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Potlatch Shareholder Criticizes Dam Stance Salmon Harmed, Environmentalist Says by Theo Francis, The Arkansas Democrat-Gazette May 19, 2000

One day after Gov. Mike Huckabee praised Potlatch Corp. for its environmental stewardship, a shareholder criticized the company for opposing efforts to protect Idaho's endangered wild salmon.

Environmentalist Mark Solomon said Potlatch's opposition to tearing down dams on the 1,040-mile-long Snake River can be blamed in part on its insensitivity to shareholder concerns.

The comments at Potlatch's annual meeting at the Statehouse Conference Center on Thursday came as Solomon introduced a measure that would have put Potlatch's entire board up for election each year. Board members now serve staggered three-year terms.

The motion failed with 84 percent of voted shares against it. Solomon, spokesman of a Spokane, Wash., environmental group, proposed it on behalf of the group's head, John Osborne, who owns 80 shares.

Potlatch defended its board, saying the structure helps protect it from hostile takeovers and allows board members to become familiar with its operations. Moreover, it called its environmental policies sound. On Wednesday, state officials held ceremonies to praise Potlatch for donating 72 acres in southeast Arkansas to the Arkansas Game and Fish Foundation.

About 50 people attended the 11 a.m. meeting, which lasted less than an hour. Potlatch rotates its annual meeting among the four states in which it does business.

Increasingly, advocacy groups are turning to boardroom activism to press points in corporate circles. On occasion, they have allied themselves with shareholders interested in reforming corporate governing structures to improve efficiency. Efforts by colleagues of Solomon have succeeded in passing similar advisory motions at timber companies Weyerhaeuser Co. and Boise Cascade Corp., Solomon and Potlatch officials said.

Solomon linked his group's proposal to a long-running and complex environmental issue: endangered Pacific salmon.

Salmon -- some of them endangered -- swim up the Columbia and Snake rivers from the Pacific Ocean each year to spawn in the streams in which they hatched.

Environmentalists, local Indian tribes and commercial fishermen have long said the rivers' massive hydropower dams stop young salmon from reaching the ocean and keep mature fish from spawning. At the same time, many in the Pacific Northwest depend on electricity from the government-subsidized dams, which also permit commercial shipping, and on their flood-control capabilities.

In June, the National Marine Fisheries Service will release a report evaluating proposals for removing the dams, along with other options for protecting the salmon.

At the confluence of these issues are Potlatch's operations at Lewiston, Idaho. There, near where the Snake and Clearwater rivers meet, Potlatch releases wastewater from its papermaking operation into the stream. Like other environmentalists, Solomon, spokesman for the Rail Roads and Clearcuts Campaign, said "this witches' brew of stuff" -- as hot as 92 degrees and laced with chlorine compounds used to bleach paper -- threatens the endangered salmon.

Without the dam, Potlatch wouldn't be able to dilute the wastewater enough to meet federal clean-water rules, costing it millions of dollars, the group says. Even so, many new paper mills cool wastewater and minimize chlorine use -- something Potlatch might consider if its board changed more often, Solomon said.

"We would hope a natural outgrowth of more democracy [on the board] would be more responsiveness to environmental issues," Solomon said. But Potlatch counters that it could operate the existing plant legally without the dams in place. Its opposition to removing the dams has nothing to do with the wastewater it releases into the Snake River, spokesman Ted Wagnon said.

"Effluent is not a factor in our position regarding those four dams," Wagnon said. "That is simply not an issue."

Rather, company officials worry that losing the dams would send companies like theirs scrambling to find other electricity sources and transportation routes. Moreover, like others that rely on the dams, Potlatch questions whether removing them would necessarily help the salmon.

"That's very questionable," Wagnon said. "But there's no question about the economic benefits those dams bring the entire area."

Thursday's annual meeting is not the first time Potlatch's Lewiston plant has stirred environmental debate.

Apart from the question of dam removal, environmentalists say water from the plant could be hurting endangered salmon. The Land and Water Fund of the Rockies, a nonprofit legal group, has sued the U.S. Environmental Protection Agency to try to force it to assess how dangerous the water is.

"No one has done a scientific analysis of how Potlatch's pollution might affect those species," senior attorney Laird Lucas said.

In other business, shareholders elected to the board Reuben F. Richards, 70, a company director since 1974; Judith M. Runstad, 55, a director since last year; and Frederick T. Weyerhaeuser, 68, a director since 1960 and first-cousin to William T. Weyerhaeuser, 56, a director since 1990 who was not up for re-election this year.

The Weyerhaeuser cousins own about 8 percent of the company's outstanding shares.