April 5th 2008

By Sam Johnston
For the Times-Standard
April 5, 2008

The Environmental Protection Information Center (EPIC) has battled Pacific Lumber since the venerable North Coast timber company's takeover by the Texas-based Maxxam Corp. led to the rapacious logging of Humboldt's ancient redwood forests.

Today, with PL in bankruptcy court, we face momentous choices that will shape the future of the region. EPIC supports the plan by Marathon Finance and Mendocino Redwood Co. (MRC) as offering the best hope for moving into a new era of responsible stewardship.

Former Gov. Pete Wilson's recent My Word column claims that the plan to auction off PL's timberlands promoted by his clients -- institutional investors whose debt is secured by the land -- is the best plan for reorganization. However, the entrance of Pete Wilson should give pause to those who might support the auction plan.

To the extent that he has relevant experience with these issues, Wilson's record consists of his complicity in allowing Maxxam's liquidation plans to proceed for the eight years he was governor.

The noteholders' plan to auction off the timberlands is fraught with risks. An auction may expose prime timberland to development or continued abusive management practices well below the level of protection promised by the noteholders' competitor, Marathon-MRC. Maxxam or another corporate raider could acquire these timberlands in an auction, and burden the resources once again with huge debt.

Wilson's unsupported assertion that the Marathon-MRC
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plan relies on an undervaluation of the PL timberlands underscores this problem. The noteholders invested in Maxxam's high-risk plans because they wanted to extract high returns. By insisting on maximum possible payoff, however, they are "out-Hurwitzing Hurwitz."

The net effect will be to pile even more unsustainable debt on the land, ensuring endless pressure to overcut the forest. Indeed, Wilson's lip-service to the inadequate Habitat Conservation Plan negotiated on his watch suggests that protection of clean water and functional habitat is not a priority for Wilson's clients.

These considerations make certain that the noteholders' plan is extremely ill-suited to resolve these long-standing controversies once and for all.

Furthermore, contrary to Wilson's claim that the noteholders' plan "will not dismember the company," the auction plan only identifies the Scotia Pacific debt, leaving PL -- the company that runs the mill, hires the workers and sells lumber and forest products -- twisting in the wind, still subject to foreclosure.

The timberlands and mill must be managed as a single, sustainable operation, accountable in some measure to the local community. One of the core principles of community forestry is the idea that the whole human community has a long-term stake in the operation.

The MRC plan for PL's reorganization comes closer to implementing that principle than any other proposed plan before the court. MRC has pledged to keep Pacific Lumber's Scotia mill operating and has an impressive lumber marketing plan, at a time when falling redwood prices pose a challenge to any large-scale timber operation.

The noteholders' plan, by contrast, falls short on detail as to how it will employ local workers and keep the local timber economy vibrant. We can't count on Pete Wilson's empty promises to prevent any number of unacceptable outcomes from occurring, particularly when there is a better alternative available -- the MRC plan.

There is broad agreement across many constituencies that breaking off the lumber and milling operation from the forest resources operation would have serious adverse consequences to timber jobs and the local timber economy, and would increase the likelihood of timberland conversion for development. We need to resist this and protect the North Coast timber economy against development pressures.

The MRC plan would not only accomplish the removal of Charles Hurwitz and his Maxxam Corp. from Humboldt County, but would also terminate the Maxxam-style liquidation logging that has plagued the community all these years.

The Marathon-MRC plan for PL's reorganization is the one that deserves the support of the public and confirmation by the bankruptcy court.

Sam Johnston of Garberville is a private lands campaigner for the Environmental Protection Information Center (EPIC). For more information, see www.wildcalifornia.org.