Update on Pacific Lumber and the Water Quality Board

The North Coast Regional Water Quality Control Board (NCRWQCB) Executive Officer, Ms. Cat Kuhlman, has called a special meeting for Wednesday, 2/23 at 1PM to publicly air Pacific Lumber’s (PL) request to approve another 12 Timber Harvest Plans (THPs) in Freshwater and Elk River, under a general Waste Discharge Requirement (G-WDR) permit.

The G-WDR is designed for THPs that are not in impaired watersheds. Freshwater and Elk have been determined to be severely impaired due largely to the cumulative impacts of excessive sediment from PL’s logging during the past 15 years, combined with legacy impacts from prior logging.

In December of 2003, NCRWQCB specifically authorized Ms. Kuhlman to require watershed-wide WDRs in Freshwater and Elk as of January 1, 2005, giving PL and NCRWQCB staff the necessary lead time to develop the permits. During 2004, PL was granted special dispensation to log THPs in Freshwater and Elk under the G-WDR, with the expectation that the watershed-wide WDRs would be ready for 2005. The following conditions applied:

1. PL would supply specific requested information on environmental conditions in the Freshwater and Elk watersheds to enable WQ staff to evaluate the cumulative impacts of sediment generation from logging.

2. NCRWQCB would issue watershed-wide WDRs based upon evaluation of the data that would constrain ground disturbance and cumulative canopy removal to promote recovery in these watersheds.

PL failed to provide the requested information, especially in regard to landslides, and, accordingly, NCRWQCB was unable to issue the permits in time to allow logging on January 1. PL began a public campaign to intimidate the Regional WQ Board and its Executive Officer, claiming that if it cannot log 4 THPs, it will face bankruptcy, forcing hardships on its employees and the community.

Ms. Kuhlman complied with PL’s “emergency” request, and approved parts of 4 THPs in these two watersheds under the G-WDR, allowing PL to resume logging in these watersheds as of January, 2005. She stipulated that these approvals were made for PL’s financial convenience.

Because there is no statutory authority for NCRWQCB to enforce a partial approval of a THP, the purview of CDF, Ms. Kuhlman ordered PL to submit weekly reports detailing the extent of logging (acres logged, percentage of canopy removed). In their first reports, PL reported low amounts of logging reflecting only those operations which removed timber (i.e., falling, yarding and hauling) from the watersheds. PL claimed that the felling of trees does not constitute a reportable logging operation because it does not discharge sediment.

According to NCRWQCB, the watershed-wide WDRs are based on a methodology developed by NCRWQCB staff in conjunction with scientists from the Redwood Science Laboratory. The methodology relies on readily available information, such as that from aerial photographs, ground “truthing,” and WQ monitoring. It is designed to provide NCRWQCB with the capacity to determine how much ground disturbance and canopy removal (the prime factors affecting sediment generation) is allowable without impeding the recovery of the impaired watersheds in a timely manner. NCRWQCB has concluded that in Freshwater and Elk, it is the only way for NCRWQCB to reliably abate nuisance flooding.

This methodology has been peer reviewed and refined by an independent, blue ribbon panel (whose members included those chosen by PL) of watershed scientists hired by the NCRWQCB in 2003. It provides an interim approach until more detailed and extensive data can be acquired.

PL has claimed that these lands are covered under provisions of the HCP, and that the HCP is “working,” so NCRWQCB has no right to limit logging. In requiring watershed-wide WDRs, the NCRWQCB is requiring specific data to support PL’s claim.

Instead of complying with the NCRWQCB orders, PL has most recently proposed that the 12 THPs be approved under the G-WDR, a request inconsistent with the function and requirements for enrollment of THPs in the G-WDR. In exchange, PL has promised to:

• Provide drinking water for affected residents in mainstem Elk,

•Put $100,000 into an escrow account to pay for feasibility studies of stream-channel sediment removal and raising bridges and roads

•Pay for facilitated mediation for improved dialogue and data-sharing with the NCRWQCB

•Pay for a facilitator for working with residents and Humboldt Watershed Council

•Work with the residents to improve access when it rains by allowing use of PL's roads as detours and using heavy equipment to ferry people across the floodwaters

•Pay Stillwater Sciences to provide independent analysis of monitoring data from the RWB and PL.

