By Mary Slosson
SACRAMENTO, July 17 (Reuters) - Logging company Sierra Pacific Industries agreed to pay the United States $122.5 million in damages to settle a lawsuit over a 2007 wildfire that was among the most devastating in California history, the Department of Justice said on Tuesday.
The settlement is the largest ever received by the United States for damages caused by a wildfire, the so-called Moonlight Fire that charred 65,000 acres in September 2007.
The blaze was sparked by employees of the logging company and a contractor who struck a rock with a bulldozer, prosecutors said, sending sparks into the dry ground on a day the National Weather Service had issued a red flag warning, indicating a high fire danger.
The smoldering fire went unnoticed because the employees skipped a company-required fire patrol, prosecutors said.
"Instead, the designated fire watch left the work area and drove 30 minutes away to get a soda. When he returned over an hour later, there was a 100-foot wall of smoke billowing from the work area," the Department of Justice said in a statement.
Sierra Pacific Industries denied responsibility for the fire, but could not be reached for comment on Tuesday.
The settlement will include a $55 million cash payment and 22,500 acres of land in California owned by Sierra Pacific. The U.S. Forest Service will choose the land, which prosecutors said is expected to bridge gaps between existing national forests and will support critical watersheds and sensitive species habitats.
The Moonlight Fire scorched more than 46,000 acres of national forests in September 2007, killing more than 15 million trees on public land, some of which were more than 400 years old. It also destroyed thousands of acres inhabited by sensitive species including the California spotted owl.
"The Moonlight Fire was a devastating blow to National Forest land here in California," U.S. Attorney for the Eastern District of California Benjamin B. Wagner said in a statement.
"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."
Sierra Pacific Industries owns nearly 1.9 millions acres of timberland in California and Washington state and is the second largest lumber producer in the United States, according to the company. (Editing by Tim Gaynor and Todd Eastham)
Gila National Forest Fire
This image provided by the U.S. Forest Service shows a May 29, 2012 photo, of the massive blaze in the Gila National Forest is seen from Cliff, N.M. Fire officials said Wednesday the wildfire has burned more than 265 square miles has become the largest fire in New Mexico history. (AP Photo/U.S. Forest Service)
Gila National Forest Fire
In this Tuesday, May 29, 2012 photo provided by the U.S. Forest Service, a firefighter walks along a burn out line as part of an effort to contain the nation's largest wildfire in the Gila National Forest in New Mexico. More than 1,200 firefighters are battling the blaze that has charred 340 square miles, or 218,000 acres, of terrain in the rugged mountains and canyons of southwestern New Mexico. (AP Photo/U.S. Forest Service, Mark Pater)
Little Bear Fire
Smoke billows from the Little Bear fire in southeastern New Mexico near Ruidoso, Saturday, June 9, 2012. Spanning only a few acres on Wednesday, the Little Bear fire began to grow Friday as spot fires formed outside established fire lines due to windy conditions. By Saturday morning, about 10,000 acres had been charred northwest of the mountain community of Ruidoso. (AP Photo/Roswell Daily Record, Mark Wilson)
Luce County, MI Fire
In this Saturday, May 26, 2012 photo provided by the Michigan Department of Natural Resources, a wildfire burns in Michigan's Upper Peninsula. The fire that began last week has burned 95 structures, with a third of them being homes or cabins. The Michigan Department of Natural Resources said Monday, May 28, 2012, that the Duck Lake Fire has burned more than 22,000 acres, or 34 square miles, in Luce County. (AP Photo/Michigan Department of Natural Resources)
San Bernardino Fire
Firefighter Scott Abraham, of the San Bernardino County Fire Department, sprays water as his crew tries to keep the fire from crossing a San Diego County road Friday, May 25, 2012, near Julian, Calif. The blaze broke out Thursday afternoon east of Julian near Banner Grade. About 100 homes were temporarily evacuated in the Shelter Valley area along Highway 78 during the early stages of the fire but that order was lifted late Thursday. (AP Photo/Gregory Bull)
