acres of old trees left to fight over.
Among the good scientific works of today, there are many examples of junk science molded to produce a desired result. This was best displayed locally by faulty studies on the habitat needs of the spotted owl. Freudenburg has produced the same kind of work to show that environmental regulations have not only not caused job losses but have actually created more jobs in the industry.
Despite Freudenburg's work and other studies negating the "spotted owl" effect on our labor market, I think the truth is contained in the answer to this simple question: If the Six Rivers National Forest has a million acres of timber land and its management sets aside 85 percent of that for purposes other than timber growing and harvesting, doesn't that have an effect on jobs in the timber industry?
That's what has been done throughout the Northwest under the Northwest Forest Plan (Option 9).
Yes, technology and the shift to harvesting second-growth timber have reduced timber employment. Fewer hours of human labor are required to produce 1,000 board feet of lumber. But the reduction in the number of acres available for tree growing and harvesting has cut additional jobs.
Of course, the environmental laws have sown a rich increase in jobs for biologists, geologists and other "ists" to meet the new requirements. The costs of employing these people is borne by the buyers of timber products.
The same is not true for other forest resources that have come under the protection of environmental laws. Do recreationists pay the costs of the benefits they get from the use of federal forests? What percentage of management costs do the lovers of wilderness pay? How about watershed protection? Do water users pay the full cost?
The next time someone tells you that timber job losses were due to technology and other changes in the industry -- not environmental protection -- ask them how you can take millions of acres of timber land out of production without reducing the number of people turning those natural resources into lumber?
Jerry Partain is a retired professor of forestry from Humboldt State University and former director of the California Department of Forestry.
GUEST OPINION by Jerry Partain
If you follow the debate over forestry policies in the Pacific Northwest, you've probably heard from environmentalists who say that job losses in the timber industry have been caused by the new sawmill technology rather than environmental regulations.
Recently my attention was called to a study by Bill Freudenburg at the University of Wisconsin-Madison. He studied employment trends between 1947 and 1993 and found no "statistically believable evidence of a 'spotted owl' effect on logging jobs." He concluded that if environmental laws had any effect on jobs in the timber industry, it was to increase them.
My first clue to Freudenburg's biased outlook on this subject was his use of the terms "chopping down trees" and "mowing down trees." Like a lot of people, he doesn't approve of harvesting trees as an agricultural crop. I'm sure he would not refer to a wheat harvest as "chopping down" wheat stems.
Employment in the period Freudenburg studied certainly did drop, and it dropped partly because of technology changes that saved lives and reduced operating costs. It dropped also because companies harvested old growth timber at a rapid rate, thus reducing the availability of this resource.
After World War II returning servicemen were intent on resuming their peacetime lives after four years of war. Logging and timber manufacturing expanded rapidly throughout the Northwest beginning in 1945. The rapid harvesting was done not because loggers love to "chop down" trees, but because they responded to an unprecedented demand for homes, furniture, paper and a thousand other valuable products made from trees.
The large increase in logging just after the war set the stage for a significant reduction of logging jobs when the demand was met. It's what we expected. It's what happened in the Northeast, the Great Lakes states and the Southeast in much earlier times.
In 1960 I predicted at an economic development seminar that the 300 or so sawmills we then had in Humboldt County would drop to about 10 or 15 by 1980. We knew that the industry needed to make the transition from harvesting residual old growth to the management and harvesting of young growth. It was the pattern followed all across the country at different times in our history. The difference was that all of the old growth had been cut in the rest of the country, while we still had millions of acres of old trees left to fight over.
Among the good scientific works of today, there are many examples of junk science molded to produce a desired result. This was best displayed locally by faulty studies on the habitat needs of the spotted owl. Freudenburg has produced the same kind of work to show that environmental regulations have not only not caused job losses but have actually created more jobs in the industry.
Despite Freudenburg's work and other studies negating the "spotted owl" effect on our labor market, I think the truth is contained in the answer to this simple question: If the Six Rivers National Forest has a million acres of timber land and its management sets aside 85 percent of that for purposes other than timber growing and harvesting, doesn't that have an effect on jobs in the timber industry?
That's what has been done throughout the Northwest under the Northwest Forest Plan (Option 9).
Yes, technology and the shift to harvesting second-growth timber have reduced timber employment. Fewer hours of human labor are required to produce 1,000 board feet of lumber. But the reduction in the number of acres available for tree growing and harvesting has cut additional jobs.
Of course, the environmental laws have sown a rich increase in jobs for biologists, geologists and other "ists" to meet the new requirements. The costs of employing these people is borne by the buyers of timber products.
The same is not true for other forest resources that have come under the protection of environmental laws. Do recreationists pay the costs of the benefits they get from the use of federal forests? What percentage of management costs do the lovers of wilderness pay? How about watershed protection? Do water users pay the full cost?
The next time someone tells you that timber job losses were due to technology and other changes in the industry -- not environmental protection -- ask them how you can take millions of acres of timber land out of production without reducing the number of people turning those natural resources into lumber?
Jerry Partain is a retired professor of forestry from Humboldt State University and former director of the California Department of Forestry.
NCJ - THE FINANCIAL ROOTS OF HEADWATERS 1997
THE FINANCIAL ROOTS OF HEADWATERS
by Daniel Ihara
The roots of the Headwaters Forest controversy extend not only down into the soil of Humboldt County, but also back in time to the financial shenanigans of the 1980s. It is important to understand these roots as the federal government, stockholders and the courts search for resolutions to Headwaters-related issues.
First, Maxxam could not have taken over Pacific Lumber if not for junk bonds and the "Junk Bond King," Michael Milken. Junk bonds -- politely called "high yield, high risk" bonds -- have been around for a long time. But they didn't hit it big until Milken realized that a collection of junk bonds paid higher returns than safer investments, even taking into account the proportion of bonds that defaulted on interest payments.
And second, Maxxam could not have taken over Pacific Lumber if vast changes had not occurred in the savings and loan industry. In the late 1980s at the close of the Jimmy Carter presidency, interest rates and inflation shot up into the double digits. This left savings and loan institutions stuck with home mortgages paying 3 percent while banks and money market funds were paying triple that amount to depositors.
This was the first savings and loan crisis. But instead of biting the bullet and letting these savings and loans collapse, the Reagan administration, in the spirit of deregulation, allowed them to take on higher yielding, riskier investments.
At the same time, and also in the spirit of deregulation, the government reduced the number of government regulators reviewing savings and loan activity. What was retained, though, was government insurance of saving and loan deposits used for riskier investments.
Savings and loans now had funds and authorization to buy high-yield investments while being insured by the government, and Milken had the junk bonds to sell them. All that was lacking was something to buy with junk bond money. Enter corporate raiders and leveraged buyouts.
Corporate raiders borrow money to buy control of companies. Although their own assets may be small, corporate raiders borrow by using the assets they will acquire as collateral, or backing, for the millions (sometimes billions) of dollars that they borrow.
Corporate raiders make no profit if the amount they borrow simply equals the value of the assets they purchased, but there are ways such corporate takeovers can make sense.
One, if the company being taken over has assets worth more than the value of all that company's stock, then someone who gains control of all this stock could sell off the company's assets, pay off money borrowed to buy the company and come out ahead.
Or two, a corporate takeover could break implied contracts, agreements or practices that had allowed the targeted company to function in the past. For example, a company's management might have an unwritten commitment to provide long-term employment in exchange for employees' agreement not to strike for higher wages. Or there might be an unwritten policy that the company would practice voluntary sustained yield harvesting for long-term stability instead of short-term profits and fluctuating employment levels. There are those who argue such was the case with Pacific Lumber before the Maxxam takeover.
