Gov. Jerry Brown tucked provisions into his budget that would limit payouts in wildfire liability cases, potentially saving timber companies and other major California landowners hundreds of millions of dollars as federal prosecutors pursue record-high damages in court.
The Democratic governor also asked lawmakers to impose a 1 percent lumber tax to fund forestry oversight while reducing industry costs. And he wants to reduce the frequency with which California reviews tree-cutting plans for environmental impacts.
Brown pitched the ideas as ways to help the state's timber industry provide jobs after a construction downturn and fierce competition with producers from the Pacific Northwest. He also highlights $30 million in new lumber tax funding for environmental reviews that have gone missing due to budget cuts.
But the plan has drawn strong opposition from the Sacramento-based U.S. attorney's office, which is aggressively pursuing wildfire negligence cases, as well as some environmentalists who contend Brown is giving the industry too much.
Brown's legislation addresses wildfire lawsuits filed by government agencies. It would more narrowly tailor criteria for calculating wildfire damages and seeks to focus awards on restoration costs. Federal courts generally rely on state laws to determine wildfire damages.
U.S. prosecutors suggested the proposal could affect their pending case against the state's largest landowner, Sierra Pacific Industries, and other defendants for a 2007 fire in Lassen and Plumas counties where damages could reach $600 million.
The case is slated for trial two days into the next fiscal year, right after Brown is expected to sign the budget.
"This proposed legislation appears to be a fairly cynical attempt by Sierra Pacific Industries to undermine the federal government's position in our pending lawsuit against that company," said U.S. Attorney Benjamin B. Wagner in a statement.
Brown says in his budget that current law "leads to claims far exceeding restoration costs." Federal prosecutors have won unprecedented amounts lately, such as $102 million from Union Pacific Railroad Co. for a 2000 fire in Plumas and Lassen national forests, far above the previous $14 million record. That included money for firefighting and timber loss, plus impacts on recreation, habitat and public scenery. Much of the money pays for U.S. Forest Service restoration work.
The governor's proposal could slice wildfire liability damages by 75 percent or more, according to two experts who did not want to be named because of pending litigation. Resources Agency spokesman Richard Stapler said his office believes the proposal would not affect the 2007 Moonlight fire case, contrary to what the U.S. attorney's office said.
Brown's resources secretary, John Laird, said he has heard complaints from smaller timber companies about the potential for large payouts should a wildfire start on their property.
"I think they're just looking for predictability, and this allows small and midsized timber companies to stay in business," Laird said.
Industry officials say federal prosecutors have gone overboard.
"We feel the current law is so ambiguous that it leaves wide open the possibility of government entities making very large claims not based on any scientific foundation for what the value of the land and resources is," said Sierra Pacific Industries spokesman Mark Pawlicki.
But Gary Hughes, executive director of the Environmental Protection Information Center, called the liability proposal "a direct giveaway from the Governor's Office to the largest landowner in the state."
Timber companies, environmentalists and Brown officials met for months leading up to Brown's May budget.
On April 21, Brown received three contributions from the timber industry toward his November tax initiative, including $10,000 from Sierra Pacific Industries, $10,000 from Green Diamond Resource Co. and $5,000 from the California Forestry Association. Sierra Pacific Industries also gave $46,800 toward Brown's 2010 gubernatorial campaign.
"There's no tie between the two," said Brown spokeswoman Elizabeth Ashford.
The Personal Insurance Federation of California backed legislation in March to reduce liability for tree damage. The insurance group gave Brown's initiative campaign $200,000 on the same day as the forestry groups.
PIFC political director Kelly Calkin said the group's bill, since tabled, was intended to deal with non-wildfire damage, and the group has no interest in the governor's latest plan.
Timber companies must submit harvest plans before cutting trees. For years, activists complained that regulatory agencies such as the Department of Fish and Game have been so poorly funded they cannot adequately judge the impacts tree-cutting will have on endangered species and animal habitat.
Brown's proposal would raise $30 million annually for timber harvest reviews through a 1 percent tax on all lumber sold in California. Republicans, whose votes are needed for taxes, are undecided on the charge. Many have signed no-tax pledges.
The California Retailers Association, which represents Home Depot, is leaning against the plan, said President Bill Dombrowski.
The lumber tax would provide more money for oversight, but also eliminate about $500,000 to $600,000 in fees for timber companies.
"We definitely believe the Department of Fish and Game needs money," said Hughes, "but the timber industry is the only industry as far as I know that would be exempt from paying fees for the permitting process."
Sierra Club California is neutral on the proposal and has concerns, said director Kathryn Phillips. Other environmental groups, such as the Nature Conservancy, are in support.
As much as 70 percent of lumber purchased in California comes from outside the state, according to California Forestry Association President David A. Bischel. The industry believes that a lumber tax would spread costs while raising money for California's timber harvest programs.
He said California timber companies pay multiple times more to file harvest plans than their competitors in the Pacific Northwest. If the state were to push more costs onto the industry, Bischel said it would be harder to compete with companies from beyond California.