UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549


                                 FORM 10-Q

                              ---------------

            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                    THE SECURITIES EXCHANGE ACT OF 1934

             FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996

                      Commission File Number 33-55538


                       SCOTIA PACIFIC HOLDING COMPANY
           (Exact name of Registrant as specified in its charter)



           DELAWARE                          74-2652575
 (State or other jurisdiction             (I.R.S. Employer
      of incorporation or              Identification Number)
         organization)


         P. O. BOX 712                          95565
  125 MAIN STREET, 2ND FLOOR                 (Zip Code)
      SCOTIA, CALIFORNIA
     (Address of Principal
      Executive Offices)


     Registrant's telephone number, including area code: (707) 764-2330


     Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes /X/   No /  /


  Number of shares of common stock outstanding at November 1, 1996: 3,000


     Registrant meets the conditions set forth in General Instruction
H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the
reduced disclosure format.

                                   INDEX


PART I. - FINANCIAL INFORMATION                                        PAGE

     Item 1.   Financial Statements

          Balance Sheet at September 30, 1996 and December 31, 1995   3
          Statement of Income for the three and nine months ended
               September 30, 1996 and 1995                            4
          Statement of Cash Flows for the nine months ended
               September 30, 1996 and 1995                            5
          Condensed Notes to Financial Statements                     6

     Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                         10

PART II. - OTHER INFORMATION

     Item 1.   Legal Proceedings                                      12
     Item 6.   Exhibits and Reports on Form 8-K                       13
     Signatures                                                       S-1

                       SCOTIA PACIFIC HOLDING COMPANY

                               BALANCE SHEET
                         (IN THOUSANDS OF DOLLARS)


<TABLE>

<CAPTION>

                                                  September 30,  December 31,
                                                       1996          1995     
                                                  ------------- -------------
                                                   (Unaudited)
                      ASSETS
<S>                                               <C>           <C>
Current assets:
     Cash and cash equivalents                    $      6,796  $     21,542 
     Receivables:
          Due from Pacific Lumber                       12,929         4,471 
          Accrued interest                                  78           157 
     Prepaid timber harvesting costs and other 
          current assets                                 2,314         2,020 
                                                  ------------- -------------
          Total current assets                          22,117        28,190 
Timber and timberlands, net of depletion of
     $141,420 and $129,666 at September 30, 1996
     and December 31, 1995, respectively               168,523       179,364 
Property and equipment, net of accumulated
     depreciation of $5,218 and $4,873 at
     September 30, 1996 and December 31, 1995,
     respectively                                        4,146         3,804 
Deferred financing costs, net                           15,019        15,954 
Deferred income taxes                                   30,706        32,683 
Restricted cash                                         30,453        31,367 
                                                  ------------- -------------
                                                  $    270,964  $    291,362 
                                                  ============= =============

     LIABILITIES AND DEFICIENCY IN NET ASSETS

Current liabilities:
     Due to Pacific Lumber                        $        617  $        825 
     Accrued interest                                    5,196        12,375 
     Other accrued liabilities                           1,565         1,136 
     Long-term debt, current maturities                 16,165        14,103 
                                                  ------------- -------------
          Total current liabilities                     23,543        28,439 
Long-term debt, less current maturities                319,965       336,130 
                                                  ------------- -------------
          Total liabilities                            343,508       364,569 
                                                  ------------- -------------

Contingencies

Deficiency in net assets:
     Common stock, $1.00 par value, 3,000 shares
          authorized and issued                              3             3 
     Excess of liabilities assumed and common
          stock issued over assets contributed         (59,376)      (59,376)
     Cumulative activity since inception               (13,171)      (13,834)
                                                  ------------- -------------
          Total deficiency in net assets               (72,544)      (73,207)
                                                  ------------- -------------
                                                  $    270,964  $    291,362 
                                                  ============= =============

   The accompanying notes are an integral part of these financial statements.

</TABLE>

                       SCOTIA PACIFIC HOLDING COMPANY
                            STATEMENT OF INCOME
                                (UNAUDITED)
                         (IN THOUSANDS OF DOLLARS)


<TABLE>

<CAPTION>

                                       Three Months Ended          Nine Months Ended
                                         September 30,               September 30,       
                                  --------------------------- ---------------------------
                                       1996          1995          1996          1995     
                                  ------------- ------------- ------------- -------------

<S>                               <C>           <C>           <C>           <C>
Log sales to Pacific Lumber       $     42,050  $     38,535  $     99,316  $    78,305  
                                  ------------- ------------- ------------- -------------