Pacific Lumber's Articles of Incorporation state:
"The board of directors ... when evaluating any offer of another party ... to merge or consolidate this corporation with another corporation ... shall ... give due consideration to ... all relevant factors, including without limitation the social, legal, environmental and economic effects on the employees, customers, suppliers, and other constituencies of this corporation ... on the communities and geographical areas in which this corporation and its subsidiaries operate or are located."
-- Articles of Incorporation 1981, Article 10
In addition,
"any dissolution or liquidation of this corporation (as would occur in a corporate merger) shall require the affirmative vote of not less than eighty percent (80 percent) of the outstanding shares of this corporation entitled to vote, if ... any other corporation, person or entity beneficially owns or controls, directly or indirectly, five percent (5 percent) or more of the outstanding stock of this corporation." (Article 6)
A lawsuit in Humboldt County Superior Court alleges that when the PALCO board or directors agreed to the merger Oct. 22, 1985, it "was under the erroneous assumption that Hurwitz held less than 5 percent of Pacific Lumber stock and therefore needed only 50 percent ownership (instead of 80 percent) to effectuate a merger."
Further, this suit alleges that
"Hurwitz ... along with convicted felons Milken, Drexel Burnham Lambert, and Ivan Boesky engaged in ... securities manipulations as part of the continuing plan, scheme, and unlawful conspiracy .... to defraud Pacific Lumber shareholders with resulting injury to the non-shareholder constituencies of Pacific Lumber, (which) constituted and was part of a pattern of racketeering activity." (Thompson et al vs. Hurwitz et al. )
Pete Stark and 12 other representatives in Congress last month asked the Securities Exchange Commission to "consider an enforcement seeking the disgorgement of any wrongful gains that may have resulted from the takeover of Pacific Lumber."
Finally, the latter part of the 1980s saw the collapse both of junk bond prices and many savings and loan institutions. One of the largest to collapse was United Savings Association of Texas, controlled by Charles Hurwitz. Its demise cost U.S. taxpayers $1.6 billion to bail out. The Federal Deposit Insurance Corp. is seeking recovery of $250 million and the federal government's Office of Thrift Supervision might recover more than $1 billion because of the collapse of Hurwitz's Texas saving and loan. The OTS suit is scheduled to be heard beginning Sept. 22 in Houston.
(Note: For additional information, The Last Stand by David Harris, now in paperback, tells the dramatic story of the takeover with its vivid cast of characters.)
Daniel M. Ihara is the economics consultant for Humboldt County and Redwood Region Economic Development Commission, and an economics instructor at Humboldt State University.
by Daniel Ihara
The roots of the Headwaters Forest controversy extend not only down into the soil of Humboldt County, but also back in time to the financial shenanigans of the 1980s. It is important to understand these roots as the federal government, stockholders and the courts search for resolutions to Headwaters-related issues.
First, Maxxam could not have taken over Pacific Lumber if not for junk bonds and the "Junk Bond King," Michael Milken. Junk bonds -- politely called "high yield, high risk" bonds -- have been around for a long time. But they didn't hit it big until Milken realized that a collection of junk bonds paid higher returns than safer investments, even taking into account the proportion of bonds that defaulted on interest payments.
And second, Maxxam could not have taken over Pacific Lumber if vast changes had not occurred in the savings and loan industry. In the late 1980s at the close of the Jimmy Carter presidency, interest rates and inflation shot up into the double digits. This left savings and loan institutions stuck with home mortgages paying 3 percent while banks and money market funds were paying triple that amount to depositors.
This was the first savings and loan crisis. But instead of biting the bullet and letting these savings and loans collapse, the Reagan administration, in the spirit of deregulation, allowed them to take on higher yielding, riskier investments.
At the same time, and also in the spirit of deregulation, the government reduced the number of government regulators reviewing savings and loan activity. What was retained, though, was government insurance of saving and loan deposits used for riskier investments.
Savings and loans now had funds and authorization to buy high-yield investments while being insured by the government, and Milken had the junk bonds to sell them. All that was lacking was something to buy with junk bond money. Enter corporate raiders and leveraged buyouts.
Corporate raiders borrow money to buy control of companies. Although their own assets may be small, corporate raiders borrow by using the assets they will acquire as collateral, or backing, for the millions (sometimes billions) of dollars that they borrow.
Corporate raiders make no profit if the amount they borrow simply equals the value of the assets they purchased, but there are ways such corporate takeovers can make sense.
One, if the company being taken over has assets worth more than the value of all that company's stock, then someone who gains control of all this stock could sell off the company's assets, pay off money borrowed to buy the company and come out ahead.
Or two, a corporate takeover could break implied contracts, agreements or practices that had allowed the targeted company to function in the past. For example, a company's management might have an unwritten commitment to provide long-term employment in exchange for employees' agreement not to strike for higher wages. Or there might be an unwritten policy that the company would practice voluntary sustained yield harvesting for long-term stability instead of short-term profits and fluctuating employment levels. There are those who argue such was the case with Pacific Lumber before the Maxxam takeover.
Pacific Lumber's Articles of Incorporation state:
"The board of directors ... when evaluating any offer of another party ... to merge or consolidate this corporation with another corporation ... shall ... give due consideration to ... all relevant factors, including without limitation the social, legal, environmental and economic effects on the employees, customers, suppliers, and other constituencies of this corporation ... on the communities and geographical areas in which this corporation and its subsidiaries operate or are located."
-- Articles of Incorporation 1981, Article 10
In addition,
"any dissolution or liquidation of this corporation (as would occur in a corporate merger) shall require the affirmative vote of not less than eighty percent (80 percent) of the outstanding shares of this corporation entitled to vote, if ... any other corporation, person or entity beneficially owns or controls, directly or indirectly, five percent (5 percent) or more of the outstanding stock of this corporation." (Article 6)
A lawsuit in Humboldt County Superior Court alleges that when the PALCO board or directors agreed to the merger Oct. 22, 1985, it "was under the erroneous assumption that Hurwitz held less than 5 percent of Pacific Lumber stock and therefore needed only 50 percent ownership (instead of 80 percent) to effectuate a merger."
Further, this suit alleges that
"Hurwitz ... along with convicted felons Milken, Drexel Burnham Lambert, and Ivan Boesky engaged in ... securities manipulations as part of the continuing plan, scheme, and unlawful conspiracy .... to defraud Pacific Lumber shareholders with resulting injury to the non-shareholder constituencies of Pacific Lumber, (which) constituted and was part of a pattern of racketeering activity." (Thompson et al vs. Hurwitz et al. )
Pete Stark and 12 other representatives in Congress last month asked the Securities Exchange Commission to "consider an enforcement seeking the disgorgement of any wrongful gains that may have resulted from the takeover of Pacific Lumber."
Finally, the latter part of the 1980s saw the collapse both of junk bond prices and many savings and loan institutions. One of the largest to collapse was United Savings Association of Texas, controlled by Charles Hurwitz. Its demise cost U.S. taxpayers $1.6 billion to bail out. The Federal Deposit Insurance Corp. is seeking recovery of $250 million and the federal government's Office of Thrift Supervision might recover more than $1 billion because of the collapse of Hurwitz's Texas saving and loan. The OTS suit is scheduled to be heard beginning Sept. 22 in Houston.
