Saturday, April 28, 2007

Houston Chronicle - Loren Steffy's Blog

"Humboldt Watershed Council" is very busy lobbying against Hurwitz in every possible forum.

Even on Loren Steffy's Blog
(Photo: Houston Chronicle Reporter Loren Steffy)

January 24, 2007
Sound Off: Pacific Lumber's bankruptcy

If you've followed the Charles Hurwitz saga for a while, you probably know that Pacific Lumber was flirting with bankruptcy for several years. I discuss the bankruptcy in my column today.

One thing I didn't mention in the column, though, is the theory among environmental groups that Hurwitz has purposely kept Palco near bankruptcy.

He did this, the theory goes, because he was siphoning money out of the company. Now first of all, no executive purposely keeps a company near bankruptcy. That's especially true if you're wanting to siphon money out of a company, because when the company goes bankrupt the first thing the creditors will do is look at where the money went.

The environmental groups, though, can't be bothered with such business basics. Here's another one they frequently flub: they want to stop logging on private land, yet they are unwilling to pay to preserve the trees.

If these guys cared so much about nature, why don't they simply buy up the bonds of Palco's Scotia Pacific division? That's the unit that owns the timber land. Then, they could control the trees. They could refuse to sell the trees to Palco or any other lumber company. They could retire the debt and set up a preserve. They could, in other words, put their money where their mouths are.

Why don't they?

He invites readers: Please discuss.

Asked why he doesn't rake Hurwitz over the coals, (Steffy is a reporter for the Houston Chronicle) Steffy responds:

"Actually, I've taken quite a bit of time to study this issue. I've read several books on the Timber Wars, I've reviewed thousands of pages of documents and interviewed quite a few people on both sides of the issue. I have written thousands of words on the topic. It's a remarkable story, but one that's steeped in myth. To portray the "old" Palco as an idyllic, paternalistic company, for example, ignores the changes that were happening before Hurwitz came on the scene. (Tax benefits for selective cut, for example, had been eliminated. Palco was going to have to start clear-cutting to remain competitive.) To imply that Hurwitz's timber harvest rates have remained double or triple those of the old Palco is inaccurate. To say that he destroyed the pension is wrong. Palco still has a defined benefit pension plan, something few companies in America still offer. But none of this matters because the rhetoric has been driving the debate for more than a decade. Hurwitz's biggest mistake was not recognizing the cost of alienating the environmentalists, and for that, he has paid dearly. They will not rest until he is gone. The irony is that their protests and legal challenges have kept him from selling.

Posted by: Loren at January 25, 2007 08:11 AM"

Another excerpt: (from Josh Reiss)
This is in response to the several postings from the Humboldt Watershed Council. In the interest of full disclosure I served as the spokesperson of Maxxam from 1999-2002. I have not worked for the corporation in any capacity since 2004.

Anyone who ever worked at worked at Maxxam in any capacity knows that the bankruptcy of ScoPac was a painful and sad decision, not taken lightly. Nor was it ever a part of a plan as the Council and others have recklessly suggested over the last week and in the post above. Indeed, one need only look at the 10Qs over the past several years at the $ that has moved downstream (no pun intended) to make bond payments as proof that bankruptcy was never planned nor desired. Moreover, if it was planned or desired why on earth would a significant capital contribution be made for Project Scotia to revitalize and modernize the mill. It simply makes no sense to suggest that the intent was to bankrupt.

I have never met Mr. Lovelace (who I assumed posted the above note from the Council). In fairness to him I do believe that he really does care about the Humboldt Community. And I think he has toned down some of the Council's rhetoric and tactics from the past. (For instance,who can ever forget Bob Martel -- Mr. Lovelace's predecessor at the Council -- suing Maxxam in the FDIC case and losing more than 110K of his own money in the process because his suit was frivilous. Or Darryl Cherney declaring on the radio in 2001 that he hoped PL would go bankrupt.)However, I also cannot help but note the irony of several groups such as the Humboldt Watershed Council and others over the last week declaring that they intend to press for the HCP to stay in place. These are the same individuals and groups that did not like the HCP to begin with. Remember the placards HCP=Huge Corporate Profits. Showing up at community meeting to reckle and give a tough time to PALCO scientists who were dedicated 100% to watershed management based on science. Perhaps now these groups can finally acknowledge what PALCO declared accurately for years -- that the HCP was the most environmenatlly senstitive HCP plan ever. Unfortunately no one ever gave the plan a chance to work because the goal of the headwaters movement was never fully met -- acquisition of 200K acres without having to pay a dime for it. That the HCP failed is a true tragedy right up there with the bankruptcy; perhaps ever sadder.