Operating expenses:
     General and administrative          2,225         2,332         5,802         5,801 
     Depletion and depreciation          5,222         5,132        12,133        10,877 
                                  ------------- ------------- ------------- -------------
                                         7,447         7,464        17,935        16,678 
                                  ------------- ------------- ------------- -------------

Operating income                        34,603        31,071        81,381        61,627 

Other income (expense):
     Interest and other income             669           707         2,120         2,218 
     Interest expense                   (7,016)       (7,270)      (21,261)      (22,012)
                                  ------------- ------------- ------------- -------------
Income before income taxes              28,256        24,508        62,240        41,833 

Provision in lieu of income taxes      (11,598)      (10,061)      (25,547)      (17,173)
                                  ------------- ------------- ------------- -------------

Net income                        $     16,658  $     14,447  $     36,693  $     24,660 
                                  ============= ============= ============= =============

    The accompanying notes are in integral part of these financial statements.

</TABLE>

                       SCOTIA PACIFIC HOLDING COMPANY
                          STATEMENT OF CASH FLOWS
                                (UNAUDITED)
                         (IN THOUSANDS OF DOLLARS)


<TABLE>

<CAPTION>


                                                       Nine Months Ended
                                                         September 30,       
                                                  ---------------------------
                                                       1996          1995     
                                                  ------------- -------------
<S>                                               <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                   $     36,693  $     24,660 
     Adjustments to reconcile net income to net
          cash provided by operating activities:
          Provision in lieu of income taxes             25,547        17,173 
          Depletion and depreciation                    12,133        10,877 
          Amortization of deferred financing
               costs                                       935           857 
          Increase in other accrued liabilities            429           705 
          Increase in receivables                       (8,379)       (8,115)
          Decrease in accrued interest                  (7,179)       (7,441)
          Decrease in amounts due to Pacific
               Lumber                                     (208)          (88)
          Other                                           (292)         (166)
                                                  ------------- -------------
               Net cash provided by operating 
                    activities                          59,679        38,462 
                                                  ------------- -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Net proceeds from sale of assets                       32             - 
     Capital expenditures                               (1,668)         (791)
                                                  ------------- -------------
          Net cash used for investing activities        (1,636)         (791)
                                                  ------------- -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Restricted cash withdrawals, net                      914           563 
     Dividends paid                                    (59,600)      (39,300)
     Principal payments on Timber Notes                (14,103)      (13,578)
                                                  ------------- -------------
               Net cash used for financing
                    activities                         (72,789)      (52,315)
                                                  ------------- -------------
                                                   
NET DECREASE IN CASH AND CASH EQUIVALENTS              (14,746)      (14,644)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD        21,542        20,160 
                                                  ------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD        $      6,796  $      5,516 
                                                  ============= =============

SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND
     FINANCING ACTIVITIES:
     Assumption of net tax liabilities by Pacific
          Lumber                                  $     23,570  $     14,065 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Interest paid                                $     27,505  $     28,596 



   The accompanying notes are in integral part of these financial statements.

</TABLE>

                       SCOTIA PACIFIC HOLDING COMPANY
                   CONDENSED NOTES TO FINANCIAL STATEMENTS
                         (IN THOUSANDS OF DOLLARS)

1.        GENERAL

          The information contained in the following notes to the financial
statements is condensed from that which would appear in the annual
financial statements; accordingly, the financial statements included herein
should  be reviewed in conjunction with the financial statements and
related notes thereto contained in the Annual Report on Form 10-K filed by
Scotia Pacific Holding Company (the "Company") with the Securities and
Exchange Commission for the fiscal year ended December 31, 1995 (the "Form
10-K").  Any capitalized terms used but not defined in the following
Condensed Notes to Consolidated Financial Statements have the same meaning
given to them in the Form 10-K.  Accounting measurements at interim dates
inherently involve greater reliance on estimates than at year end.  The
results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the entire year.

          The financial statements included herein are unaudited; however,
they include all adjustments of a normal recurring nature which, in the
opinion of management, are necessary to present fairly the financial
position of the Company at September 30, 1996, the results of operations
for the three and nine months ended September 30, 1996 and 1995 and cash
flows for the nine months ended September 30, 1996 and 1995.  Certain
reclassifications of prior period information have been made to conform to
the current presentation.  The Company is a wholly owned subsidiary of The
Pacific Lumber Company ("Pacific Lumber").  Pacific Lumber is a wholly
owned indirect subsidiary of MAXXAM Group Inc. ("MGI").  MGI is a wholly
owned subsidiary of MAXXAM Inc. ("MAXXAM").