(Note: For additional information, The Last Stand by David Harris, now in paperback, tells the dramatic story of the takeover with its vivid cast of characters.)
Daniel M. Ihara is the economics consultant for Humboldt County and Redwood Region Economic Development Commission, and an economics instructor at Humboldt State University.
4.28.2007
DEBT FOR TREES PART 1 and PART 2
This is an interesting chronology of the Pacific Lumber/Headwaters saga, complete with the high level players, and the pressure groups, big Foundations and extremist environmental groups:
This is the link to this two part series. It works most of the time.
DEBT FOR TREES PART 1
from there you can link to PART 2.
Both are included below:
DEBT FOR TREES PART 1
By Jon Christian Ryter September 1, 2005 NewsWithViews.com
Houston financier and corporate raider Charles Hurwitz's problems began with the collapse of a little known Texas thrift in 1988, United Savings Association of Texas—only Hurwitz's purported complicity in the collapse of the savings and loan company never surfaced until about the time his company, MCO Holdings (which changed its name in 1995 to Maxxam, Inc.) assumed Pacific Lumber Company in 1986. Once the Pacific Lumber buyout was complete Hurwitz's problems began. But not from the US government— from environmentalists.
One of Pacific Lumber's most valuable assets was a stand of 1,000-plus year old coastal redwood trees in Humboldt County—in a 6,000 acre tract of ancient redwoods in the 90,000 acre Headwaters' Forest know as the Headwaters Grove. Each of the 300 foot tall ancient giant redwoods have a commercial street value—as cut lumber—of at least $100,000. Hurwitz, who used junk bonds to finance his takeover of Pacific Lumber needed to liquidate some of the assets of the newly acquired company to pay down the debt.
Hurwitz became interested in Pacific Lumber when junk bond investment banker Drexel Burnham Lambert advised MCO that Pacific Lumber had made an overpriced offer to buy back its own stock in 1984, causing MCO to take a closer look at the company as a potential hostile takeover since Pacific was not interested in suitors. And the closer Hurwitz looked, the better Pacific Lumber looked. Finally, in October, 1985 he went after it, assuming control of the company in 1986.
Environmentalists feared Hurwitz would clear-cut the Headwaters Grove of its ancient treasures to pay for the takeover. In reality, Hurwitz already planned to sell off specific assets of Pacific Lumber to pay for the takeover—and the Headwaters Grove was not part of his thinking. However, MCO Holdings, which was extremely leveraged, still needed to generate a revenue stream, and planned to clear-cut up to a thousand acres of Pacific Lumber's expansive reserve of Douglas pines, spruce, coastal redwoods and other timber species which the company owned. Within a matter of months, Hurwitz doubled Pacific Lumber's relatively conservative lumber harvesting practices. That convinced the greens that a land-stripper had taken over the 117 year old company.
Pacific Lumber was an institution in northern California, and had been since 1869. It was the largest employer in Humboldt County, owning around 194,000 acres of prime timberland worth billions of dollars at retail. Yet, it was not as profitable as it could have been, or should have been, due to environmentalists who did everything possible to hamstring logging operations for over a decade. The constant inference of Pacific's logging operation by radical green groups made Pacific Lumber "easy pickings" for any corporate raider. When Hurwitz took it over it wasn't long before green groups like Earth First!, the Sierra Club and Greenpeace were targeting Hurwitz, who became the "scorched earth" villain.
In January 1995, Humboldt environmentalist activist Robert Martel filled a lawsuit in US District Court against Maxxam, Industries seeking $1.6 billion to cover the losses suffered by Maxxam's bankrupt S&L, United Savings Association of Texas plus an additional $4.8 billion in punitive damages on behalf of the American taxpayers. Because Martel represented neither the government nor the depositors of United Savings, there was no legal basis for his filing. But, his lawsuit opened Pandora's box. When the federal court—which should never have accepted the action in the first placed—ruled against him, Martel appealed that court's decision to the 5th Circuit Court of Appeals. The appellate court not only rejected Martel's appeal, it ordered him to pay Maxxam's legal fees of more than $110,000, saying that Martel's case was "frivolous"
In August of 1995, FDIC Chairman Ricki Tigert-Helfer filed the first of two "recovery" lawsuits in US District Court in Houston. The action, FDIC v Hurwitz, sought $250 million in damages—not from Maxxam (as MCO Holding had been renamed)—but from Hurwitz personally. When she filed her suit, Tigert-Helfer asked the Office of Thrift Management to investigate Charles Hurwitz and Maxxam for wrongdoing. In December, 1995 the Office of Thrift Management filed 13 claims against the defendants of its own lawsuit—against Hurwitz, Maxxam, two other Maxxam companies: Federated Development Company, United Financial Group (which was the parent company of United Savings), and the former and current directors of the S&L. The OTM sought $821 million in damages. The FDIC and the OTM both alleged that Hurwitz's business dealings with Drexel Burnham Lambert contributed significantly to the thrift's failure by not keeping it properly capitalized. They also alleged that Hurwitz "raided" the assets of United Savings to purchase Pacific Lumber, making Hurwitz personally liable for the $1.6 billion the OTM claims United Savings lost.
From the time the dual actions were filed by the FDIC and the OTM, Hurwitz's lawyer, Richard Keeton, was approached by various environmental groups suggesting that the government would entertain a "debt-for-trees" swap. Hurwitz would get to walk away from the FDIC and OTM charges if he agreed to allow the old stand of 300' tall redwoods in Headwaters Grove be deeded to the US government. The government would make the Headwaters redwoods part of the Six Rivers National Forest. In the early 1990s, Howard Hughes' estate engaged in a "debt for nature" swap when the estate traded some wetlands near the Los Angeles Airport to settle a tax bill owed the State of California. Several third world countries swapped land that US environmentalists thought should be protected for the debt they owed the United States. Bolivia traded tropical forests to clear their debt. Land swaps were also done with the Philippines and several other nations as well.
In February, 1997 Deputy Interior Secretary John Garamendi approached Maxxam to arrange for the acquisition of the Headwater Grove. Maxxam's general counsel, J. Kent Friedman, told the Clinton Administration official that Maxxam would consider selling the Headwater Grove to the Interior Department—but only on the condition that the government drop its FDIC lawsuit. "We want this case to go away," Friedman said.
Garamendi reported "...Hurwitz brought that to the table numerous times," but he added, he refused to intervene on Hurwitz's behalf, concluding it would be inappropriate for the Interior Department to get involved in the FDIC's business. Friedman said Maxxam raised the issue about the FDIC case because the action should never have been filed against Hurwitz who had undergone a lengthy, politically-motivated and ultimately unproved investigation by the Clinton Administration and a federal agency that violated its own rules in bringing the action. Hurwitz was not liable for the failure of United Savings because neither he nor Maxxam had controlling interest in United Financial—the holding company that had a minority interest in United Savings—therefore neither Hurwitz nor Maxxam had any legal authority to control the capital levels at the thrift.
At the time the Garamendi negotiations were underway, the Rose Foundation for Communities and the Government and several other environmentalist groups managed to convince a federal court that Pacific Lumber and a neighboring lumbering camp, Elk River Timber Company, had both violated the Endangered Species Act by logging pristine forests that sheltered the spotted owl. The federal court issued an injunction forbidding either Elk River Timber or Pacific Lumber from harvesting their land. Nine times the environmentalists filed suit in federal court. Nine times the court issued injunctions forbidding the lumber companies from cutting trees on their own land due to violations of the Endangered Species Act.
