Lumber Firm Expects Charges of Environmental Violations
Louisiana-Pacific Corp. said it expects to be indicted by a federal grand jury on allegations that it tampered with environmental monitoring equipment and submitted false product samples to a product certification agency.
The charges add to a string of environmental problems at the Portland, Ore., company in the past few years. Louisiana-Pacific has paid $17 million in environmental penalties in the past two years.
The company first reported the Denver grand jury investigation in documents filed with the Securities and Exchange Commission in March, 1994, and said in November that it would probably be indicted.
The allegations include tampering with emissions monitoring equipment and altering records at its Montrose, Colo., plant, according to information repeated in a Form 10-Q the company filed May 15 with the SEC. The Wall Street Journal reported the contents of the filing Thursday.
“If it’s limited to one plant, it’s not material,” said Paul Latta, an analyst at Ragen MacKenzie in Seattle. “If it were expanded to other plants, it could be.”
The company’s shares fell 15% on Thursday after the announcement, closing down $4 at $22.75 on trading of 4.57 million shares, more than 10 times its three-month daily average.
L-P also faces a federal grand jury investigation regarding allegations that it submitted non-representative oriented-strand-board (OSB) samples to the American Plywood Assn., an industry product certification agency. The allegation is that the samples sent for testing may not have been true reflections of overall production quality.
“It is likely that [the company] will be indicted with respect to both the environmental and the APA-related matters,” Louisiana-Pacific said in the SEC filing. “The resolution of these matters could have a materially adverse impact.”
The company said the federal inquiry into its OSB products may be directed at one or more employees at the Montrose plant.
OSB is a composite material of wood chips and paraffin wax generally used as a less-expensive substitute for plywood in products such as roof sheeting.
Louisiana-Pacific is a major forest products company that makes lumber, pulp, hardwood veneers, windows, doors and cellulose insulation.
It began an internal investigation of the environmental matters in the summer of 1992 and reported its initial findings to the government in September of that year. Additional subpoenas were issued last March requiring the production of evidence and testimony related to the OSB samples.
Louisiana-Pacific said it has begun an independent investigation of irregularities in sampling and quality assurance at its OSB operations. Charles Renfrew, a retired federal judge, is overseeing the internal inquiry.
