up next on a second look, the nation's last totally owned company town is poised to move two private ownerships. today we visit the town of sosha. we visit his rich history as the center of environmental controversy. we also recall the earthquakes two decades ago that shook its foundation and the fire that threatened its economic core. all that straight ahead tonight on a second look. good evening i'm julie haener, and this is a second look. new year's eve marked a new day in the tiny humble county

village of sosha. it went from being the last wholly owned company in america to one on the road to public ownership. the owner built the company in sosha for its residents. now a five member governing council will run sosha. and the people who rented the company homes will have a chance to buy them. ktvu randy shorthand sreul talked to the people there. >> it's just before noon in the tiny town of skosha. the noon whistle blows, 2/3 of the work force have been laid

off in recent years. >> my dad worked here over 40 years. >> reporter: keith miller worked at pacific lumber for 29 years. but now jobs are disappearing. the town of skosha the entire town is up for sale. >> i'm very sad. very sad. i lost a lot of friends around here. very sad i i've seen a lot of people walking out with tears in their eyes. >> scosha is the last private town in america. the company soared -- >> everybody knows who you are, what you drive. where you live. >> reporter: and so are churches and elementary schools. >> what more can you ask for? you have a beautiful town, a

market, a gym, a school, a playground. everything is safe and secure. >> reporter: residents say it's a modern mayberry. and the company they say looks out for them. >> your grandmother worked for them. >> yeah. >> father. >> yes. >> mother. >> yes. >> and you. >> me, brother, sister. >> and they all lived in scosha. they told us that in recent years that pacific lumber has been money first, people last. the company plans to sell homes. >> people are going to get -- and it's the little guys.

>> reporter: that scosha has survived as long as it has is remarkable. it has survived fires and per happen it is biggest threat of all the environmental ruling. ten years ago, pacific lumber looked like this. with it's processing fee all the time. now shut. >> pacific lumber has had more violations for state forestry violations than any other company in california. >> reporter: are pacific lumber was sold to texas financiers. environmentalists said that's when they started getting greedy. started cutting more traoáes than ever and cleared cut one of itses redwood forests. >> they came here and treated our coast like this economic

colony. that they could just till it, profit and move on. >> reporter: when pacific lumber tried to cut down ancient trees, a controversy broke out. to preserve the forest, a state and federal government bought it for almost half a million dollars. the deal also added new logging restrictions, pacific lumber now says it's staying dry. >> there's a lot of empty houses right now,. >> sad, it makes me think about how it used to be. >> reporter: how it used to be. the 1950s, they called it paradise with a waiting list. a picture perfect town, but now -- >> the town of scosha is just a

pond. a much bigger game of corporate razzle-dazzle. >> the afternoon whistle. the end of the workday. >> still to come on a second look, the controversy over one of the oldest redwood forests in the world. and a bit later, the natural disaster of 1992 that brought humble towns to their knees.

tonight we're taking another look at a pacific town in sosha. now sosha moves into becoming

private ownership. this is the head quarter slope of ancient redwood seed. the most ancient grow in the world. most of these trees are 500 to 1,000 years old. some are 2,000 years old, here before the birth of christ. not so long ago these living skyscrapers were not unusual part of a more than 2 million- acre forest. but in the last 550 years loggers have forested 65% of the old growth -- leaving less than 150 acres and much of that is in protected heart land such

as this. tall trees but cleared undergrowth for sightseeing and picnics. the 3,000 acres are different, you have to trudge through. and and it's privately owned by the pacific lumber company. the slash on each tree means ready for harvest. >> i believe we have enough forest preserved for everyone to enjoy. >> does that private company pacific lumber have the right to shut them down. we are in a business to make money. >> for more than 250 years, the pacific company was the model for responsible logging. the family owned company cut less and planted more than its competitors yet still managed

to make a profit. but in 1986, texas financier tied junk bonds to take over. after the costly take over, herwood needed to do something. so he ordered pacific lumber to accelerate its tree cutting, cut more, sell more. in fact, almost overnight pacific lumber doubled the rate of its tree cutting. pacific lumber officials acknowledged the accelerated cutting included clear cutting some old growth forest. the company focused on old forests because it could be worth up to $100,000 a tree. but for almost a decade now, environmentalists have prevented the cut down of trees. >> you have to make a transition from cuing down

these forests. we need to rebuild our fisheries. >> reporter: these animals are what analysts are pinning their legal hopes on. hoping the courts will agree with them that if pacific lumber harvests here, animals such as the tailed frog and salmon could become even more endangered than they already are. because there are no laws protecting forests, environmentalists will protect the forestings. >> these animals have become dependent on the the structures of the forest which does not

defend on a farm. that doesn't exist in the second world tree farm. >> reporter: but several years ago, environmentalists said it's the same thing about the spotted owl. now they acknowledge the owl can survive in second growth forest. pacific lumber says other species can survive too. >> i believe the law of nature, is the animals are at adaptable to change just like humans are. >> reporter: environmentalists fear that the loggers will cost their lives. >> they've been paying taxes for 20 years, 25 years on what they want to cut. >> reporter: federal and state officials are offering charles herwood incentives not to harvest. or trading government timberlands in the head waters,