(Author's note: While I did not find documents to support my belief that Hurwitz, Friedman and Keeton were very bluntly, off-the-record, advised that they might as well sell the Headwater Grove to the environmentalists and get something for their buck because it was unlikely that, anytime in the foreseeable future, they would be able to harvest any lumber from that area since the Headwaters Forest was home to the spotted owl.)
In 1999 Hurwitz caved in and sold 10,000 acres of Headwaters Forest land to the Department of the Interior for $480 million. The deal was brokered by Sen. Diane Feinstein to preserve the old growth giant coastlal redwoods. In 2002 the FDIC dropped its 250 million action against Hurwitz when the OTM settled their $821 million case under an agreement where Hurwitz paid $206 thousand, made no admissions of wrongdoing, and agreed not to discuss the suit or the settlement.
But in his settlement, Hurwitz never agreed not to file suit against the government. He immediately sued the FDIC, by asking US District Court Judge Lynn Hughes (the presiding judge in the government's case) to award him $72 million in damages to cover his costs to fight not only the FDIC charges, but the costs associated with fighting to keep the government from seizing his redwood trees—and fighting frivolous lawsuits from the Rose Foundation, the Sierra Club, Greenpeace, Earth First! and scores of other green groups who lined up to take their best shot at Maxxam in court while Maxxam and Hurwitz were distracted with the FDIC lawsuit.
Don't miss the concuding Part 2 "whodunnit" to understand how our fine justice system really works.
© 2005 Jon C. Ryter - All Rights Reserved
DEBT FOR TREES
PART 2
By Jon Christian Ryter September 1, 2005 NewsWithViews.com
In 1999 Charles Hurwitz caved in and sold 10,000 acres of Headwaters Forest land to the Department of the Interior for $480 million. The deal was brokered by Sen. Diane Feinstein to preserve the old growth giant coastlal redwoods. In 2002 the FDIC dropped its 250 million action against Hurwitz when the OTM settled their $821 million case under an agreement where Hurwitz paid $206 thousand, made no admissions of wrongdoing, and agreed not to discuss the suit or the settlement.
But in his settlement, Hurwitz never agreed not to file suit against the government. He immediately sued the FDIC, by asking US District Court Judge Lynn Hughes (the presiding judge in the government's case) to award him $72 million in damages to cover his costs to fight not only the FDIC charges, but the costs associated with fighting to keep the government from seizing his redwood trees—and fighting frivolous lawsuits from the Rose Foundation, the Sierra Club, Greenpeace, Earth First! and scores of other green groups who lined up to take their best shot at Maxxam in court while Maxxam and Hurwitz were distracted with the FDIC lawsuit.
Hurwitz, through his lawyers, claimed that the Clinton Administration's FDIC [a] improperly funded another government agency's investigative witch hunt against Maxxam on the same matter; and, [b] his suite alleged that the Clinton Administration used bogus lawsuits in an attempt to force him to surrender over a billion dollars worth of prime coastal redwood trees to settle bogus claims against him and his company.
On Tuesday, August 23, 2005 US District Court Judge Lynn Nettleton Hughes issued his decision in FDIC v Hurwitz. It was a scathing denunciation of a government, pressured by radical environmentalist, to railroad an innocent man solely to steal his land for special interest extremists. In what is now the largest judgment against a federal agency ever awarded, Hughes ordered the FDIC to pay Hurwitz $72.3 million. In his 133-page decision, Hughes compared the federal investigations of Hurwitz and Maxxam to "...secret society of extortionists [that had practiced] craven submission [when faced with pressure from the office of the Vice President of the United States and] the green groups to cause him pain." Hughes said Hurwitz was the victim of a vindictive and politically-motivated federal agency. Hughes referred to the ordeal Hurwitz was forced to endure in terms of the Boston Tea Party, writing that "...Sam Adams would say that somebody needs to dump the FDIC's tea overboard." Hughes found, in his decision, that the FDIC, in close concert with environmental groups, sued Hurwitz to pressure him into a "debt-for-nature" swap, in effect giving the government about a billion dollars worth of trees in exchange for his supposed liability in the failure of the United Savings Association of Texas.
Paul Mason, a lobbyist and green activist for the Sierra Club summed up the view of the environmentalist movement when he noted that Judge Hughes had been hostile to the government's case against Hurwitz from the beginning. "To state that the environmental community was steering the case," Mason told the media, "would strongly overstate the influence we had with the federal government."
The question is, who's telling the truth and who's lying? That's the part of the story you won't read in your local newspaper this evening—nor will you see it on Fox News. The chronology of events is not deeply hidden. A Google search will bring you most of the headlines. A little digging will give you the rest.
For the environmentalists to even suggest that not only were they not steering the Hurwitz case, but that they hadn't engineered it by persuading Vice President Al Gore, Interior Secretary Bruce Babbitt and other bureaucrats in the Clinton Administration to run interference for them in filing a lawsuit for damages against Maxxam that would force Hurwitz to agree to a "debt-for-nature" swap to alleviate his liability in the failure of United Savings Association of Texas—when the FDIC and the Clinton Justice Department knew he was not legally culpable for the failure of the S&L.
The radical environmentalist Earth First! hatched up the scheme for the FDIC to sue Hurwitz for the failure shortly after the co-presidency of Bill and Hillary Clinton descended on Washington, DC. In the usual fashion of the green extremists, Earth First! revealed its idea in a Spring, 1993 demonstration in front of the FDIC, demanding that the government take the old-growth redwoods that belonged to Pacific Lumber Company to settle any claims the FDIC should have with another Hurwitz company, the failed S&L, United Savings Association of Texas. Earth First! later insisted that their suggestion was politely offered at that time only because of the fear that Hurwitz would destroy the thousand year old trees that shielded the habitat of the spotted owl and other endangered species that lived in the Headwaters Forest in Humboldt County, California.
From that demonstration in 1993, both the Clinton Administration and Congress became acutely aware of the Headwaters Forest, Charles Hurwitz, United Savings Association of Texas and the implied liability of Hurwitz, whom the environmentalists claimed raided the assets of United Savings to leverage Pacific Lumber. Shortly after the demonstration Greenpeace, the Sierra Club Legal Defense Fund and the Rose Foundation for Community and the Government began to leverage Congress and Mr. Environment—Al Gore, Jr. The Rose Foundation and the Sierra Club became fixtures on Capitol Hill as they made their way from one Congressional and Senatorial office to another, and from the FDIC to the Office of Thrift Management, to the White House and Blair House, asking for legislation that would both implicate and exonerate Hurwitz by arranging a debt-for-trees swap in which the FDIC would exchange Hurwitz's liability in United Savings for 57,000 to 76,000 acres of Headwaters Forest which would be placed in the public trust.
In 1994 Congressman Dan Hamburg [D-CA] introduced a bill in the House of Representatives that would authorize the US Forest Service to "negotiate" the transfer of the Headwaters Forest under eminent domain to the US government and make it part of the Six Rivers National Forest. The bill passed in the House, but the Senate version of the bill, introduced by Barbara Boxer [D-CA], never made it out of committee and onto the Senate floor for a vote. When the GOP Revolution in November of 1994 pushed the Democrats out of all of the committee chairs in both the House and Senate, the odds of enacting the Headwaters bill was greatly diminished. The environmentalists reverted to the suggestion made by Earth First!—convince the FDIC to file suit against Hurwitz and then swap the Headwaters for a release from liability on United Savings Association of Texas.
