February 10th 2008

Editorial
San Francisco Chronicle
February 10, 2008

The fabled Pacific Lumber redwood company is teetering in a billion-dollar bankruptcy in a Texas courtroom, some 1,800 miles from its foggy stands of primeval trees near Humboldt Bay.

It may sound like an ignoble end to a woodsy soap opera that's featured tree sitters, a corporate raider and $500 million in government payouts to forestall chain-sawing many of the world's oldest, tallest trees.

But the court proceedings may produce a remarkable result: a revival of logging on terms that both environmentalists and timber firms can accept. Jobs, thriving forests, regulatory precautions - all the issues that bedevil the timber industry and its critics - could be worked out in a new way.

There are huge obstacles that remain, starting with the objections of Pacific Lumber's owner, Houston-based Maxxam, which wants to maintain control over the 200,000 acres of trees. Creditors holding upwards of $800 million in overdue bonds could stick with Maxxam or force a fire-sale auction of the prized timberland, which might be stripped of conservation controls imposed by past agreements.

But bankruptcy rules have opened the door to another option: New bidders with offers to snap up the land and Pacific Lumber's world of mills, a power plant, schools, shops and the small company town of Scotia, built up during 100 years of operation. Selling off these holdings could mean harm to hundreds of families tied to Pacific Lumber, acquired by Maxxam in a junk-bond takeover in 1986.

One outside bid is headed by the Nature Conservancy, a blue-ribbon group that has lined up financial and lumber firms in a team that promises to preserve many of the oldest trees and cut the remaining stands over time. It would make permanent the timber cutting policies forced on Maxxam that now have a 42-year life.

The second bid is brought by the Mendocino Redwood Company, owned by the billionaire Fisher family, which founded the Gap clothing chain. This bid would unite the state's two biggest redwood companies, and its leaders pledge to follow careful tree-cutting practices.

With either bid, the potential is enormous for maintaining a forest that operates in harmony with environmental groups and timber economics. The bids would keep jobs, taxes, and business flowing in a region where the once-dominant lumber business is in decline. And it wouldn't call for the costly, unrealistic solutions of a massive government buyout or a logging ban. "Nobody wants a 200,000-acre park," said Paul Mason, deputy director of the state Sierra Club.

These stakes explain why Gov. Arnold Schwarzenegger weighed in with a letter to the bankruptcy court. He didn't back any of the competing plans but rightly noted that a settlement needed to match the public's interest in preserving old trees with sustainable timber cutting over future years.

Finding this magic balance won't be simple. But it's worth the effort to settle this old north-coast quarrel.