2.        RESTRICTED CASH

          Restricted cash represents the amount deposited into an account
held by the Trustee under the indenture governing the Company's Timber
Notes.

          At September 30, 1996 and December 31, 1995, cash and cash
equivalents also includes $5,676 and $19,742, respectively, which is
restricted for debt service payments on the succeeding note payment date
for the Timber Notes.

3.        CONTINGENCIES

          The Company's business is subject to a variety of California and
federal laws and regulations dealing with timber harvesting, endangered
species and critical habitat, and air and water quality.  While the Company
does not expect that compliance with such existing laws and regulations
will have a material adverse effect on its financial position, results of
operations or liquidity, the Company is subject to certain pending matters
described below, including the resolution of issues relating to the final
designation of critical habitat for the marbled murrelet, which could have
a material adverse effect on the Company's financial position, results of
operations or liquidity.  Moreover, the laws and regulations relating to
the Company's business are modified from time to time and are subject to
judicial and administrative interpretation.  There can be no assurance that
certain pending or future governmental regulations, legislation or judicial
or administrative decisions would not materially and adversely affect the
Company or its ability to sell logs.

          In May 1996, the U.S. Fish and Wildlife Service (the "USFWS")
published its final designation of critical habitat for the marbled
murrelet ("Final Designation"), designating over four million acres as
critical habitat for the marbled murrelet.  Although nearly all of the
designated habitat is public land, approximately 25,000 acres of Company's
timberlands are included in the Final Designation, the substantial portion
of such 25,000 acres being young growth timber.  Pacific Lumber's wildlife
surveys to date (based upon current survey protocols) have indicated that
the Company has approximately 1,200 acres of Company Timber which is
occupied marbled murrelet habitat, the bulk of it falling within the area
of the Company's timberlands covered by the Final Designation.  In order to
mitigate the impact of the Final Designation, particularly with respect to
timberlands occupied by the marbled murrelet, Pacific Lumber over the last
few years has attempted to develop a habitat conservation plan for the
marbled murrelet (the "Murrelet HCP").  Due to, among other things, the
unfavorable response of the USFWS to Pacific Lumber's initial Murrelet HCP
efforts, Pacific Lumber and its subsidiaries, including the Company, filed
two actions (the "Takings Litigation") alleging that certain portions of
its timberlands have been "taken" and seeking just compensation (see Part
II, Item 1, "Legal Proceedings--Timber Harvesting Litigation" for a
description of the Takings Litigation).  Pursuant to the Headwaters
Agreement described in Note 4 below (the "Headwaters Agreement"), the
parties to the Takings Litigation have stayed the Takings Litigation.

          It is impossible for the Company to determine the potential
adverse effect of the Final Designation on the Company's financial
position, results of operations or liquidity until such time as all of the
material regulatory and legal issues are resolved; however, if the Company
is unable to harvest, or is severely limited in harvesting, on timberlands
designated as critical habitat for the marbled murrelet, such effect could
be material.  If the Company is unable to harvest or is severely limited in
harvesting, it intends to seek just compensation from the appropriate
governmental agencies on the grounds that such restrictions constitute a
governmental taking.  There continue to be other regulatory actions and
lawsuits seeking to have various other species listed as threatened or
endangered under the federal Endangered Species Act and/or the California
Endangered Species Act ("ESA") and to designate critical habitat for such
species.  For example, the National Maine Fisheries Service ("NMFS")
recently announced that by April 25, 1997, it would make a final
determination concerning whether to list the coho salmon under the ESA in
northern California, including, potentially, lands owned by Pacific Lumber. 
It is uncertain what impact, if any, such listings and/or designations of
critical habitat would have on the Company's financial position, results of
operations or liquidity.  See Note 4 below for a description of certain
terms of the Headwaters Agreement relating to processing and approval of a
multi-species habitat conservation plan ("Multi-Species HCP") covering
Pacific Lumber's timberlands.