It was after the defeat of The Hamburg-Boxer Act that Jill Ratner, the lawyer activist head of the Rose Foundation intensified her letter-writing campaign to entice FDIC Chairman Tigert-Helfer to file a lawsuit against Hurwitz and then do a debt-for-trees swap to settle the 1,000 year old redwood tree matter for all time. Ricki Tigert-Helfer replied to Ratner that the FDIC could not compel the defendants of any legal action to consider a debt-for-nature swap since they might decide to use other assets to satisfy their liability. It was obvious that the Bush-41 Administration clearly understood that minority shareholders in companies—unless they are board members—have no fiduciary control over the company, and thus can't be held liable for any capitalization shortfalls of the company. And, it was clear that, by the end of 1994 the Clinton Administration believed they could arbitrarily assign "fault," and in the Headwaters Forest matter, they had arbitrarily decided that Charles Hurwitz was culpable in the United Savings matter because the Sierra Club, Earth First!, Greenpeace and the Rose Foundation convinced the Clinton Administration—without any actual evidence to support their position—that Hurwitz had gutted United Savings Association and used what could be construed as stolen assets to buy Pacific Lumber. Thus, since ill-gotten gains paid for Pacific, it was only fitting to the environmentalists calling for it, that Pacific Lumber assets be used to satisfy the government's case against Hurwitz.
Ratner even raised the issue of debt-for-nature with Maxxam lawyers on several times. One one occasion, Maxxam spokesman Joshua Reiss dismissed Ratner's swap suggestion as a flawed premise since, he said, there is no debt to swap. Hurwitz, he told the media, had done nothing wrong. Since he did not possess controlling interest in United Savings, he had no legal authority to influence their policies.
John V. Thomas, associate general counsel for the FDIC wrote to a green activist, Larry Helbrook of Eleva, Wisconsin on August 23, 1994. Helbrook inquired about a possible debt-for-nature swap to protect the ancient Sequoia giants. Thomas responded, saying "We are mindful of the possibility that if Pacific Lumber's parent can be held liable for our losses, issues involving the redwood forests might be brought into play."
Shortly after she filed suit against Hurwitz, Tigert-Helfer wrote a letter to then US Congressman David E. Skaggs in which she said, in response to his question: "You may be assured that the government remains open to any appropriate settlement of this claim—including a debt-for-nature swap."
Throughout the last months of 1994 there was a flurry of high level meetings between the environmentalist lobbyists from Greenpeace, the Sierra Club, and the Rose Foundation, several liberal Congressmen and Senators, some high level Clinton Administration officials, and Vice President Al Gore who functioned as "control central" on the Hurwitz-Headwaters Forest matter. The high level meetings produced a compromise between the environmentalists and the Clinton Administration. The Al Gore emissary, Deputy Interior Secretary John Garamendi, was sent to Sacramento to meet with Hurwitz and his lawyers and negotiate the "surrender" of the Headwaters Forest.
For the environmentalists and former Clinton-Gore officials to claim they did not originate the debt-for-nature swap, or attempt to influence the filing of charges against Charles Hurwitz by the FDIC specifically to pressure him into settling the lawsuit by trading a billion dollars worth of redwood trees for a handful of spotted owls. Judge Lynn Hughes was right—the government lied. FDIC officials "...discarded the mantle of the American Republic for the clock of a secret society of extortionists. If the Vice President called, they responded. If a lobbyist called, they responded. They heeded every call but that of duty and honor."
FDIC spokesman David Barr said the agency will appeal the judgment. If the 5th Circuit Court knows how to do a Google search, without even holding a hearing, it will find enough material to uphold the opinion of Judge Hughes. If, on the other hand, the judges on the 5th Circuit believe that the Clinton-Gore Administration was an honest broker of justice, they will likely overrule one of the most intelligent decisions made by a US District Court Judge in 50 years.
Back to -----> Part 1
© 2005 Jon C. Ryter - All Rights Reserved
Order Jon Ryter's book "Whatever Happened to America?"
http://www.newswithviews.com/Ryter/jon99.htm
This is the link to this two part series. It works most of the time.
DEBT FOR TREES PART 1
from there you can link to PART 2.
Both are included below:
DEBT FOR TREES PART 1
By Jon Christian Ryter September 1, 2005 NewsWithViews.com
Houston financier and corporate raider Charles Hurwitz's problems began with the collapse of a little known Texas thrift in 1988, United Savings Association of Texas—only Hurwitz's purported complicity in the collapse of the savings and loan company never surfaced until about the time his company, MCO Holdings (which changed its name in 1995 to Maxxam, Inc.) assumed Pacific Lumber Company in 1986. Once the Pacific Lumber buyout was complete Hurwitz's problems began. But not from the US government— from environmentalists.
One of Pacific Lumber's most valuable assets was a stand of 1,000-plus year old coastal redwood trees in Humboldt County—in a 6,000 acre tract of ancient redwoods in the 90,000 acre Headwaters' Forest know as the Headwaters Grove. Each of the 300 foot tall ancient giant redwoods have a commercial street value—as cut lumber—of at least $100,000. Hurwitz, who used junk bonds to finance his takeover of Pacific Lumber needed to liquidate some of the assets of the newly acquired company to pay down the debt.
Hurwitz became interested in Pacific Lumber when junk bond investment banker Drexel Burnham Lambert advised MCO that Pacific Lumber had made an overpriced offer to buy back its own stock in 1984, causing MCO to take a closer look at the company as a potential hostile takeover since Pacific was not interested in suitors. And the closer Hurwitz looked, the better Pacific Lumber looked. Finally, in October, 1985 he went after it, assuming control of the company in 1986.
Environmentalists feared Hurwitz would clear-cut the Headwaters Grove of its ancient treasures to pay for the takeover. In reality, Hurwitz already planned to sell off specific assets of Pacific Lumber to pay for the takeover—and the Headwaters Grove was not part of his thinking. However, MCO Holdings, which was extremely leveraged, still needed to generate a revenue stream, and planned to clear-cut up to a thousand acres of Pacific Lumber's expansive reserve of Douglas pines, spruce, coastal redwoods and other timber species which the company owned. Within a matter of months, Hurwitz doubled Pacific Lumber's relatively conservative lumber harvesting practices. That convinced the greens that a land-stripper had taken over the 117 year old company.
Pacific Lumber was an institution in northern California, and had been since 1869. It was the largest employer in Humboldt County, owning around 194,000 acres of prime timberland worth billions of dollars at retail. Yet, it was not as profitable as it could have been, or should have been, due to environmentalists who did everything possible to hamstring logging operations for over a decade. The constant inference of Pacific's logging operation by radical green groups made Pacific Lumber "easy pickings" for any corporate raider. When Hurwitz took it over it wasn't long before green groups like Earth First!, the Sierra Club and Greenpeace were targeting Hurwitz, who became the "scorched earth" villain.
