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If a Tree's Owner Falls ...

by Patt Morrison

If things had gone according to plan, this year of grace 2008 would have been the year that the last privately owned virgin, old-growth California redwoods -- those older-than-Shakespeare, older-than-Jesus trees -- got axed. That they haven't been turned into decking is thanks to stubborn lawmakers, environmental nags such as Julia "Butterfly" Hill -- the most famous tree-sitter since the Cheshire Cat -- and corporate gluttony that backfired.

That's how we came to today's hearing in a Texas courtroom. That's where Pacific Lumber -- the California timber company that had been run astutely since the Battle of Gettysburg until it was overrun and then run to the edge of ruin by corporate raiders -- will explain how it wants to save itself from bankruptcy.

When John D. Rockefeller visited the redwoods nearly 80 years ago, he saw a natural treasure. He put up $2 million to spare 10,000 acres. Wheeler-dealer Charles Hurwitz saw a different kind of treasure. In a 1986 hostile takeover -- financial-speak for date rape -- his firm, Maxxam, got Pacific Lumber for nearly $900 million, financed by junk bonds. Just to make interest payments, he had to cut down twice as many trees. Redwoods formerly chosen one by one for the chain saw were measured by computer coordinates and felled by the swath.

The thunder of clear-cutting roused enviros and politicians. Twelve years of wrangling ended in 1999 with the Headwaters forest -- 7,500 acres of ancient redwood "cathedrals" in public hands -- new rules on logging the other 210,000 acres and a government check for nearly half a billion bucks in Hurwitz's corporate wallet.

Did he use it to pay down Pacific Lumber's humongous debt? No. He still owes almost as much on it as he did 22 years ago.

Back in 1981, according to David Harris' book, "The Last Stand," Pacific Lumber told shareholders that companies "have a duty to use [their] resources wisely." In 1986, the new owner, Hurwitz, was "joking" with employees that his golden rule is: "He who has the gold, rules."

When the rules don't suit him, he's found ways around them. When Rancho Mirage didn't cotton to his development plan in the area -- Frank Sinatra wrote an ad denouncing it -- Hurwitz's lawyers sued the city, then threatened to sue City Council members personally. Pacific Lumber tried and failed to recall the Humboldt County district attorney for alleging that the company used fake data to get a better deal in the Headwaters negotiations.

The Headwaters deal evidently wasn't good enough. Pacific Lumber went crying to Gov. Arnold Schwarzenegger that if California didn't lighten up on logging rules -- rules Pacific Lumber had broken so often that its timber license was briefly yanked -- the company would go bust. Sure enough, last year, Pacific Lumber filed for Chapter 11.

John Driscoll writes about Pacific Lumber for Eureka's Times-Standard. Virtually nothing, he told me, "could be more rooted in a community than [Pacific Lumber] is in Humboldt County. It's rooted in the land, rooted in the economy, rooted in the society here, and the outcome of this bankruptcy may determine whether [Pacific Lumber] -- weakened over two decades -- lives or dies."

Today's court date is in the Texas Gulf Coast and not California's North Coast because Pacific Lumber, now calling itself Palco, opened a snug little office in Corpus Christi -- "a phone booth," California officials called it. That planted the flag for jurisdiction in Hurwitz's home state, not the home of the redwoods.

That's how big, bad business plays. Put the loopholes and fine print and asterisks into law. And when you can't make the rules, break them -- or break the rule makers.

In 2001, the feds were trying to get back some of the $1.6 billion that taxpayers paid to bail out Hurwitz and his pals when their S & L went belly-up in 1988. (Put it on Hurwitz's tab; he didn't just clear trees, he raided $55 million from Pacific Lumber's pension fund and replaced it with annuities from a Hurwitz company whose parent is now broke. Who could wind up paying those pensions? Us.)

Three GOP congressmen hammered investigators to lay off Hurwitz. They subpoenaed confidential documents, putting them into the Congressional Record so Hurwitz's attorneys could get them. The upshot? No investigation, no payback from Hurwitz.

What could bankruptcy change? Options run from selling land for McMansions to an environmental buyout. The most plausible plan would save jobs and trees by restoring the careful logging practices of old.

Once upon a time, thrift, responsibility and debt-free profits were sound business. Now it's Las Vegas rules run amok -- and look where that's gotten us: a landscape littered with sub-prime mortgage catastrophes, leveraged debt, securities fraud and imperiled pension funds.

And redwood stumps.

--patt.morrison@latimes.com

Copyright 2008 Los Angeles Times

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