Operational Compliance Programs

Potlatch's environmental, health, and safety policy reads as follows:

Each line operation (each unit) shall establish and maintain a written program of policies, compliance standards, and procedures designed to achieve the following objectives:

Educate and train all of the company's employees with respect to the company's environmental, health and safety policies;
Assure that Potlatch employees comply with all environmental, health and safety laws and regulations which are applicable to the company's operations;
Advise agents1 of their responsibility to educate and train their employees and make certain that only properly educated and trained persons are working on Potlatch projects; and
Encourage employee involvement and participation in the environmental, health and safety policies and goals of the company.

Specifically, each written program shall include the following components:

I. Education and Training

The requirement that environmental, health and safety standards and practices and compliance responsibilities relevant to each employee's job be reduced to writing, and be reviewed and revised to prevent incidents and improve performance;

Procedures for training each employee on a regular basis (at least annually) about the environmental, health and safety standards and practices and compliance responsibilities specific to his or her job and this policy and compliance program;
Procedures to document the training and to verify its effectiveness;
Procedures for ensuring that agents of the company understand and comply with the company's Environmental, Health and Safety Policy and Compliance Program

Reporting and Correcting Deficiencies

A requirement for prompt reporting of environmental, health and safety violations to appropriate management and staff personnel;
A system within the operation for reporting and resolving actual or perceived noncompliance concerns, without fear of retribution;
A commitment to correct promptly known deficiencies and take all reasonable steps to prevent violation;

Regulatory Implementation

The requirement that a person or group within the plant or unit be responsible for either maintaining an accurate record of, or having ready access to, all applicable environmental, health and safety laws and regulations, and for converting these laws and regulations into specific compliance requirements;

A system for prompt reporting of environmental, health and safety violations to appropriate management and staff personnel;
A procedure for assuring that persons who have or will have substantial discretionary authority with respect to compliance with the environmental, health and safety laws and regulations, have a proper respect for these laws and regulations;
A disciplinary policy and corrective action procedures relating to environmental, health and safety violations or other non-compliance incidents, which are documented and communicated to each employee; and
A management system which includes management commitment, policies, measurable objectives, rules and responsibilities, training, checks and verification, management review and continuous improvement, and documentation, recordkeeping, and reporting.

The system shall be periodically reviewed.

II. Communications

An important requirement in fulfilling Potlatch's environmental, health and safety philosophy is candid communication on environmental, health and safety issues with company stakeholders - employees, customers, shareholders, public officials, suppliers and communities - using the best information available and stressing the company's commitment to environmental, health and safety responsibility.

The company has already established certain staff functions and procedures for communications with various groups, such as shareholders, public officials and the press. In addition, it is the responsibility of each operating group and division manager to assure that the appropriate personnel in his or her operation communicate with the employees, customers and suppliers of the operation and the communities in which the operation is located by:

Responding accurately and promptly to questions and concerns of interested parties;
Sharing reliable, straightforward, and scientifically-based information; and
Participating constructively in discussions at all levels over the relevant range of environmental, health and safety issues.

The vice president and general counsel of the company shall serve as legal counsel to the committee.

III. Environmental Hotline

The company is committed to a process by which any employee of the company may communicate his or her concerns regarding the company's compliance with environmental, health and safety laws and regulations on an anonymous basis (if they so choose) and without fear of retribution. The company has established an 800 hotline, which will be monitored by the legal department. The purposes of the hotline and the number of the hotline shall be made available to each employee and a notice of the purposes and availability of the hotline shall be posted on employee bulletin boards that are readily accessible to all employees. The Potlatch environmental hotline number is 1-800-841-3093

IV. Reporting Procedure

In January of each year, each division vice president of the company shall certify to the chief executive officer of the company whether the plants or units for which he or she is responsible have complied with the Potlatch Environmental, Health and Safety Policy and Compliance Program. The chief executive officer shall report on the status of the company's compliance to the Board of Directors.

V. Overall Compliance Responsibility

The chief executive officer shall have overall responsibility to oversee and assure compliance with the Potlatch Environmental, Health and Safety Policy and Compliance Program.

¹ An agent is any entity that acts for and at the direction of the company. Contractors are agents