In January 1995, Humboldt environmentalist activist Robert Martel filled a lawsuit in US District Court against Maxxam, Industries seeking $1.6 billion to cover the losses suffered by Maxxam's bankrupt S&L, United Savings Association of Texas plus an additional $4.8 billion in punitive damages on behalf of the American taxpayers. Because Martel represented neither the government nor the depositors of United Savings, there was no legal basis for his filing. But, his lawsuit opened Pandora's box. When the federal court—which should never have accepted the action in the first placed—ruled against him, Martel appealed that court's decision to the 5th Circuit Court of Appeals. The appellate court not only rejected Martel's appeal, it ordered him to pay Maxxam's legal fees of more than $110,000, saying that Martel's case was "frivolous"
In August of 1995, FDIC Chairman Ricki Tigert-Helfer filed the first of two "recovery" lawsuits in US District Court in Houston. The action, FDIC v Hurwitz, sought $250 million in damages—not from Maxxam (as MCO Holding had been renamed)—but from Hurwitz personally. When she filed her suit, Tigert-Helfer asked the Office of Thrift Management to investigate Charles Hurwitz and Maxxam for wrongdoing. In December, 1995 the Office of Thrift Management filed 13 claims against the defendants of its own lawsuit—against Hurwitz, Maxxam, two other Maxxam companies: Federated Development Company, United Financial Group (which was the parent company of United Savings), and the former and current directors of the S&L. The OTM sought $821 million in damages. The FDIC and the OTM both alleged that Hurwitz's business dealings with Drexel Burnham Lambert contributed significantly to the thrift's failure by not keeping it properly capitalized. They also alleged that Hurwitz "raided" the assets of United Savings to purchase Pacific Lumber, making Hurwitz personally liable for the $1.6 billion the OTM claims United Savings lost.
From the time the dual actions were filed by the FDIC and the OTM, Hurwitz's lawyer, Richard Keeton, was approached by various environmental groups suggesting that the government would entertain a "debt-for-trees" swap. Hurwitz would get to walk away from the FDIC and OTM charges if he agreed to allow the old stand of 300' tall redwoods in Headwaters Grove be deeded to the US government. The government would make the Headwaters redwoods part of the Six Rivers National Forest. In the early 1990s, Howard Hughes' estate engaged in a "debt for nature" swap when the estate traded some wetlands near the Los Angeles Airport to settle a tax bill owed the State of California. Several third world countries swapped land that US environmentalists thought should be protected for the debt they owed the United States. Bolivia traded tropical forests to clear their debt. Land swaps were also done with the Philippines and several other nations as well.
In February, 1997 Deputy Interior Secretary John Garamendi approached Maxxam to arrange for the acquisition of the Headwater Grove. Maxxam's general counsel, J. Kent Friedman, told the Clinton Administration official that Maxxam would consider selling the Headwater Grove to the Interior Department—but only on the condition that the government drop its FDIC lawsuit. "We want this case to go away," Friedman said.
Garamendi reported "...Hurwitz brought that to the table numerous times," but he added, he refused to intervene on Hurwitz's behalf, concluding it would be inappropriate for the Interior Department to get involved in the FDIC's business. Friedman said Maxxam raised the issue about the FDIC case because the action should never have been filed against Hurwitz who had undergone a lengthy, politically-motivated and ultimately unproved investigation by the Clinton Administration and a federal agency that violated its own rules in bringing the action. Hurwitz was not liable for the failure of United Savings because neither he nor Maxxam had controlling interest in United Financial—the holding company that had a minority interest in United Savings—therefore neither Hurwitz nor Maxxam had any legal authority to control the capital levels at the thrift.
At the time the Garamendi negotiations were underway, the Rose Foundation for Communities and the Government and several other environmentalist groups managed to convince a federal court that Pacific Lumber and a neighboring lumbering camp, Elk River Timber Company, had both violated the Endangered Species Act by logging pristine forests that sheltered the spotted owl. The federal court issued an injunction forbidding either Elk River Timber or Pacific Lumber from harvesting their land. Nine times the environmentalists filed suit in federal court. Nine times the court issued injunctions forbidding the lumber companies from cutting trees on their own land due to violations of the Endangered Species Act.
(Author's note: While I did not find documents to support my belief that Hurwitz, Friedman and Keeton were very bluntly, off-the-record, advised that they might as well sell the Headwater Grove to the environmentalists and get something for their buck because it was unlikely that, anytime in the foreseeable future, they would be able to harvest any lumber from that area since the Headwaters Forest was home to the spotted owl.)
In 1999 Hurwitz caved in and sold 10,000 acres of Headwaters Forest land to the Department of the Interior for $480 million. The deal was brokered by Sen. Diane Feinstein to preserve the old growth giant coastlal redwoods. In 2002 the FDIC dropped its 250 million action against Hurwitz when the OTM settled their $821 million case under an agreement where Hurwitz paid $206 thousand, made no admissions of wrongdoing, and agreed not to discuss the suit or the settlement.
But in his settlement, Hurwitz never agreed not to file suit against the government. He immediately sued the FDIC, by asking US District Court Judge Lynn Hughes (the presiding judge in the government's case) to award him $72 million in damages to cover his costs to fight not only the FDIC charges, but the costs associated with fighting to keep the government from seizing his redwood trees—and fighting frivolous lawsuits from the Rose Foundation, the Sierra Club, Greenpeace, Earth First! and scores of other green groups who lined up to take their best shot at Maxxam in court while Maxxam and Hurwitz were distracted with the FDIC lawsuit.
Don't miss the concuding Part 2 "whodunnit" to understand how our fine justice system really works.
© 2005 Jon C. Ryter - All Rights Reserved
DEBT FOR TREES
PART 2
By Jon Christian Ryter September 1, 2005 NewsWithViews.com
In 1999 Charles Hurwitz caved in and sold 10,000 acres of Headwaters Forest land to the Department of the Interior for $480 million. The deal was brokered by Sen. Diane Feinstein to preserve the old growth giant coastlal redwoods. In 2002 the FDIC dropped its 250 million action against Hurwitz when the OTM settled their $821 million case under an agreement where Hurwitz paid $206 thousand, made no admissions of wrongdoing, and agreed not to discuss the suit or the settlement.
But in his settlement, Hurwitz never agreed not to file suit against the government. He immediately sued the FDIC, by asking US District Court Judge Lynn Hughes (the presiding judge in the government's case) to award him $72 million in damages to cover his costs to fight not only the FDIC charges, but the costs associated with fighting to keep the government from seizing his redwood trees—and fighting frivolous lawsuits from the Rose Foundation, the Sierra Club, Greenpeace, Earth First! and scores of other green groups who lined up to take their best shot at Maxxam in court while Maxxam and Hurwitz were distracted with the FDIC lawsuit.
Hurwitz, through his lawyers, claimed that the Clinton Administration's FDIC [a] improperly funded another government agency's investigative witch hunt against Maxxam on the same matter; and, [b] his suite alleged that the Clinton Administration used bogus lawsuits in an attempt to force him to surrender over a billion dollars worth of prime coastal redwood trees to settle bogus claims against him and his company.
On Tuesday, August 23, 2005 US District Court Judge Lynn Nettleton Hughes issued his decision in FDIC v Hurwitz. It was a scathing denunciation of a government, pressured by radical environmentalist, to railroad an innocent man solely to steal his land for special interest extremists. In what is now the largest judgment against a federal agency ever awarded, Hughes ordered the FDIC to pay Hurwitz $72.3 million. In his 133-page decision, Hughes compared the federal investigations of Hurwitz and Maxxam to "...secret society of extortionists [that had practiced] craven submission [when faced with pressure from the office of the Vice President of the United States and] the green groups to cause him pain." Hughes said Hurwitz was the victim of a vindictive and politically-motivated federal agency. Hughes referred to the ordeal Hurwitz was forced to endure in terms of the Boston Tea Party, writing that "...Sam Adams would say that somebody needs to dump the FDIC's tea overboard." Hughes found, in his decision, that the FDIC, in close concert with environmental groups, sued Hurwitz to pressure him into a "debt-for-nature" swap, in effect giving the government about a billion dollars worth of trees in exchange for his supposed liability in the failure of the United Savings Association of Texas.
