As Maxxam/PL has skated on the edge of fiscal collapse, depleting its timber resource base to service its massive debtload, it has also logged well beyond the edge of watershed stability across broad areas of its timberlands. Maxxam/PL's logging has caused extensive damage to streams and river systems, resulting in increased flooding and runoff and an ensuing uprising among downstream residents that has prompted remedial action by the North Coast Regional Water Quality Control Board (Water Board). In December 2003, the Water Board directed its staff to develop waste discharge requirements for the Elk River and Freshwater Creek watersheds to repair the damage from the cumulative impacts of Maxxam/PL's high rate of logging. Some time later, the Water Board issued an order allowing the company to harvest part of its intended volume in Elk and Freshwater under interim standards even though the waste discharge requirements had yet to be completed. This order was reversed by the State Water Resources Control Board following an appeal by the Environmental Protection Information Center (EPIC) and the Humboldt Watersheds Council.
Maxxam/PL has sabotaged the Water Board's proposals in every way imaginable. After its dilatory responses to the Water Board's requests for information were unsuccessful in preventing the Water Board from initiating the process for the adoption of adequate standards to protect watersheds, Maxxam/PL turned to litigation and, in a very controversial move, successfully convinced Humboldt County Judge Bruce Watson to issue an injunction on September 13 preventing the Water Board from taking any action on the proposed waste discharge requirements until Maxxam/PL's case challenging the Water Board could be heard on its merits. That case will be heard on Thursday, December 8, at the Humboldt County Courthouse in Eureka at 8:30 AM, at which time the court will also hear Maxxam/PL's appeal of the State Water Board order preventing further logging in Elk and Freshwater under the interim standards.
Thus far, Maxxam/PL has sought to blame the Water Board for the company's cash flow problems and is expected to do so again in court. But the analysis completed by State Water Board economist Michael Gjerde demonstrates that it is Maxxam/PL's high rate of harvest, combined with a highly leveraged business model, and not regulatory requirements, that have created the company's fiscal crisis.