Posted by: Josh Reiss at January 28, 2007 08:26 PM

"O.C.: Sorry if I overlooked a respone to your earlier question. The short answer is that companies filing for bankruptcy have a lot of latitude in choosing a venue. Basically anything that can be considered an operation of the company allows it to file in that jurisdiction. That's the reason that Enron could file in Manhattan, for example. It's also the reason many companies file in Delware -- simply because they're incorporated there. Debtor companies do this all the time, looking for a venue they believe will be more favorable to them.

Posted by: Loren at February 11, 2007 02:17 PM


  1. Where did the $600 million go that paid for the Headwaters? It did not show up on the balance sheet, it did not go to pay off debt, it did not go to modernize facilities, it did not go to purchase additional timber supplies. From people who worked for the company when the payment was made, they have told me the check was delivered to an office with only a desk and secretary in Scotia set up just for this purpose. It was then immediately sent back out. I am open to an explanation by the company. This is not an attack on them. I believe they had the right to do what they wanted with the money. But I am curious where the money went.

  2. You know, I'm learning - is it $480 million or $600 million?
    In 1999 Hurwitz caved in and sold 10,000 acres of Headwaters Forest land to the Department of the Interior for $480 million. The deal was brokered by Sen. Diane Feinstein to preserve the old growth giant coastlal redwoods. In 2002 the FDIC dropped its 250 million action against Hurwitz when the OTM settled their $821 million case under an agreement where Hurwitz paid $206 thousand, made no admissions of wrongdoing, and agreed not to discuss the suit or the settlement.

    There's certainly more to this saga than we have been told here.

  3. If I remember correctly, there was the money put up by the Feds and the money put up by the State. I think that is where the larger total comes from.

  4. Neither amount is correct if you are looking for the amount Palco received. There were other parties that received funds as part of Headwaters. Maybe you could look into this Rose and come up with the answer.

  5. The interesting part of the story is who was involved in pressuring Hurwitz into GIVING them the Headwaters grove. They wanted him to hand it over in return for his "guilt" in the Savings and Loan mess. It didn't matter to them that he had not been found guilty, they said he was, therefore it must be so.

    Big Foundations, powerful activist groups and powerful politicians, including then vice-president Al Gore, right?

    One of the things that people in Humboldt County don't realize is that Hurwitz sued the Feds for their "Debt for Nature" strongarm tactics - and the judge recently ruled in his favor, comparing them to the Mafia. I'll pull up some of the quotes for you. You won't find it on heraldo's blog. There was one story posted at Local Solutions (I think that one of Salzman/.Twombly's groups) - and they had inserted their spin - what was it? Something about the judge being corrupt? I forget.

    The trouble with Ken Miller/"Humboldt Watershed Council" is that he keeps running into the real world. The law is the law, and he doesn't get it right. Thus, it must be that everyone who rules against him is corrupt. Ken. Your issues are your own.

  6. Finally! What a fair and balanced blog, just like Fox News. Even the link to the Houston Chronical smells like money. The only people interested in removing Gallegos THEN are the same angry right wing capitalists with no ethics except for greed NOW. Thank you for reaffirming my stance against corporate greed and corruption.

  7. Oh, and speaklng of money - who's asking for money":
    Industry: Non-Profit
    Location: Humboldt : Ca : United States
    About Me
    PO BOX 28, ARCATA, CA 95518

    Another phony baloney group.

  8. Here's your Fair and Balanced:


    Ya gonna get another kid killed in the forest? Sending 'em out with no training in an area where even seasoned woodsmen can be killed by a falling tree? Then cry foul and use their name for more pleas for money.

  9. If you take the time to read further, you will see that I back up what I say with documents.

    Claiming to be "for the forest" or claiming environmentalist status has been a convenient cloak for you guys, like the sacred cows in India, no one dared question you or your motives.

    But this bunch is as corrupt as anything you have railed against. Just look at Salzman's Plan (Salzman, Stoen and Gallegos' plan) to corrupt the public judicial system by soliciting special interest activist money to fund a public lawsuit. Not one they are paying for themselves because they have no standing, but one they have managed to get their boy, Gallegos to file in the name of the people. Private funding of a public lawsuit. It doesn't get any worse than that.

    A campaign donor in the DA's office helping write the suit. It doesn't get any worse than that. And Ken Miller knew that. That's why he tried to hide it at first.

    There's far more, 1:13. Far more. And that's what this blog seeks to expose.

    Fair and balanced? This blog did not write Gallegos' plagiarized Op-Eds. He did. This blog did not lie to the press about his use of force policy. He did. This blog did not assume false names and write phony letters to the editors of all the local papers - letters that sought to destroy any opposing voices - Salzman did, and he was caught.

    What kind of fair and balanced do you want? The kind where those things are swept under the rug and never mentioned. Censored forever. Why because you still think the Emperor has a beautiful new set of clothes with silk embroidery.


Comments are open, but moderated, for the time-being. Good luck.