Dealing With a Raider to Save a Forest : Headwaters: An S&L; sharpie is blitzing old-growth redwoods to save his neck; we can swap his debt to save this ancient forest.
For 117 years, family-operated Pacific Lumber Co. was a model corporation. As owners of the Headwaters Forest in Humboldt County, Pacific Lumber’s conservative logging practices left their forests healthy long after other timber companies had liquidated theirs.
In 1985, corporate raider Charles Hurwitz recognized Pacific Lumber as an undervalued asset and, with his friends Michael Milken and Ivan Boesky, orchestrated a takeover of Pacific Lumber primarily through high interest, high risk junk bonds. Three years later, Hurwitz’s United Savings Assn. of Texas failed, costing the taxpayers $1.6 billion. It was the sixth-largest savings-and-loan-failure in U.S. history.
Hurwitz has been logging the Headwaters Forest at an unprecedented rate so that he can pay off his debts. He has tripled the logging of redwood, especially old-growth trees, taking at least 40,000 acres of redwood and Douglas fir. The company has only 5,500 acres of virgin redwood and 5,000 acres of virgin Douglas fir left. However, Hurwitz’s debts from various ventures are so massive that no amount of logging will help him balance his accounts. By logging at such a furious pace, Hurwitz has nearly exhausted the resources of the forest, which will devastate the local timber industry and mean the loss of hundreds of jobs from the region.
Several court decisions have kept Hurwitz from logging even further. On at least two occasions while the company has been under Hurwitz’s control, Pacific Lumber’s logging operations have violated important state and federal mandates protecting endangered species, according to an opinion by U.S. District Judge Louis C. Bechtle in March. Still, Hurwitz has been logging previously restricted parts of the forest since March and has indicated that he will log the Headwaters Grove, home of the largest stand of privately owned ancient redwoods in the world, in September. Hurwitz needs to know that the taxpayers will not stand idly by and watch him break the law time after time, avoid his massive public debt and cut down an ancient grove of 2,000-year-old redwood trees.
Recent developments have given many in California hope that there may be a way to save the Headwaters. The Federal Deposit Insurance Corporation (FDIC) has filed suit against Hurwitz for his role in the 1988 savings-and-loan failure. If the suit is prosecuted, the FDIC could force Hurwitz to pay back $250 million of the $1.6 billion he owes the American taxpayers for covering his depositors’ losses. A debt-for-nature swap is the best way for the taxpayers to recover that debt and also save the Headwaters Forest from destruction. In a debt-for-nature swap, the government would acquire the Headwaters Forest, and in return would relieve all or part of Hurwitz’s outstanding S&L; debts.
If the public is interested in saving the Headwaters Forest redwoods from the chain saws, then this debt-for-nature proposal is our best hope. Congress and other federal and state officials need to be encouraged to advocate aggressively for such a settlement.
Less than 4% currently remains of the ancient, old-growth redwoods that once covered more than 2 million acres from Big Sur to the Oregon border. These majestic redwoods, such an important part of our California heritage, need to be preserved for generations to come.