Paul Mason, a lobbyist and green activist for the Sierra Club summed up the view of the environmentalist movement when he noted that Judge Hughes had been hostile to the government's case against Hurwitz from the beginning. "To state that the environmental community was steering the case," Mason told the media, "would strongly overstate the influence we had with the federal government."
The question is, who's telling the truth and who's lying? That's the part of the story you won't read in your local newspaper this evening—nor will you see it on Fox News. The chronology of events is not deeply hidden. A Google search will bring you most of the headlines. A little digging will give you the rest.
For the environmentalists to even suggest that not only were they not steering the Hurwitz case, but that they hadn't engineered it by persuading Vice President Al Gore, Interior Secretary Bruce Babbitt and other bureaucrats in the Clinton Administration to run interference for them in filing a lawsuit for damages against Maxxam that would force Hurwitz to agree to a "debt-for-nature" swap to alleviate his liability in the failure of United Savings Association of Texas—when the FDIC and the Clinton Justice Department knew he was not legally culpable for the failure of the S&L.
The radical environmentalist Earth First! hatched up the scheme for the FDIC to sue Hurwitz for the failure shortly after the co-presidency of Bill and Hillary Clinton descended on Washington, DC. In the usual fashion of the green extremists, Earth First! revealed its idea in a Spring, 1993 demonstration in front of the FDIC, demanding that the government take the old-growth redwoods that belonged to Pacific Lumber Company to settle any claims the FDIC should have with another Hurwitz company, the failed S&L, United Savings Association of Texas. Earth First! later insisted that their suggestion was politely offered at that time only because of the fear that Hurwitz would destroy the thousand year old trees that shielded the habitat of the spotted owl and other endangered species that lived in the Headwaters Forest in Humboldt County, California.
From that demonstration in 1993, both the Clinton Administration and Congress became acutely aware of the Headwaters Forest, Charles Hurwitz, United Savings Association of Texas and the implied liability of Hurwitz, whom the environmentalists claimed raided the assets of United Savings to leverage Pacific Lumber. Shortly after the demonstration Greenpeace, the Sierra Club Legal Defense Fund and the Rose Foundation for Community and the Government began to leverage Congress and Mr. Environment—Al Gore, Jr. The Rose Foundation and the Sierra Club became fixtures on Capitol Hill as they made their way from one Congressional and Senatorial office to another, and from the FDIC to the Office of Thrift Management, to the White House and Blair House, asking for legislation that would both implicate and exonerate Hurwitz by arranging a debt-for-trees swap in which the FDIC would exchange Hurwitz's liability in United Savings for 57,000 to 76,000 acres of Headwaters Forest which would be placed in the public trust.
In 1994 Congressman Dan Hamburg [D-CA] introduced a bill in the House of Representatives that would authorize the US Forest Service to "negotiate" the transfer of the Headwaters Forest under eminent domain to the US government and make it part of the Six Rivers National Forest. The bill passed in the House, but the Senate version of the bill, introduced by Barbara Boxer [D-CA], never made it out of committee and onto the Senate floor for a vote. When the GOP Revolution in November of 1994 pushed the Democrats out of all of the committee chairs in both the House and Senate, the odds of enacting the Headwaters bill was greatly diminished. The environmentalists reverted to the suggestion made by Earth First!—convince the FDIC to file suit against Hurwitz and then swap the Headwaters for a release from liability on United Savings Association of Texas.
It was after the defeat of The Hamburg-Boxer Act that Jill Ratner, the lawyer activist head of the Rose Foundation intensified her letter-writing campaign to entice FDIC Chairman Tigert-Helfer to file a lawsuit against Hurwitz and then do a debt-for-trees swap to settle the 1,000 year old redwood tree matter for all time. Ricki Tigert-Helfer replied to Ratner that the FDIC could not compel the defendants of any legal action to consider a debt-for-nature swap since they might decide to use other assets to satisfy their liability. It was obvious that the Bush-41 Administration clearly understood that minority shareholders in companies—unless they are board members—have no fiduciary control over the company, and thus can't be held liable for any capitalization shortfalls of the company. And, it was clear that, by the end of 1994 the Clinton Administration believed they could arbitrarily assign "fault," and in the Headwaters Forest matter, they had arbitrarily decided that Charles Hurwitz was culpable in the United Savings matter because the Sierra Club, Earth First!, Greenpeace and the Rose Foundation convinced the Clinton Administration—without any actual evidence to support their position—that Hurwitz had gutted United Savings Association and used what could be construed as stolen assets to buy Pacific Lumber. Thus, since ill-gotten gains paid for Pacific, it was only fitting to the environmentalists calling for it, that Pacific Lumber assets be used to satisfy the government's case against Hurwitz.
Ratner even raised the issue of debt-for-nature with Maxxam lawyers on several times. One one occasion, Maxxam spokesman Joshua Reiss dismissed Ratner's swap suggestion as a flawed premise since, he said, there is no debt to swap. Hurwitz, he told the media, had done nothing wrong. Since he did not possess controlling interest in United Savings, he had no legal authority to influence their policies.
John V. Thomas, associate general counsel for the FDIC wrote to a green activist, Larry Helbrook of Eleva, Wisconsin on August 23, 1994. Helbrook inquired about a possible debt-for-nature swap to protect the ancient Sequoia giants. Thomas responded, saying "We are mindful of the possibility that if Pacific Lumber's parent can be held liable for our losses, issues involving the redwood forests might be brought into play."
Shortly after she filed suit against Hurwitz, Tigert-Helfer wrote a letter to then US Congressman David E. Skaggs in which she said, in response to his question: "You may be assured that the government remains open to any appropriate settlement of this claim—including a debt-for-nature swap."
Throughout the last months of 1994 there was a flurry of high level meetings between the environmentalist lobbyists from Greenpeace, the Sierra Club, and the Rose Foundation, several liberal Congressmen and Senators, some high level Clinton Administration officials, and Vice President Al Gore who functioned as "control central" on the Hurwitz-Headwaters Forest matter. The high level meetings produced a compromise between the environmentalists and the Clinton Administration. The Al Gore emissary, Deputy Interior Secretary John Garamendi, was sent to Sacramento to meet with Hurwitz and his lawyers and negotiate the "surrender" of the Headwaters Forest.
For the environmentalists and former Clinton-Gore officials to claim they did not originate the debt-for-nature swap, or attempt to influence the filing of charges against Charles Hurwitz by the FDIC specifically to pressure him into settling the lawsuit by trading a billion dollars worth of redwood trees for a handful of spotted owls. Judge Lynn Hughes was right—the government lied. FDIC officials "...discarded the mantle of the American Republic for the clock of a secret society of extortionists. If the Vice President called, they responded. If a lobbyist called, they responded. They heeded every call but that of duty and honor."
FDIC spokesman David Barr said the agency will appeal the judgment. If the 5th Circuit Court knows how to do a Google search, without even holding a hearing, it will find enough material to uphold the opinion of Judge Hughes. If, on the other hand, the judges on the 5th Circuit believe that the Clinton-Gore Administration was an honest broker of justice, they will likely overrule one of the most intelligent decisions made by a US District Court Judge in 50 years.
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© 2005 Jon C. Ryter - All Rights Reserved
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HC - It seems like Charles Hurwitz just can't catch a break
It seems like Charles Hurwitz just can't catch a break
Business: Loren Steffy
Jan. 23, 2007, 11:13PM Copyright 2007 Houston Chronicle
Victory seems to forever elude Charles Hurwitz.