CORRECTS DATE - Firefighters battle a wind-driven fire that has destroyed at least two homes and a number of outbuildings in Topaz Ranch Estates, south of Gardnerville, Nev., on Tuesday, May 22, 2012. (AP Photo/Cathleen Allison)
Fire burns through trees on the Hewlett wildfire in the Poudre Canyon northwest of Fort Collins, Colo., on Thursday, May 17, 2012. More than 50 homes were evacuated on Thursday. The fire has grown from 1.5 square miles to 8 square miles in the last day as erratic wind gusts of up to 50 mph moved into the area fueled by thunderstorms that didn┬'t produce rain. (AP Photo/Ed Andrieski)
Smoke from the wild fire can be seen from Spring Valley as the sun goes down and firefighters try to protect the town of Crown King Wednesday, May 16, 2012 in Crown King, Ariz. (AP Photo/The Arizona Republic, Tom Tingle) MARICOPA COUNTY OUT; MAGS OUT; NO SALES
The Gladiator Fire burns in the Bradshaw Mountains in Prescott National Forest, Ariz. on Wednesday, May 16, 2012. Authorities are worried that flames from the Gladiator Fire will get past a fire line that's about a mile west of the historic mining town of Crown King, fire incident spokeswoman Loretta Benavidez said Tuesday night. (AP Photo/The Arizona Republic, David Wallace) MARICOPA COUNTY OUT; MAGS OUT; NO SALES
Lower North Fork Wildfire
Smoke envelops trees on a ridge in the Lower North Fork Wildfire as it burns in the foothills community of Conifer, Colo., southwest of Denver on Tuesday, March 27, 2012. Firefighters are now able to actively battle the blaze on the ground that started on Monday and has already destroyed at least 16 homes in the rugged terrain. (AP Photo/David Zalubowski)
Emergency personnel respond to a wildfire in Reno, Nev. Friday, Nov. 18, 2011. Nevada firefighters are battling a wind-whipped wildfire that has already burned several homes and caused several injuries. Reno Fire Chief Michael Hernandez sayfire crews are having a tough time "getting ahead of" the 400-acre blaze. He also says flames broke off into two areas in Caughlin Ranch. Hernandez says about a dozen homes have burned. (AP Photo/The Reno Gazette-Journal, Tim Dunn)
A firefighter tries to keep back the flames, whipped by strong winds, in Reno, Nev. Friday, Nov. 18, 2011. Nevada firefighters are battling a wind-whipped wildfire that has already burned several homes and caused several injuries. Reno Fire Chief Michael Hernandez sayfire crews are having a tough time "getting ahead of" the 400-acre blaze. He also says flames broke off into two areas in Caughlin Ranch. Hernandez says about a dozen homes have burned. (AP Photo/The Reno Gazette-Journal, Tim Dunn)
A tree burns in the ravine along Manzanita Lane near Broken Arrow in Reno, Nev. Friday, Nov. 18, 2011. Nevada firefighters are battling a wind-whipped wildfire that has already burned several homes and caused several injuries. Reno Fire Chief Michael Hernandez sayfire crews are having a tough time "getting ahead of" the 400-acre blaze. He also says flames broke off into two areas in Caughlin Ranch. Hernandez says about a dozen homes have burned. (AP Photo/The Reno Gazette-Journal, Liz Margerum) NEVADA APPEAL OUT; NO SALES
In this Sept. 5, 2011 file photo firefighters battle a wildfire on Highway 71 near Smithville, Texas. Despite a recent lull in fire activity statewide, the threat remains in parts of Texas, so the Texas Forest Service is not declaring an end to the wildfire season that started Nov. 15, 2010. (AP Photo/Erich Schlegel, File)
File - In this Sept. 5, 2011 file photo, firefighters battle a large wildfire near Smithville, Texas. Long before this month's historic wildfires in Texas, the state's forest service came up with a $20.4 million plan to stop the flames from starting or tamp them out before small blazes grew deadly and destructive. Three years later, the plan is still only half-funded. (AP Photo/Erich Schlegel, File)
File - In this Sept. 5, 2011 file photo firefighters battle a wildfire on Highway 71 near Smithville, Texas. Scorching temperatures, strong winds and dry vegetation are turning Texas wildfires into fast and furious dangers that hop from place to place within hours, even minutes, and give residents little time to flee. Now it
Okefenokee Swamp Fire
In this June 9, 2011 photo provided by the US Fish and Wildlife Service, the Honey Prairie fire is seen burning in the Okefenokee Swamp in southeast Georgia. A wildfire started by lightning in the Okefenokee Swamp is still smoldering and sputtering six months after it started. (AP Photo/ US Fish and Wildlife Service, Howard McCullough)
