The crash of ancient redwoods felled in Humboldt County is echoing far beyond California's north coast - reaching all the way to Wall Street and Capitol Hill. At issue is the century-old Pacific Lumber Company and its acquisition by Maxxam Group Inc., headed by corporate takeover wizard Charles E. Hurwitz. At stake are about 16,000 acres of virgin redwoods - among the few untouched stands left in the world.
The stately trees, most predating the American Revolution and some as old as the Magna Carta, are now being clear-cut to pay the costs of Maxxam's 1985 takeover, environmentalists say.
Opponents of Pacific's use of the method charge it is destroying a national treasure, harming the local environment, and jeopardizing the long-term viability of the area's economy.
In addition, questions have been raised about the propriety of Maxxam's takeover, although no charges have been filed. Still, Pacific Lumber represents ``one case study of the potential for abuse of inside or other nonpublic information in hostile takeover attempts,'' says US Rep. John D. Dingell (D) of Michigan, chairman of the House Energy and Commerce intelligence subcommittee, which is holding a series of hearings on the Pacific Lumber takeover. Pacific Lumber Company and its new owner face a number of lawsuits and investigations. Company officials steadfastly maintain that the company's timber harvesting is in full compliance with state regulations, that its policies are bringing prosperity to a formerly depressed economy, and that its takeover was completely legal. And Pacific has sued several environmentalists for trespassing on its property during protests.
Before the days of the crosscut saw, redwoods graced about 2 million acres of California's north coast. Most of the land has been cut over at least once, but old-growth redwoods still stand on about 110,000 acres. (Southern California redwoods, Page 6.)
It is the old-growth trees that have become the cause c'el`ebre for environmentalists. About 70 percent of these trees are protected in national, state, and regional parks. Of the remaining unprotected old growth, however, Pacific Lumber owns the lion's share.
At the current rate of cutting, Pacific Lumber's old growth will disappear in 20 years. Environmentalists are urging the state to assess the overall impact of Pacific Lumber's plans on water quality and sensitive wildlife, such as the spotted owl, before clear-cutting of the old-growth trees proceeds.
But the company says it is being singled out unfairly. Spokesman David Galitz says the environmentalists ``have some other agenda. ... Is their real intent to stop all timber harvesting?''
Still, many people in these parts express outrage at what has happened to Pacific Lumber. Before the takeover, the company was widely regarded as the most environmentally sensitive in the industry, selectively cutting its old growth under a sustained-yield policy. It was debt-free and had made 164 consecutive dividend payments to its shareholders.
Now the company is saddled with debt, has sold off its nontimber operations, and has doubled its harvest rate.
``Some people see a real boom up here as a result of the takeover, but a lot of others are just sick about it,'' says attorney William Burtain, who represents several shareholders in a lawsuit against Maxxam.
The New York Stock Exchange, the US Justice Department, Representative Dingell's subcommittee, and the Securities and Exchange Commission (SEC) all are investigating the takeover tactics of Maxxam and other companies affiliated with Mr. Hurwitz. Pacific Lumber is also one of 14 takeover-related stocks the SEC is investigating in connection with the Ivan Boesky insider-trading case.
A report by Dingell's subcommittee says an investor who pleaded guilty to ``parking'' stock for Mr. Boesky may have done the same thing for Hurwitz. Parking stock is the practice of one investor buying a stock for another who does not want to be identified. The practice may involve violations of federal margin rules, bookkeeping regulations, and other securities laws, the report says.
Hurwitz has repeatedly denied any illegality in connection with the takeover.
The case has also prompted a fresh look at state regulations governing private timberlands.
Two local environmental groups have each filed suit against the company and the California Department of Forestry (CDF), alleging the accelerated harvest rate on Pacific Lumber land has not been environmentally assessed in accord with state law. In the first case, brought by the Environmental Protection Information Center (EPIC) of Garberville, a California Superior Court judge ruled this month that the CDF improperly ``rubber-stamped'' three timber harvest plans presented by Pacific Lumber Company.
Under the California Forest Practice Act, which regulates timber harvest on private property, timber harvest plans are submitted to the agency for review in lieu of environmental impact reports.
Concerned about the uproar in his district, state Sen. Barry Keene has introduced legislation designed to stave off timber takeovers by limiting harvest yields on such properties. His bill is pending action in the state Assembly, where it is expected to be amended in response to timber-industry opposition.