The Coastal Post - September, 1995

Headwater Forest Seems Doomed By Republicans

Logging To Begin September 15

BY JAMES M. POWERS

To say that environmental news has been uniformly bad with the advent of the 104th Congress hardly touches upon the severity of the assault. The unprecedented rollback of environmental protections established through decades of faithful work, the gutting of the Environmental Protection Agency, the rolling back of health, safety and clean air and water laws is attributable to this Congress' fawning submission to the demands of concentrated capital as embodied in the modern corporation, the furtherance of whose wealth and influence now appears to take precedent over all else on the American political scene. The values of the market dominate.

One of the casualties of the continuing "conservative" assault was H.R. 2866, the Headwaters Forest Act, which would have shielded 44,000 acres of privately-owned ancient redwoods from the loggers' ax. While the bill passed the House of Representatives last year by a large margin, it stalled in the Senate. Chances for its passage in the 104th Congress are practically nil.

Up until now, the Headwaters Forest has been the last privately-owned sanctuary to ancient groves of redwood trees, some of which were seedlings when Jesus Christ was crucified. These groves provide shelter for several endangered and threatened species, including the spotted owl, marbled murrelet, and coho salmon. But these are non-market values, and where many see an irreplaceable treasure in its natural state, others see redwood decks and hot tubs, and the profits that accrue from corporate management of these privately-owned forest lands.

Up to now only the scores of lawsuits by groups like the Environmental Protection Information Center (EPIC) and the more confrontational actions of Earth First! activists have prevented the firm that controls Headwaters, Pacific Lumber Company, from logging the Headwaters. On September 15, the end of the marbled murrelet nesting season, the Headwaters is slated to be opened to logging for the first time ever, signaling the end of that forest in its pristine state.

Pacific Lumber has been mired in controversy ever since its 1986 acquisition in a leveraged buy-out by the Houston-based MAXXAM Corporation. If Headwaters is to be saved, it may be due to the circumstances surrounding Pacific Lumber's purchase and the subsequent failure of the Houston-based United Savings Association of Texas, owned by Houston financier Charles Hurwitz, the same man who controls Pacific Lumber and its parent corporation, MAXXAM.

The shady methods used by Hurwitz to purchase Pacific Lumber are part and parcel of the junk bond-driven casino economy of the 1980s that provided the corporate raiders and robber barons of that unhappy decade with nearly unlimited financial resources for gobbling up corporation after corporation.

How Hurwitz fit into this was outlined by investigative journalist Stephen Pizzo, and Jill Ratner, president of the Rose Foundation, in an interview on Pacific Radio in mid-August. Their analysis went something like this: Michael Milken and his firm, Drexel Burnham Lambert, Inc. were able to finance most of the largest corporate takeovers of the 1980s through the floating of high yield, high risk, "junk" bonds. The primary customers of these junk bonds were the newly deregulated Savings and Loan institutions, many of which had been bought out by these self-same corporate raiders, through the floating of junk bonds.

Enter Charles Hurwitz, who bought out Pacific Lumber in 1986; the first major hostile takeover financed by junk bonds. The Hurwitz-controlled United Savings Association of Texas went belly-up in 1988 after purchasing $1.8 billion in Milken's junk bonds which had gone sour. Naturally the S&L;'s failure occurred after Milken had provided the $750 million in financing for Hurwitz's MAXXAM Corporation to purchase Pacific Lumber.

Says Stephen Pizzo: "Lest anyone believe that this was just another sharp-eyed business deal, of the 98 criminal felony counts that were brought against Mike Milken that sent him to jail, seven of those counts directly related to the Pacific Lumber deal."

The U.S. government was left with the tab for USAT's failure, pegged at $1.6 billion, a debt to be paid courtesy of the American taxpayer. In the meantime, Hurwitz had walked away with Pacific Lumber and its 197,000 acres of redwood forest lands, which will have to be completely liquidated within 22 years to pay off the timber collateralized notes incurred in the takeover. All this without ever putting up a dime of his own money.

Legal thievery? Perhaps. But in early August federal banking regulators filed a $250 million suit against Hurwitz for his role in United Savings Association of Texas' failure. If there is a way to save the Headwaters it may be through the invocation of a "debt for Nature," swap whereby the government would forgive any liability that Hurwitz may owe in exchange for surrendering the Headwaters to some federal agency. The government's suit against Hurwitz, says Cecelia Lanman, Project Director of EPIC, "has brought new life to that possibility."

Barring this, the only thing that stands between the Headwaters' ancient trees and the chainsaws are public pressure and last-minute lawsuits designed to keep the loggers out of the ancient groves. According to EPIC's Lanman, "The [Headwaters Forest Act] bill did well in Congress last year. All it would have done would have been to open negotiations, so I say it's time to open negotiations. What are we waiting for? Let's get on with it, unless they want to get dragged back into federal court, which we are going to do every step of the way."

A massive legal mobilization is planned for Friday, September 15 at noon at a Pacific Lumber mill in the town of Carlotta, which is between Garberville and Eureka, near Fortuna. Thousands will be needed if the Headwaters is to be saved. The event is sponsored by EPIC, Headwaters Steering Committee, Earth First!, Mendocino Environmental Center, Rainforest Action Network, Bay Area Action, Food Not Bombs, Sierra Club, Ancient Forest Committee and many others. Earth First! and affiliate groups are planning a campaign of civil disobedience for those wishing to get more directly involved. For more information, call the Mendocino Environmental Center, (707) 468-1660 or the Bay Area Headwaters Coalition, (510) 835-6303.