Headwaters Headache [San Francisco Chronicle]

ONE OF CALIFORNIA'S biggest environmental deals is near a breaking point. A giant redwood lumber company wants speeded-up timber-cutting approvals -- or it may go out of business.

In 1999, the Pacific Lumber Co. sold 6,000 acres of primeval redwoods to the government in a landmark transaction that averted logging and saved cathedral-like stands of the world's largest trees. Now the company claims that restrictions on timber cutting are putting it in jeopardy of bankruptcy.
The firm is pressing state and regional regulators for logging permits, claiming better science and logging practices allow for more cutting on its 210,000 acres along the foggy North Coast. If the firm doesn't get its way, layoffs and possible bankruptcy are possible, its executives hint.

Coming from a company known for bare-knuckled bargaining, it's an offer that Sacramento should resist. Pacific Lumber must learn to live with logging rules that it crafted and signed barely six years ago. The public expects careful regulation in exchange for $480 million paid by federal and state government for the Headwaters groves.

The firm argues that after a string of money-losing years, it is running out of options. If it closes down, a new owner taking over the same redwood stands may not be beholden to wildlife protections and logging limits that Pacific Lumber agreed to. Cut us some slack or face an uncertain future, Pacific Lumber representatives are warning.

The company has taken its demands to Sacramento, where executives have met with Gov. Arnold Schwarzenegger's advisers. The governor runs state agencies that regulate logging, and he also appoints members of a local regional water board that can veto expanded logging.

The governor built a creditable record on the environment in his first year. His stance on Pacific Lumber's demands will be his next test. Will he bend regulations to fast-track logging or make the company follow the rules?

The firm says it has spent $60 million in studies on its land, the largest redwood operation in the state. It uses helicopters to extract logs to minimize impacts and built a super-efficient $30 million mill.

What's missing from this picture of modern-day logging is more trees. Pacific Lumber claims it needs more logs to stay open. It wants 16 tree- cutting permits within the next several months but has won only four.

These proposed cuts along small streams are where wildlife habitat, mud flows and landslides need careful study. Pacific Lumber is pressing for industry-friendly appointments to a key water board. But the governor should insist future decisions be treated objectively.

Why is this dispute so important? Because Pacific Lumber's stewardship is anything but exemplary. In 1986, corporate raider Charles Hurwitz acquired the company and quickly boosted logging to pay off his financing costs. When he moved on the Headwaters Forest, filled with trees dating back hundreds of years, state and federal leaders devised the costly buyout.

Now his company is pushing again, demanding more logging and threatening bankruptcy.

The governor shouldn't cave in to these tactics.