but environmentalists feel that would be rewarding a robber baren. the federal deposit insurance corporation fdic is suing for $250 million for herwoots role. but herwood who declined our request for an interview has said he is not guilty. >> i think the majority of what is said about mr. herwood is not true. i think the majority of people who are saying bad things have never met mr. herwood, i know mr. herwood. he is very kind, very gentle person. >> a gentle man who drives a

hard bargain. >> federal negotiators announced a deal with ancient redwoods just weeks after andy's report aired. john sasaki -- >> state and federal officials announced this morning they have reached an agreement to save the hedge waters grove. it is the largest privately owned region in the world. >> it's a a win for pacific harvesting company, and it is a win for the people of the north coast of california. >> reporter: the plan calls for a head waters preserve that will be owned by the state of california. it will contain 7,500 acres of land. and a new edition of the

ancient forest known as springs. in return pacific lumber company could get about $380 million in cash, property and other assets. washington who put up to 1/3 of that bill. >> i just pointed out, this forest would see about 3,300 acres total. it is seven times bigger. pacific lumber has planned to start logging removing already fallen trees. >> i know people said, don't take more than 600 acres. you have to do it all. that's not possible to do. >> they say this agreement will

not do enough to protect the redwood or protecting wildlife. the man at the center of the wildlife debate joined senator feinstein for this morning's news conference. >> it has been a tough negotiation. it is a fair settlement. we are pleased with what we think everybody should be happy with. >> legal battles over the forest agreement continue for the next decades. pacific lumber sold in 2007. a new company inherited the town of sosha. sosha was the last company town in the united states. when we come back on a second look, we remember the massive massive effort quake that hit in 1992 and devastateed the town of skosha. how people began the recovery from that huge earthquake.

when an earthquake shook the town of sosha many people did not know it would have an aftermath. it had already done enough damage to be the biggest. >> standing in the arch way didn't work. i went around the corner to hug it as i was hugging a baby. it was really throwing us around severely. >> reporter: this victorian house was one of 16 that fell off its foundation. these stairs used to lead up to the front door. and this house used to have a

basement. not anymore. >> the home was on the national list of historic places. in one section a beam from the foundation literally punched through from once beautiful hardwood floors. what may be more incredible is this fish tank was inside the house when the quake hit. it doesn't even have a scratch. just about a mile down the road is a small town town of ferndale, it's only one block long, but 80% of the businesses on main street suffered some type of damage. the entire brick facade of this grocery store tumbled to the ground when the quake hit. >> when we were having our celebration, there were quite a few people on the street. the parade had just ended.

we were commenting to one another what a beautiful day it was when the shaking started. it became very violent, we were panicked after that. >> reporter: when a series of earthquakes hit humble county it was especially hard on some of the smallest communities. already hard hit by the recession of the early 1990s. one of those towns was skosha which lost its town center not from the earthquake but from a fire that soon followed. >> reporter: the people of scosha thought they had made it through the worse, yesterday morning's earthquake. then another earthquake at midnight that broke gas lines and the tiny town's shopping center went up in flames. pacific lumber company owns scosha and all the buildings in it. six stores burned down in the shadow of the company north. volunteer firemen from all over

the area fought the blaze and battled exploding ammunition. >> we will make it through this one and we'll survive and rebuild. >> reporter: these are hard times for the people of scosha. earthquake damage forced many of them from their company owned houses. >> i've heard stories -- just makes you feel real small, real small. >> reporter: across the eel river, the mayor call it is town simply a disaster. >> people don't know what to expect right now. most of these people are just out in a daze. but take yesterday morning when the first one hit at 11:06. there was probably

approximately 1,000 people down there. >> reporter: at water main broke and people have been here without water. not the first earthquake, not the second, but the third earthquake knocked this home off its foundation. >> the last jolt just took it. >> reporter: many are living in cars or shelters. they are badly shaken. >> i'm not feeling very good. i went through the one in 71 in los angeles. the one in los angeles is nothing scared to this. people are out on the street. when we come back to a second look. george watson tells us how the area begins to recover just after that massive 1992 earthquake.

as we look back tonight at the town of scosha we remember the earthquake that devastated the area in 1992. a few days after the quake and

the powerful aftershocks that followed. george watson reported on the recovery that has already begun in the area. >> the sound of children laughing and playing is a good sound that the town of scosha is on the way to recovery. after the earthquake, i'm told the children were scared, too scared to go out to play. >> there's still a lot of trauma. the kids, i think it's been good that they ever getting back together and talking amongst themselves. yesterday we had some help with people in eureka. people came to tell them how to deal with the earthquake.

>> reporter: quake knocked out power. >> we hope to go back online as soon as possible. >> reporter: while life slowed and some company owned homes stand in crooked testimony to the power of the quake. the people of scosha know they'll need a lot of time and help to recover. in the neighbors town of rio dell, boarded up shops look better and they are back open for business. scosha in particular are no strangers to natural catastrophes. there have been many significant earthquakes in the region and in 1964 a flood wiped out several homes and at the mill destroyed more than 20 million feet of lumber. the latest set back is worse. the company that actually owns scosha is still shut down. but the feeling still seems to

be we'll get over it. we'll survive. >> that's it for this week's second look. i'm julie haener, thank you for watching. wait, what? and only 3 likes? honey, it's embarrassing. carol's son got over 12 million views on that dancing squirrel video. don't you want that? i...i suppose. now go make your dad and me proud. try something funny. [ male announcer ] now everyone's up to speed. get high speed internet for $14.95 a month for 12 months with a one year term. at&t.