July 8th 2008

By Scott Greacen
For the Times-Standard
July 8, 2008

This week, in what we hope are the final days of the Pacific Lumber (PL) bankruptcy proceedings, Sierra Pacific Industries (SPI) inserted itself into the process. Archie "Red" Emmerson, SPI's owner and chief executive, was in the Corpus Christi, Texas courtroom pressing his offer to purchase PL's Scotia mill, an offer buttressed by 10 declarations from local timber luminaries like Dennis Scott and Bob Barnum. Opinions differ as to what SPI actually intends to achieve, but any student of California timber will tell you it's not a great idea to get between Red Emmerson and something he wants.

We at EPIC think it's unlikely SPI will prevail this time. The Scotia mill is not for sale, and would only be sold if bondholders manage to derail the Mendocino Redwood Company (MRC) plan to reorganize Pacific Lumber with a new argument that the value of the timberland has declined during the bankruptcy process. It's unlikely the bondholders will win, not least because they are arguing against their own previous claim that the land was worth more than MRC's offer. Still, the consequences for Humboldt County of allowing SPI to take control of Pacific Lumber's key assets are so severe that it's worth underscoring a few reasons we strongly oppose SPI's bid to buy the Scotia mill.

Sierra Pacific Industries is not only the largest landowner in California, but also the largest clearcutter. Clearcutting and other forms of even-aged management are not just ugly; they reduce complex forests to oversimplified tree plantations, which don't provide the benefits of natural forests. Clearcut logging and plantation forestry create higher risks of unnaturally intense fire than selection logging, increasing risks to adjacent forests. Clearcuts create more water pollution, soil damage, and harm to habitat. As well, large-scale clearcutting is closely tied to SPI's intensive herbicide use, in which toxics are applied across the landscape to suppress native plants.

Over the long run, clearcutting trades short-term profits for long-term yields. Smart selection forestry increases stand volume over time, maintaining both habitat and production jobs. Despite all this, and the tremendous unpopularity of clearcutting, SPI seems intent to continue these failed forest practices. SPI even has the gall to package old-growth liquidation and clearcut forestry as a panacea for global climate change.

SPI has earned a reputation for sharp elbows. In the Sierra counties where SPI appears to be systematically converting thousands of acres of timberlands to massive housing developments, citizens are organizing to resist the harm rural sprawl does to their communities. According to Cal Fire officials, after the 2002 Sour Grass fire in Calaveras County caused by an out-of-control SPI burn pile, the state of California had to take SPI to court to recover only $500,000 of the more than $940,000 taxpayers spent fighting the fire. In April 2007, SPI settled a class-action suit filed on behalf of hundreds of SPI truck drivers for $2.4 million; drivers alleged they had been forced to work 15-hour shifts without the breaks the law requires.

SPI seems to have a hard time taking pollution control laws seriously. Just last year, SPI was assessed a $13 million fine for air quality violations, one of the largest penalties ever levied by the California Air Resources Board. The charges included "falsification of emission reports as a result of operator tampering with monitoring equipment," as well as repeated violations of emissions limits and other serious violations. Here in Humboldt County, SPI settled a Baykeeper lawsuit over its failure to clean up toxic wastes, including dioxin, from their mill site. In a similar case in 2007, SPI was charged with violating waste discharge standards in Amador County for releasing dioxins and phenols, and for failing to report the releases, all in violation of their agreement with the state.

SPI's aggressive practices have serious consequences for other players in the timber market. SPI has closed at least nine mills in California just since 1990, steadily increasing its leverage over the market. (Note that SPI's plan for the Scotia mill includes closing SPI's existing Manila mill and a 15-year log supply contract with whoever winds up owning PL's timberland). Against this backdrop, SPI's attempt to acquire the Scotia mill looks a lot like a bid for regional dominance. That would be bad not only for the environment, but for small timber owners. In a situation where there is lots of demand for logs, but little competition to buy them, small producers would be vulnerable to the infamous choice SPI offers small operators elsewhere: sell your logs at our price or don't come back.

In short, SPI's poor track record of corporate citizenship suggests an SPI takeover of PL assets would be a disaster for Humboldt's forests and future. Given this history, we are left to wonder why some of Humboldt County's prominent timber names support SPI's gambit. Maybe they're just afraid to cross Red Emmerson.

Scott Greacen is Executive Director of EPIC, the Environmental Protection Information Center. EPIC has monitored and challenged Pacific Lumber's forest practices over the last two decades.