These will be discussed at the meeting on Wednesday. Facilitated mediation between PL and stakeholders has already been tried. It failed due to PL’s refusal to engage in any exchange, or provide any information, which could potentially lead to a reduction in its rate and extent of harvest.

PL relies on the argument that the sediment “savings” associated with their logging operations and mitigations far exceed the sediment that could be discharged by the operations themselves. This “Zero Net Discharge/ Negative Net Discharge (ZND/NND)” approach has been rejected by numerous scientists, including WQ staff, because of the spatial, temporal, and qualitative disjunction between sediment “saved” from discharge and sediment generated by the operations themselves.

Furthermore, the models PL employs to estimate sediment savings exaggerate the savings, minimize the estimated discharges, are heavily dependent on subjective operator inputs (easy to cheat), and are untested. Objective scientific reviewers have called PL’s primary model, called Water Erosion Prediction Project (WEPP), inappropriate for PL’s ownership. “Return overland flow dominates in upland forested areas where rainfall typically occurs as high frequency, low duration events, as is the case in Humboldt County, which limits the applicability of WEPP to these watersheds. The WEPP manual states that WEPP is unsuitable for complex watersheds, partly for this reason.” (Independent Science Review Panel Phase II Report, page 51)

In addition, much of the sediment savings should be considered debits, because they result from improvements to roads associated with current logging operations. These quantities rightfully belong to the overhead costs of the logging.

PL’s refusal to submit accurate or adequate landslide and other data has caused the NCRWQCB to lose trust in PL’s ability or willingness to act in good faith. PL’s claims have been viewed in the media (Sacramento Bee, LA Times, Eureka Time-Standard) as disingenuous attempts to complete the liquidation of PL’s assets (forests) in furtherance of Maxxam CEO Charles Hurwitz’s stated goal at the outset of Maxxam’s takeover of PL in 1985: “The function of PL is to throw off cash flow.”

PL’s trump appears to be financial blackmail. That the fate of a company of PL’s size and history could turn on a few THPs reflects the interest payments on the staggering debt load imposed on PL by its parent Maxxam. It also reflects PL’s liquidation of most of its merchantable timber in 20 years, such that PL has no flexibility with respect to logging, or any financial cushion. All of PL’s timberlands, “owned” by Scotia Pacific (ScoPac, another subsidiary of Maxxam), were mortgaged, along with all of ScoPac’s assets, in the last refinance of 1998. This precarious position cannot change due to the debt pressure, and low inventory.

History teaches us not to rely on PL’s promises. PL has already breached nearly every substantial component of the Habitat Conservation Plan (HCP):

Before the 1999 HCP, PL misrepresented its volume of old growth, exaggerating it by at least 25%, which had two results:

(1) giving the reviewing agencies the impression that there was more old growth habitat for covered species and that, therefore, more could be logged without adversely affecting these species, and

(2) giving the financial market a false impression of the harvestable volume that was collateral for the refinanced bonds.

Afterwards, PL “corrected” the inventory, which resulted in:

(a) more acres of second growth having to be logged to get the volume necessary to cover the debt, and

(b) fewer acres of old growth habitat remaining for species protection.

In addition,
* PL reclassified deep-seated landslides as stable, so as to log them.
* Dumped the Mass Wasting Science Review Panel when its findings confirmed the instability of deep-seated landslides
* The Superior Court of California declared the SYP invalid.
* Consequently, the murrelet, among other species, face increased jeopardy since the signing of the HCP in 1999.

