Humboldt County sues Pacific Lumber over Fraud

COLLEEN VALLES / AP 26feb03

SAN FRANCISCO -- The Humboldt County district attorney's office has sued Pacific Lumber Company, accusing the timber firm of fraud and of lying to state and federal agencies so it could log more trees on unstable slopes.

The county maintains that false information included in an environmental impact report in 1999 let the company get approval to cut down about 100,000 more trees for an extra $40 million in profits per year.

The company says there is no factual basis for the complaints.

The suit, filed in Humboldt County Superior Court Monday, seeks $2,500 per tree. It claims the company submitted false landslide data to be included in the environmental impact report, and then kept the correct data suppressed to prevent having to recirculate the report for approval.

At the same time, the suit claims, the company pressed state and federal agencies to allow an amendment to the logging plan that would let the company log on unstable slopes.

The suit also claims that the company caused major environmental harm by logging the slopes and used its plan based on false data to argue successfully against mitigation demands required by regional water regulators.

"These acts of logging resulted in major landslides causing destruction to ancient redwoods, serious harm to Humboldt Bay and serious harm to streams, bridges, roads, homes and property rights of the people of Humboldt County," the suit reads.

The next steps are to issue summons and set court dates, said Nandor Vadas, a deputy district attorney for Humboldt County.

"I don't believe this has been done before in this county," he said. "We felt it was appropriate at this time to file a complaint."

In a statement released Tuesday, Pacific Lumber president and chief executive Robert Manne said the company had agreed to "unprecedented environmental and monitoring restrictions," and that the environmental protections it has in place include "stringent protections addressing harvesting on unstable slopes."

Manne said Pacific Lumber is being singled out in an effort to keep the company from operating profitably.

"Nevertheless, we are determined to prevail, and will take this opportunity to demonstrate once again that not only have we not done anything wrong, our scientists and employees have created a model of how a timber company can operate profitably and responsibly."

Humboldt County sues Pacific Lumber

GLEN MARTIN / SF Chronicle 26feb03

The Humboldt County district attorney is suing Pacific Lumber Co., charging that the big timber firm lied to government agencies about its logging plans after completion of the historic Headwaters Forest agreement in 1999.

The suit alleges that the company filed fraudulent data to support its Environmental Impact Report, resulting in "major landslides causing destruction to ancient redwoods, serious harm to Humboldt Bay, and serious harm to streams, bridges, roads, homes and property rights of the people of Humboldt County."

The office of District Attorney Paul Gallegos filed six counts of fraud and deceptive concealment charges in the civil suit against Pacific Lumber, claiming the company misrepresented data supporting its EIR, it was required to file in 1999.

The suit, filed in Humboldt County Superior Court in Eureka on Monday, claims Pacific Lumber used unfair business practices to deceive state and federal agencies by submitting false landslide data so it could log about 100, 000 trees on unstable slopes.

The company also suppressed "corrective" data that would have required a review of the final EIR, the suit claims.

The suit has far-reaching implications. If successful, it would vindicate long-standing claims by environmentalists that the scope of the company's harvest is devastating North Coast watersheds and streams. It would also form the basis for a new series of lawsuits that could force the company to change its logging plans.

Pacific Lumber President and CEO Robert E. Manne called the lawsuit "disappointing and distressing."

"There is no factual or legal basis for these allegations," Manne said. "There is no substance to the complaints."

The district attorney's office, Manne added, "has obviously been misled and misinformed as to what actually transpired in the development of (the firm's logging plans). The result is that the complaint contains many inaccuracies and misrepresentations."

200,000 ACRES OF TREES

Pacific Lumber, headquartered in Scotia, owns approximately 200,000 acres of forestland, mostly redwoods, in northwestern California. Three years ago, the company completed a deal with federal and state governments over preservation of the Headwaters Forest, a stand of old-growth redwoods in Humboldt County.

For some, the lawsuit was a big surprise.

Ken Miller, a Humboldt County physician and a director of the Humboldt Watershed Council, a local environmental group, said the DA's move was totally unexpected.

"(Gallegos) came into office saying he wanted to ease up on prosecution of medical marijuana and concentrate on methamphetamine, things like that," said Miller, whose group long has opposed Pacific Lumber's logging plans. "I don't really recall a strong environmental platform, though."

Miller said the district attorney's suit "is about the biggest thing to hit this issue. It's bigger than Redwood Summer (the mass protests against redwood logging in the 1990s). It's big because it's a fraud action, not an environmental suit. It puts integrity back into local government. People have been really disheartened up here by the lack of courage on the part of regulators and politicians. This D.A.'s office is a true inspiration."

But Tim Stoen, the assistant district attorney who is leading the litigation, said it was not his intention to start a crusade when he filed the suit.

"I faced an existential choice when the Jordan Creek matter (a watershed that is part of Pacific Lumber's logging plans) came across my desk," Stoen said. "I could (pursue) it or not -- and when I looked into it, it seemed like it was a matter that should go before a judge."

Stoen said his office is seeking a $2,500 civil penalty for every tree cut under Pacific Lumber's 10-year harvest plan for the disputed parcels, which encompass about 100,000 trees. Up to 30,000 trees have been cut, Stoen said. That means the firm could be liable for as much as $75 million in penalties.

As far as his suit serving as the basis for future litigation, Stoen said, "That was not my intention. If that happens, it's collateral. I have a lot of respect for Pacific Lumber and their attorneys."

'LIES AND DECEIT'

Nevertheless, said Cynthia Elkins, the program director for the Environmental Protection Information Center in Garberville, Mendocino County, the suit has implications beyond its immediate goal.

EPIC has also filed a lawsuit against Pacific Lumber's logging plans, though its litigation is based on environmental, rather than fair-business, statutes.

"If the county's suit is successful, it will show that the whole Headwaters deal was approved on lies and deceit," Elkins said. "That would mean that all the (environmental concessions) approved under the deal were illegal."