The call came from Air Force One. It was February 25, and Charles Hurwitz, the chairman and chief executive officer of Houston-based Maxxam, had big reservations about a deal he’d been trying to cut with the federal government for years. The following day Maxxam’s board was going to vote on a historic agreement to save Northern California’s Headwaters Forest, the largest stand of ancient redwoods in private hands. For the considerable sum of $380 million, the feds and the State of California would buy the redwoods—some of which are one thousand years old—from Maxxam’s Pacific Lumber Company and protect them in a public preserve. Just as important to many environmentalists and the U.S. Department of the Interior was a provision for the strongest and most sweeping plan in history to protect wildlife habitats on private property.
The seeds of the agreement were first planted back in September 1996. It had taken nearly two and a half years of complex, contentious negotiations to reach a point where something—anything—could be approved. And yet at the very last minute the deal was on the verge of collapse, because state and federal agencies had proposed changes that Maxxam’s board feared would so greatly reduce the amount of timber Pacific Lumber could harvest that it couldn’t operate viably and keep its 1,400 employees on the payroll. A few days earlier Hurwitz had met with White House chief of staff John Podesta in Washington, D.C., to tell him that the board would likely reject it.
Then the phone rang. Bill Clinton said the transaction “was important for America,” Hurwitz recalled. “He wanted to make it very clear that he was behind it one hundred percent and that he’d be happy to work on any problems.” Hurwitz explained that he appreciated the gesture, but it didn’t change his mind. “I told him that if he were a director of this company, he would have voted against it the way it was constituted. And I proceeded to tell him why in a pretty lengthy conversation.” Not even the president of the United States could persuade Charles Hurwitz to sign an agreement he considered to be seriously flawed. On February 26 Maxxam’s board did indeed vote no.
Time was running out for the last, best chance to save Headwaters; congressional authorization for the federal government to spend its share of the purchase price—up to $250 million—was set to expire on March 1. Regulatory agencies quickly dispatched letters “clarifying” their earlier estimates as too conservative and promising that Pacific Lumber would be able to produce more lumber than previously projected. It wasn’t as much as Maxxam wanted, but it was enough to give the company and its workers long-term stability. Just before the deadline, Hurwitz stunned his friends and foes by reversing course. The deal was done.
Under the terms of the landmark agreement, the feds and the State of California will acquire 7,500 acres, including the Headwaters Forest and surrounding old-growth redwood groves. The deal is linked to a “habitat conservation plan” that governs how Pacific Lumber can log the rest of its 220,000 acres of forests for fifty years; it includes no-cut buffer zones near streams and other restrictions on where and how the company can harvest redwoods while allowing it to take down enough trees to keep its mills running. As it stands, Pacific Lumber will be the most strictly managed timber company in North America. California governor Gray Davis has pledged that his administration will enforce the conservation plan “to the letter.” Yet while some environmentalists applauded the deal, others had hoped for more. Groups like the Sierra Club wanted 60,000 acres of Pacific Lumber’s land around Headwaters to be set aside so that an entire ecosystem could be preserved. And they don’t believe that the habitat conservation plan, which assumes that some wildlife will be lost in the course of Pacific Lumber’s business, goes far enough to protect threatened and endangered species that live in the forests—among them, the northern spotted owl, the marbled murrelet (a small seabird that nests in the branches of old-growth redwoods), and the coho salmon.
“Many people are unhappy with it, including people in our company and including outside people,” Hurwitz told me in an exclusive interview. “Some think that we were paid too much. On the basis of appraised value, one could argue that we were paid too little. But there was a balance that was struck. I think time and history will show that it was the right thing to do.”
President Clinton said as much on national television. After the deal was signed, he called the saved redwoods “a natural treasure, as much a part of our legacy as the world’s great libraries and cathedrals.” Interior Secretary Bruce Babbitt said that Headwaters “will go down in history as one of the great achievements of our time, along with Yosemite and Sequoia and Kings Canyon national parks.”
For Hurwitz, it will go down as the deal of a lifetime, reaching far into the next millennium. And maybe the next.
I met Hurwitz at Maxxam’s offices in a high-rise tower near Houston’s Galleria a few weeks after the agreement was signed. A tall man with dark, slightly graying hair, the 59-year-old was dressed in a conservative business suit. He looked like he’d been making deals all his life. And, in fact, he has.
Born in Kilgore, the son of a prominent haberdasher, Hurwitz became a stock-broker after graduating from the University of Oklahoma. While still in his twenties he raised more than $54 million to start the country’s first publicly held hedge fund. Over the years, he acquired a series of businesses, including McCulloch Oil, which became MCO Holdings, Maxxam’s predecessor; Simplicity Pattern; and a resort in Puerto Rico. He’s a multimillionaire—he made Texas Monthly’s list of the one hundred richest Texans for four straight years, from 1990 to 1993, with his net worth at the time pegged at between $140 million and $200 million—but he doesn’t flaunt his wealth. His office is comfortably utilitarian. A