In this photo taken Oct. 3, 2011, fire and smoke cast a glow as a wildfire burns behind Tuscarora, Nev. about 52 miles northwest of Elko, Nev. (AP Photo/Elko Daily Free Press, Ross Andr├ęson)
In this photo taken Oct. 3, 2011, a firefighter takes a photograph of a crew member as they wait to for orders to move in for ground work as the Dunphy Complex Fire burns just outside Tuscarora, Nev., about 52 miles northwest of Elko, Nev. (AP Photo/Elko Daily Free Press Ross Andr├ęson)
Pagami Creek Fire
In this aerial photo, an area of the Pagami Creek wildfire shows active burning and creates a large smoke plume on Tuesday Sept. 13, 2011 in the Boundary Waters Canoe Area Wilderness in Northeastern Minnesota. The haze from the fire was heavy enough that some people reported burning eyes and difficulty breathing in the Chicago area, 600 miles south of the forest fire, the National Weather Service said. (AP Photo/The Duluth News-Tribune, Clint Austin)
A wildfire is seen at a national reserve in Brasilia, Brazil, Monday, Sept. 9, 2011. Drought, high temperatures and low humidity have caused wildfires at several places around Brasilia, according to officials. (AP Photo/Eraldo Peres)
A large wildfire to the southwest of Tehachapi, Calif. burns on Sunday, Sept. 4, 2011. A single-engine Cessna 210 went down in Blackburn Canyon near the small community of Tehachapi, sparking a raging brush fire that sent up a huge plume of smoke visible for miles around, according to Kern County fire department spokesman Cary Wright. (AP Photo/Dave Mills)
Possum Kingdom Lake Fire
A wildfire roars through dry trees near Possum Kingdom Lake, Texas, Wednesday, Aug. 31, 2011. Texas and Oklahoma are in the grips of a record-setting drought, and a summer of soaring temperatures and little rain has meant the wildfire season, which usually ends in spring, didn't end this year. (AP Photo/LM Otero)
A wildfire burns near 63rd and Sooner Road on Tuesday, Aug. 30, 2011, in Edmond, Okla. (AP Photo/The Oklahoman, Chris Landsberger)
Air Depot Wildfire
Cattle move to avoid the flames of a large grass fire in a farm off of Air Depot between 63rd and Wilshire in Oklahoma City, Tuesday, Aug. 30, 2011. Authorities have evacuated a larger area in Oklahoma City where a stiff winds and dry conditions fueled a wildfire that destroyed several homes. (AP Photo/The Oklahoman, Paul Hellstern)
Santa Barbara Wildfire
In this Nov. 14, 2008 file photo, a firefighter sprays water on the flames as a mansion burns during a wildfire in Santa Barbara, Calif. As part of the recently approved California budget, owners of rural homes will be assessed a $150 annul fee for fire protection covered by the California Department of Forestry and Fire Protection. (AP Photo/Mark J. Terrill, File)
The Monument Fire
The Monument fire burns Thursday afternoon June 16, 2011 near Hereford, Ariz. Authorities say the Monument fire has charred more than 9,300 acres or 14 square miles. (AP Photo/The Arizona Republic, Pat Shannahan)
Sierra Vista Wildfire
Fire trucks escape the flames near South Andalusian Way after the fire jumped State Route 92 as a wildfire burns on Thursday, June 16, 2011 near Sierra Vista, Ariz. (AP Photo/Arizona Daily Star, Dean Knuth)
The Wallow fire burns towards Eagar, Ariz, north of Greer, Ariz,, Wednesday night June 8, 2011. The fire in eastern Arizona that already forced thousands from their homes headed Wednesday for a pair of transmission lines that supply electricity to hundreds of thousands of people as far east as Texas. (AP Photo/Rob Schumacher/The Arizona Republic)
In this June 10, 2011 file photo, a forest burns during a backburn operation to fight the Wallow Fire in Nutrioso, Ariz. The West's 2012 wildfire season exploded in earnest last month with a wind-whipped blaze that killed three people in rugged alpine canyon country near Denver. At its peak, it took a 700-strong federal firefighting team a week of labor, day and night, to tame the blaze _ and other states throughout the West took notice.Fire experts say this year's drought, low snowpack and record-high temperatures in much of the West portend a dangerous installment of what has become year-round wildfire threat. (AP Photo/Marcio Jose Sanchez, File)
Arizona Wildfire Is Largest in State's History
The massive wildfire in Arizona is now 750 square miles and beginning to threaten towns in New Mexico.
Wildfires Sweep Through Colorado
Firefighters struggle to battle a huge fire in an inaccessible forest near Fort Collins, Colorado.