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Originally published Wednesday, July 18, 2012 at 11:16 AM

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Company to pay nearly $50M in Calif. wildfire

California's largest timber company has agreed to pay nearly $50 million and donate 22,500 acres of land to settle a lawsuit over a 2007 wildfire that destroyed about 65,000 acres in Northern California.

Associated Press

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SACRAMENTO, Calif. —

California's largest timber company has agreed to pay nearly $50 million and donate 22,500 acres of land to settle a lawsuit over a 2007 wildfire that destroyed about 65,000 acres in Northern California.

Sierra Pacific Industries denied liability, despite agreeing to the settlement announced Tuesday. Federal prosecutors said the Moonlight Fire was caused by two unsupervised employees who operated bulldozers on a red-flag warning day with high fire danger.

U.S. Attorney Benjamin Wagner said company contractors working on private land failed to follow fire regulations, sparking the blaze that burned for more than two weeks and consumed more than 46,000 acres of public land in Plumas and Lassen national forests northwest of Lake Tahoe.

Wagner characterized the settlement as the largest federal recovery ever for damages caused by a forest fire.

"What was lost was priceless and will not return for over a century. The recovery in this case will help start the process of making the public whole," he said in a statement.

William Warne, a timber company attorney, said federal prosecutors would not have been able to prove at a trial that the company was responsible for the fire, but a judge's pre-trial ruling led attorneys to believe Sierra Pacific might be forced to pay damages anyway.

The case is part of a broader battle over limiting the amount of damages that government agencies can recover from private companies when fire damages public land. California law allows courts to award damages up to three times the value of the trees or estimated value of the damage to public land.

Gov. Jerry Brown, a Democrat, was unsuccessful this year in establishing a limit as part of the latest state budget. Federal officials and environmentalists opposed the legislation, which is likely to be debated again this year in the state Legislature.

"Current law is being misused in an effort to ignore the actual value of property, highlighted here by the fact that the federal government initially demanded an amount eight times the pre-fire value of the property," Mark Pawlicki, Sierra Pacific's director of corporate affairs, said in a statement.

Wagner's office claimed employee negligence led to the growth of the fire. The person who was designated to watch for fires left the work area and drove 30 minutes to get a soda, and when he returned more than an hour later, there was a 100-foot wall of smoke, he said.

In addition, there was no access to fire suppression equipment at the site, Wagner said.

He estimated firefighting costs at $22.5 million.

The settlement includes a cash payment of $47 million from Sierra Pacific, a $7 million payment from private landowners and managers of the property where the fire started, and $1 million from the logging contractor.

Wagner estimated the value of the land at $67.5 million, but Sierra Pacific challenged that number, noting the U.S. Forest Service has not yet selected the land to be donated.

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