NCRWQCB staff have expressed three concerns about PL’s threats of bankruptcy:

1. Bankruptcy proceedings would halt the NCRWQCB’s attempts to get PL to establish water systems in Elk River for residents whose domestic water supply has been ruined by PL’s voracious logging. However, PL was ordered to do this for North Fork Elk River residents in Clean-up and Abatement Orders in 1997 (Order # 97-115 and 98-100). They have done so for very few affected people, and then inadequately in some cases. Now, there are more people deprived of their water, this time along the South Fork Elk River. There is a cruel irony to holding these sorts of mitigations hostage to further degradation, especially when bankruptcy appears inevitable.

2. The development of a watershed-wide WDR is an unprecedented and very worthy goal. However, PL shows no sign of cooperating in that effort anyway.

3. Virtual protections will evaporate after liquidation or become moot due to over-logging, and probably bankruptcy (or worse, timberland conversion into real estate). Compromise will lead to enhanced protections for Freshwater and Elk.

Bankruptcy may be Hurwitz’s exit strategy. If he can blame PL’s failure on the Water Board, he can escape liability to the bondholders, and sue the state for Takings. Although the latter is absurd due to the massive profits already extracted from PL, the former is very likely. In the trade, it is called “Bankruptcy for Profit,” and Hurwitz is an acknowledged master of the game. Unfortunately, only one party, Hurwitz, profits. The costs are externalized onto everyone else.

Several lawsuits, including those by affected residents, the Humboldt County District Attorney (DA), and PL’s insurance company (which argues that PL knew of the landslide risks associated with their logging in Elk River and Stafford, and therefore intentionally harmed people - acts not covered by the policy), stand to block Hurwitz’s exit, and force his funding of critical rehabilitation efforts in the watersheds (which translates into jobs).

The DA lawsuit charges PL with committing fraud during the HCP negotiations in order to attain a rate of logging that the evidence showed would violate water law and worsen nuisance flooding. That fraud continues to bear fruit for PL, and the consequences of it are at the heart of the Water Board efforts today.

PL and their parent Maxxam are using the stick of bankruptcy and layoffs, and the virtual, but meaningless, carrot of more biased pseudo-science and non-mitigation to get what they want. Surrendering to hostage takers and blackmailers only nourishes them and assures repetition of such behavior. It is clear why PL wants their hired facilitator and yet another hired consultant to further muddy the water.

A suggested novel approach:

•Enforce the Basin Plan. If PL refuses to provide information for the Report of Waste Discharge (RoWD) now, what makes anyone think they will do so later?

•Implement the State Water Board incremental enforcement policy if PL fails to comply with the RoWD, and continues to violate Cleanup and Abatement Orders, refer the problem to the DA for civil penalties

•Stop the watershed carnage. Allowing PL to further degrade WQ in order to study and mitigate the damages later makes no sense, particularly in light of PL’s history: there will be no later.

•Such enforcement action may be the only way to hold this company accountable, to its employees and to affected residents, and send a necessary message to other companies who lie, cheat and steal that such non-compliant behavior will be met with substantial penalties.

Excerpts from Independent Science Review Panel:

“As long as logging and road effects occur at the present rate in these watersheds, it is unclear with the present information whether the HCP or any other plans will lead to recovery. Press disturbances in the five watersheds resulting from industrial forestry might preclude initiation of recovery and push the watersheds toward a new ecological state.” (pg 18)

“Even if fully implemented as envisaged, it is the Panel's judgement that the HCP/SYP/THP structure cannot be relied upon to meet water quality objectives due to … critical shortcomings. … Further, because the HCP/SYP/THP process has not been implemented in a manner consistent with its design, there are serious negative implications for water quality, flooding, and Cumulative Watershed Effects (CWE).” (28)

“However, the prescriptions do not address the cumulative impact of the high harvest rate. This is a failure of the feedback from watershed analysis to Timber Harvest Planning and a represents a flaw in the management system.” (32)

“In the Panel's review of the Watershed Analysis, we did not find a credible scientific basis in support of these and other relaxations in the "Final Prescriptions based on Watershed Analysis for Freshwater Creek." (33)

See also Phase I Report