Charles Hurwitz Is a Greedy Clear-cutter. Charles Hurwitz Is a Caring Environmentalist.

You decide.
by Kathryn Jones

...Page 2

U.S. 101 heading north from San Francisco is called the Redwood Highway for good reason. The farther I travel on this early April day, the bigger and denser the redwood groves become. By the time I reach the famous Avenue of the Giants, a scenic drive that cuts through an ancient forest, they tower twenty or thirty stories tall, with trunks as large as fifty feet around. They make the pines of East Texas look like toothpicks. The town of Scotia, where Pacific Lumber is headquartered, is about 250 miles north of San Francisco, but it's a five- to six-hour drive from the city through the Sonoma and Mendocino wine country across high passes and along the meandering Eel River. The area has been hit by a late-season snow, so the mountains are dusted with white powder. Fingers of fog creep through the valleys. Some of the hillsides show signs of clear-cutting, but Scotia is mostly surrounded by lush green forests.

I've come all this way to see the Headwaters Forest. Luckily the snow and recent rains haven't closed the mountain road that leads to its edge. It's a short hike into a forest of old-growth redwoods much wilder and less accessible than the Avenue of the Giants. The terrain is steep, and the forest is overgrown with Douglas firs, ferns, and other vegetation. The sun barely penetrates the thick green canopy. These virgin redwoods aren't as big as those I saw on my drive, but some are more than three hundred feet tall. Several bear the blue slashes of paint that marked them for the saw blade. This land is in the heart of California's timber industry. Humboldt County leads the state in timber harvest values; a million acres, most of it private land, is devoted to growing and harvesting timber. More than 7,500 people work in the timber industry in jobs that paid an average of $31,200 a year in 1997. "Everybody loves redwoods, only fifty percent love them vertical and fifty percent love them horizontal," says Doug Bosco, an attorney and former congressman from Santa Rosa, California, who was among the first to try to get the government interested in preserving Headwaters.

Clashes between environmentalists and timber employees are a fact of life here, and the timber wars aren't over yet. New lawsuits have been filed since the Headwaters accord, challenging parts of the plan governing the rest of Pacific Lumber's logging practices. Environmentalists say that the company can't be trusted to protect endangered wildlife and that its practices are ruining fragile ecosystems. They point out that the California Department of Forestry revoked its timber operator license at the end of last year because of excessive violations. In February a conditional license was issued, and the company agreed to train its logging personnel and take other steps to improve its record. "Industrial logging techniques and profit levels are such that they've taken a diverse forest and, little by little, removed crucial elements of it," says Kathy Bailey, the forest conservation chair of the Sierra Club in California. "So you end up getting two-by-four farms." Pacific Lumber officials insist that the company has been a good steward of the land over the years, growing and replanting more trees than it harvests. (Redwoods are among the fastest-growing trees; in thirty years they can grow to 130 feet.) They argue that last year they planted about 1.2 million redwood and Douglas fir seedlings, that they employ full-time wildlife and fisheries biologists, and that they raise salmon and steelhead trout in their fish hatchery and rearing ponds and release them into various waterways. And while habitat conservation plans are being written for other timber companies, none is on the scale of the massively complex one designed for Pacific Lumber, which has the kind of restrictions that could raise the bar for its competitors. "This is the prototype of the future," Hurwitz said. "And if the state and federal governments want to use this as a prototype, then it's in everybody's interest to make this work or there won't be any more."

From the Headwaters Forest it's a short drive to Scotia, which was originally named Forestville. It's one of the last company towns in America. Pacific Lumber built and owns almost everything here, including several hundred bungalow-style homes that employees can rent, and provides power from a cogeneration plant that burns wood waste from the mills to produce steam and electricity. The town of 1,200 has a school, two churches, a bank, a hardware store, a supermarket, and a quaint country inn. After three earthquakes set off a fire that destroyed a fifties-era shopping center in 1992, Hurwitz ordered it rebuilt in redwood in keeping with the area's rustic architecture. Since Maxxam bought Pacific Lumber, it has invested more than $100 million. "We've had more money in this company in the last ten years than had been spent in the last one hundred years," Hurwitz said.

