Dan Walters

Dan Walters: Rough justice prevails in insidious California land case

Dan Walters
Dan Walters

An insidious political syndrome popped up in California during the 1990s involving large tracts of land whose owners wanted to sell to state and federal governments.

The owners would announce, very loudly, plans to develop their properties, sparking Pavlovian opposition from environmental groups and political pressure to “save” them from a rapacious fate.

Those efforts would culminate in acquisition by the state or federal governments at inflated prices, allowing the politicians involved to polish their environmental credentials and landowners to walk away with big bucks from taxpayers.

It happened in Southern California with Catellus Corp., a spinoff from the Southern Pacific Railroad, which acquired immense tracts of land throughout the state as 19th-century subsidies for laying track.

Catellus erected billboards announcing plans to develop some desert lands, and environmental groups protested that development would harm plant and animal species. Sen. Dianne Feinstein took up their cause and the firm traded 405,000 acres of economically worthless desert to the federal government for valuable property that could be profitably exploited.

It happened in San Francisco Bay when Cargill Corp. swapped and sold 16,000-plus acres of salt flats, getting $100 million based on appraisals that were later denounced by a judge as wildly inflated. The appraisers who participated in the deal were disciplined for unprofessional conduct, but the money still went to Cargill.

And it happened on the North Coast when corporate raider Charles Hurwitz, having acquired Pacific Lumber Co., threatened to cut a tract of old-growth redwoods known as the Headwaters Forest. The environmental groups went nuts, conducting months-long and occasionally confrontational protests, demanding that politicians intercede.

Hurwitz had paid $970 million for Pacific Lumber and its more than 200,000 acres of timberland, but state and federal governments eventually paid him $495 million for just 7,000 acres of it, even though it would have been virtually impossible for him to obtain regulatory permission to cut its trees.

Even so, Pacific Lumber eventually slipped into bankruptcy and the bankrupt company’s litigation trustee, Avidity Partners, sued the state, alleging that a piece of the sales agreement was that the firm could accelerate timber-cutting on its remaining acreage, but that permission was later denied by state agencies.

A Sacramento judge tossed the case without a trial, and last month, a state appellate court agreed.

The judicial decisions dispensed, one could conclude, rough justice. Hurwitz made out like a bandit on the Headwaters Forest, but never got the rest of the deal in a formal contract, so lost the big money from accelerated logging.