In 1999, he hammered out an agreement with California and federal officials to preserve old-growth redwood trees while allowing his logging company, Pacific Lumber, to cut enough new-growth trees to make a profit.
The deal, known as the Headwaters Agreement, was supposed to broker peace between Hurwitz and environmental groups that opposed his company's logging operations.
More importantly, it should have been a model for how private industry can work with other groups to preserve the environment.
Last week, Pacific Lumber filed for bankruptcy, strangled by new regulations made outside the agreement.
"We were dealt a hand where we couldn't do anything," Hurwitz told me Monday. "It's a pure breach of contract."
Regional water boards, which weren't included in the Headwaters Agreement and therefore argue they aren't bound by it, ruled that runoff from Palco's logging was affecting rivers and streams in Northern California's scenic Humboldt County.
The boards imposed new restrictions.
Palco's timber harvest has fallen steadily as a result, to 145.5 million board feet in 2005 from 166.3 million in 2003, according to its annual filings with the Securities and Exchange Commission.
At the same time, the quality of the harvest shifted to lower grades of redwood and Douglas fir, which sell at a lower price.
The company wasn't making enough money to service its debt, part of which was incurred when Palco refurbished its mills for the newer growth trees as specified in the 1999 deal.
Over the years, the battle between Hurwitz and the environmentalists has grown personal. The protesters bristle at the thought of a single tree felled by Hurwitz's hand.
In a news release, Karen Pickett, director of one such group, the Bay Area Coalition for Headwaters, summed up the filing this way:
"The one thing we can look forward to ultimately is a Maxxam-free and Hurwitz-free company."
Unattractive
Then what?
What chance does Palco have for survival? It can't, under the latest environmental restrictions, produce enough lumber to turn a profit, whether it's owned by Hurwitz or someone else.
Bankruptcy may eliminate some of the company's debt, but it won't make Palco attractive to outside buyers. The threat of unending tree sittings and sabotage to logging operations makes Palco an unappealing purchase.
Hurwitz's adversaries spin a heartwarming myth about returning Palco to its days as an ecofriendly, family-run logging company.
But returning Palco to its old style of operations also returns it to the reality that left it vulnerable to Hurwitz's takeover 20 years ago. Palco was a mismanaged operation. Its executives hadn't done an accurate inventory of its timber lands in more than 30 years, and the "family" company's stock — which was traded on the New York Stock Exchange — languished.
In today's lumber industry, the margins have gotten thinner and the competition has increased. A return to Palco's past would promptly be followed by a return to bankruptcy court.
'Root of all evil'
For his part, Hurwitz has paid a hefty price for his ownership of Palco.
"This is the root of all evil for us," he said. "Everything that's bad in my business life has come out of this."
The environmental issues formed the basis for the Federal Deposit Insurance Corp.'s decadelong legal battle against Hurwitz. The lawsuit involved the failure of United Savings Association of Texas, but documents released as part of a congressional investigation revealed that regulators pursued a flimsy case to extract a settlement that would have included forfeiting Palco's old-growth redwood forest.
Hurwitz won, but the government appealed. With the case headed back to court, the victory is hollow. Palco's bankruptcy represents another eroded triumph, the collapse of the Headwaters Agreement.
The cycle remains unbroken and as vicious as it was before. Hurwitz and his foes in the environmental movement seem locked in perpetual conflict.
In many of these battles, Hurwitz has been right. But as last week's bankruptcy filing shows, you can be right and still lose.
Loren Steffy is the Chronicle's business columnist. His commentary appears Sundays, Wednesdays and Fridays. Contact him at loren.steffy at chron.com. His blog is at http://blogs.chron.com/lorensteffy/.
Business: Loren Steffy
Jan. 23, 2007, 11:13PM Copyright 2007 Houston Chronicle
Victory seems to forever elude Charles Hurwitz.
In 1999, he hammered out an agreement with California and federal officials to preserve old-growth redwood trees while allowing his logging company, Pacific Lumber, to cut enough new-growth trees to make a profit.
The deal, known as the Headwaters Agreement, was supposed to broker peace between Hurwitz and environmental groups that opposed his company's logging operations.
More importantly, it should have been a model for how private industry can work with other groups to preserve the environment.
Last week, Pacific Lumber filed for bankruptcy, strangled by new regulations made outside the agreement.
"We were dealt a hand where we couldn't do anything," Hurwitz told me Monday. "It's a pure breach of contract."
Regional water boards, which weren't included in the Headwaters Agreement and therefore argue they aren't bound by it, ruled that runoff from Palco's logging was affecting rivers and streams in Northern California's scenic Humboldt County.
The boards imposed new restrictions.
Palco's timber harvest has fallen steadily as a result, to 145.5 million board feet in 2005 from 166.3 million in 2003, according to its annual filings with the Securities and Exchange Commission.
At the same time, the quality of the harvest shifted to lower grades of redwood and Douglas fir, which sell at a lower price.
The company wasn't making enough money to service its debt, part of which was incurred when Palco refurbished its mills for the newer growth trees as specified in the 1999 deal.
Over the years, the battle between Hurwitz and the environmentalists has grown personal. The protesters bristle at the thought of a single tree felled by Hurwitz's hand.
In a news release, Karen Pickett, director of one such group, the Bay Area Coalition for Headwaters, summed up the filing this way:
"The one thing we can look forward to ultimately is a Maxxam-free and Hurwitz-free company."
Unattractive
Then what?
What chance does Palco have for survival? It can't, under the latest environmental restrictions, produce enough lumber to turn a profit, whether it's owned by Hurwitz or someone else.
Bankruptcy may eliminate some of the company's debt, but it won't make Palco attractive to outside buyers. The threat of unending tree sittings and sabotage to logging operations makes Palco an unappealing purchase.
Hurwitz's adversaries spin a heartwarming myth about returning Palco to its days as an ecofriendly, family-run logging company.
But returning Palco to its old style of operations also returns it to the reality that left it vulnerable to Hurwitz's takeover 20 years ago. Palco was a mismanaged operation. Its executives hadn't done an accurate inventory of its timber lands in more than 30 years, and the "family" company's stock — which was traded on the New York Stock Exchange — languished.
In today's lumber industry, the margins have gotten thinner and the competition has increased. A return to Palco's past would promptly be followed by a return to bankruptcy court.
'Root of all evil'
For his part, Hurwitz has paid a hefty price for his ownership of Palco.
"This is the root of all evil for us," he said. "Everything that's bad in my business life has come out of this."
The environmental issues formed the basis for the Federal Deposit Insurance Corp.'s decadelong legal battle against Hurwitz. The lawsuit involved the failure of United Savings Association of Texas, but documents released as part of a congressional investigation revealed that regulators pursued a flimsy case to extract a settlement that would have included forfeiting Palco's old-growth redwood forest.
Hurwitz won, but the government appealed. With the case headed back to court, the victory is hollow. Palco's bankruptcy represents another eroded triumph, the collapse of the Headwaters Agreement.
The cycle remains unbroken and as vicious as it was before. Hurwitz and his foes in the environmental movement seem locked in perpetual conflict.
In many of these battles, Hurwitz has been right. But as last week's bankruptcy filing shows, you can be right and still lose.
Loren Steffy is the Chronicle's business columnist. His commentary appears Sundays, Wednesdays and Fridays. Contact him at loren.steffy at chron.com. His blog is at http://blogs.chron.com/lorensteffy/.