Pacific Lumber has logged in Northern California for 130 years and, until Maxxam took over, was praised by environmental groups for its responsible logging practices. As far back as the twenties the company worked with the Save-the-Redwoods League to set aside some of its old redwood groves until Save-the-Redwoods could acquire them for parks; part of the Avenue of the Giants is on former Pacific Lumber land, as is the spectacular Founders Grove, which has some of the oldest trees on earth. But soon after Maxxam bought the company, the protests began in the forests. Demonstrators blocked logging roads, chained themselves to trees, and even became "tree sitters," occupying a tree so loggers wouldn't cut it down. The best known tree sitter, Julia "Butterfly" Hill, has been living on top of a redwood for more than a year—not in Headwaters, but in another forest owned by Pacific Lumber. Initially the protests were just angry; then they got nasty. Campbell found a dead deer in his swimming pool, and his house was vandalized. During a 1997 protest, Humboldt County authorities doused protesters with pepper spray. And then last fall, protester David "Gypsy" Chain, a 24-year-old Earth First! activist from Austin, was killed on Pacific Lumber property when a logger felled a tree that hit him. "He was in a place where he shouldn't have been," Campbell says, adding that the company has had "tremendous numbers of trespassers" on its property. Chain's family is expected to file a wrongful death suit against Pacific Lumber.

Hard-line environmentalists like these didn't want the government to pay Hurwitz a dime for Headwaters. They wanted to force him to relinquish ownership of the forest in a so-called "debt for nature" swap to square a "debt" over the failed United Savings Association of Texas, one of the Texas S&Ls that toppled like dominoes during the real estate bust of the eighties. The Federal Deposit Insurance Corporation (FDIC) is suing Hurwitz for his role in the failed thrift; the Office of Thrift Supervision has brought a similar suit. Hurwitz's attorneys say that he was merely the chairman and a minority stockholder in the S&L's holding company and had no role in running the S&L per se.

Documents in the FDIC case, which is still pending in U.S. district court in Houston, showed that the government may have been pressured by the redwoods fight in bringing its suit. When a judge briefly unsealed them for a few days, the Houston Chronicle obtained and printed portions of them. Among other things, they revealed that environmental groups such as the Rose Foundation in California and the National Audubon Society began a campaign in 1995 to press Congress and the White House to consider a debt-for-nature swap. Leon Panetta, then the White House chief of staff, suggested in a letter to the Audubon Society that an exchange was "worth pursuing" given budget constraints that made purchasing the land difficult. The unsealed documents also showed that Interior Department and FDIC officials met to discuss such a settlement before the agency filed the suit against Hurwitz. His attorneys say the complicated case was clearly politically motivated. "Reason didn't prevail," says J. C. Nickens, one of the Houston lawyers who is defending Hurwitz in the FDIC suit. "Politics prevailed." Because the case is still in litigation, FDIC spokesman Steve Katsanos declined to comment on its specifics but denied that it was politically motivated: "This case was brought based on the merits of what we felt were inappropriate activities in this institution." As of now, the FDIC has no plans to drop the suit, and the Office of Thrift Supervision's case against Hurwitz could drag on into next year. "It's government at its worst," Hurwitz maintained. "People talk about Ken Starr spending $40 million. Between the government and ourselves, we've spent more than $50 million—on no case."

Near the end of the interview, Hurwitz told me a story about another controversial project that he worked long and hard to complete: the Ritz-Carlton Hotel in Rancho Mirage, California. Frank and Barbara Sinatra opposed the development because they had horseback riding trails in the area, but just as problematic were the environmentalists who argued that it would kill the bighorn sheep in the mountains. After years of battling, he got it built. "The biggest problem we've had at this hotel," he said with a smile, "are these damn bighorn sheep that come and eat a million dollars of our shrubbery a year. The sheep population has exploded." It took a while, but Charles Hurwitz proved the naysayers wrong in the Southern California desert. He's done it before, and he may do it again—this time, perhaps, in the foggy forests to the north.