SACRAMENTO, CA - The federal government and Sierra Pacific Industries and its contractor have agreed to a $122.5 million settlement for a 2007 forest fire that blackened about 65,000 acres, more than 15 million trees and habitat for sensitive species.

PHOTOS: 2007 Moonlight Fire

The Moonlight Fireburned through Sierra Pacific private land and public land inthe Plumas and Lassen NationalForests for more than two weeks.

The fire began on Sept. 3, 2007. According to federal court documents, multiple instances of failure to follow fire safety steps allowed flames to spread.

According to the documents, two Sierra Pacific and contractor employees used bulldozers on a red flag fire warning day when the National Weather Service advises fire danger is high. The workers were unsupervised. The fire sparked in dry underbrush when a blade on a bulldozer struck a rock.

Fire investigators determined the fire smoldered for a long time butwasn't caught because the bulldozer operators did not patrol for fire per company protocol after they shut down for the day.

Rather, according to court records, the designated fire watch individual drove 30 minutes away for a soft drink. A 100-foot-wall of smoke enveloped the work area when he returned more than an hour later. He didn't have a mobile phone to call in the fire and he didn't have access to fire suppression equipment.

Sierra Pacific and its contractor denied culpability for the fire.

In a response to the settlement, Sierra Pacific said it had been looking forward to trying the case in court but settled because of "a last minute ruling by the trial judge which indicated that the defendants might be liable for a fire they did not cause."

Sierra Pacific also alleged investigative misconduct and said the fight wasn't over.

"Typically, a settlement signifies the end of a dispute, but this is just the beginning," stated Sierra Pacific attorney William Warne.

Per terms of the settlement, the defendants will pay $55 million in cash and turn over 22,500 acres of Sierra Pacific land in California. The U.S. Forest Service will pick the acreage it wants from large selections offered by the lumber company.

Federal prosecutors said the Forest Service spent more than $22.5 million to fight the Moonlight Fire. Some 3,000 fire personnel were involved and several communities were threatened, including the town of Susanville.

U.S. v. Sierra Pacific Industries Inc. settlement pdf accompanies this story.

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