SPI narrowly escapes government bounty hunters
At least 150 families in Plumas County are probably breathing a sigh of relief right now. They are the people whose livelihood depends on a paycheck from the Sierra Pacific Industries lumber mill in Quincy.
Sierra Pacific agreed to a settlement with the federal government last week that could cost the company more than $122 million in cash and land for its role in the 2007 Moonlight Fire. The fire burned 65,000 acres, including 45,000 acres in the Plumas and Lassen national forests.
The government was seeking more than $700 million in damages from SPI. It was a dollar figure that SPI officials said would have amounted to a financial death penalty for their company.
Would the family-owned business, ranked in the upper half of the Forbes Fortune 500 list of private companies, have filed bankruptcy in the face of a $700 million bill? Maybe not. Would it look to move its operations outside of over-regulated California? Perhaps. We certainly hope it doesn’t but we couldn’t blame the company if it did.
We feel that the government’s request for $700 million in damages was an outrageous amount. It was about eight times more than the timber was worth before it burned. Even if you consider the “ecosystem” value of the land, the $700 million price tag was excessive. It was nearly seven times more than the second-largest forest fire settlement in U.S. history, the 2000 Storrie Fire. And “ecosystem” damage was factored into that settlement.
Sierra Pacific still insists it had no role in the fire. Its attorneys were chomping at the bit to prove it in court. But a judge’s ruling that SPI could have been found liable even if it didn’t start the fire left the company with no alternative other than to accept the settlement.
The company said the settlement — which represented a fraction of what the government was seeking — proved that it had a good case.
Sierra Pacific said it was named as a defendant in the case just two days after the two-week fire started — long before any investigation was conducted to find the cause of the fire. SPI said the government had a “bounty hunter” mentality — choosing to go after Sierra Pacific because it had the deepest pockets.
Sierra Pacific attorney William Warne said it was only because of the company’s deep pockets that it was able to stand up to the federal government’s legal barrage. “Thankfully, I was representing a client that was able to vigorously defend itself,” Warne said. “We think there is a bounty hunter mentality presently threatening the jobs of thousands of California residents, and the financial security of thousands of California property owners.”
Sierra Pacific’s director of corporate affairs, Mark Pawlicki, said the federal government exploited ambiguities in California law on fire damages. “Current law is being misused in an effort to ignore the actual value of property,” he said.
Sierra Pacific said it has proof that it didn’t start the Moonlight Fire. And the company said it is looking forward to trying the case in state court, where stakes aren’t quite as high. CalFire is looking to recover about $8 million to pay for its costs of fighting the fire.
“Oftentimes, when a case is settled that is the end of the story,” Warne said. “But that is not the case in this situation.”
If a civil court jury decides that Sierra Pacific wasn’t responsible for the fire, what happens next? Will the federal government refund any or all of the settlement? We’d like to think it would but we know it won’t.