          In 1994, the California Board of Forestry ("BOF") adopted certain
regulations regarding compliance with long-term sustained yield objectives. 
These regulations require the projected harvest by timber companies, over
time, be capable of sustaining the average annual yield achieved during the
last decade of the planning horizon, which is currently a 100-year planning
period ("Projected Annual Growth").  During any rolling ten-year period,
the average annual harvest over such ten-year period may not exceed
Projected Annual Growth.  The regulatory deadline for Pacific Lumber to
submit a proposed  sustained yield plan ("SYP") setting forth, among other
things, its Projected Annual Growth is November 15, 1996.  However, the BOF
has adopted and sent to the Office of Administrative Law for its
consideration a regulation to extend the deadline to November 15, 1997. 
This review is expected to be completed in the near future.  Pacific Lumber
has not completed its analysis of the projected productivity of its
timberlands (including enhancements to productivity which could be achieved
by a variety of methods).  Until an SYP is submitted, reviewed and fully
approved, the Company is unable to predict the impact that these
regulations will have on its future timber harvesting practices; however,
it is possible that the final results of this analysis could require
Pacific Lumber to reduce its timber harvest in future years from the
average annual harvest that it has experienced in recent years (including
that relating to the Company's timberlands).  The Company and Pacific
Lumber believe they will be able to mitigate the effect of any required
reduction in harvest level by acquisitions of additional timberlands,
although there can be no assurance that they would be able to do so.  The
Company is unable to predict the ultimate impact the sustained yield
regulations will have on its future financial position, results of
operations or liquidity.  See Note 4 below for a description of certain
terms of the Headwaters Agreement relating to the SYP.

          Various groups and individuals have filed objections with the
California Department of Forestry ("CDF") and the BOF regarding the CDF's
and the BOF's actions and rulings with respect to certain of the Company's
timber harvesting plans ("THPs") and other timber harvesting operations,
and the Company expects that such groups and individuals will continue to
file such objections to certain of the Company's THPs and other timber
harvesting operations.  In addition, lawsuits are pending and/or threatened
which seek to prevent the Company from implementing certain of its approved
THPs, and/or which challenge other operations by the Company.  These
challenges have severely restricted Pacific Lumber's ability to harvest old
growth timber on its property.  To date, challenges with respect to the
Company's THPs relating to young growth timber have been limited; however,
no assurance can be given as to the extent of such challenges in the
future.  The Company believes that environmentally focused challenges to
its timber harvesting operations are likely to occur in the future,
particularly with respect to virgin and residual old growth timber. 
Although such challenges have delayed or prevented the Company from
conducting a portion of its operations, they have not had a material
adverse effect on the Company's financial position, results of operations
or liquidity.  Nevertheless, it is impossible to predict the future nature
or degree of such challenges or their ultimate impact on the Company's
financial position, results of operations or liquidity.

          The Company is also involved in various claims, lawsuits and
proceedings relating to a wide variety of other matters.  While there are
uncertainties inherent in the ultimate outcome of such matters and it is
impossible to determine the ultimate costs that may be incurred, management
believes that the resolution of such uncertainties and the incurrence of
such costs should not have a material adverse effect on the Company's
financial position, results of operations or liquidity.

4.        HEADWATERS AGREEMENT

          On September 28, 1996,  MAXXAM and Pacific Lumber (the "Pacific
Lumber Parties") entered into an agreement (the "Headwaters Agreement")
which provides the framework for the acquisition by the United States and
California of approximately 5,600 acres of Pacific Lumber's timberlands
commonly referred to as the Headwaters Forest and the Elk Head Springs
Forest (the "Headwaters Timberlands").  Included within the 5,600 acres are
approximately 800 acres of the Company's timberlands, Pacific Lumber having
the exclusive right to harvest on approximately 300 of these acres.  The
Headwaters Timberlands would be transferred in exchange for (a) property
and consideration (including cash) from the United States and California
having an aggregate fair market value of $300 million and (b) approximately
7,775 acres of adjacent timberlands to be acquired by the United States and
California (the "Elk River Timberlands").  The Pacific Lumber Parties have
agreed not to conduct logging operations (including salvage logging) on the
Headwaters Timberlands while the Headwaters Agreement is in effect.  The
continuing effectiveness of the Headwaters Agreement is predicated on the
satisfaction of various conditions, including completion within ten months
of specified closing items.

           The Headwaters Agreement also provides, among other things, for
expedited processing  by  the United States of an incidental take permit
("Permit") to be based upon the Multi-Species HCP which is to cover all of
Pacific Lumber's existing timber properties and any timber properties
acquired as a result of the Headwaters Agreement.  The agreement also
requires expedited processing by California of an SYP.  Closing of the
Headwaters Agreement is subject to various conditions, including (a)
acquisition by the government of the Elk River Timberlands from a third
party, (b) approval of an SYP and a Multi-Species HCP, and issuance of a
Permit, each in form and substance satisfactory to Pacific Lumber, (c) the
issuance by the Internal Revenue Service and the California Franchise Tax
Board of closing agreements in form and substance sought by and
satisfactory to the Pacific Lumber Parties, (d) the absence of a judicial
decision in any litigation brought by third parties that any party
reasonably believes will significantly delay or impair the transactions
described in the Headwaters Agreement, and (e) the dismissal with prejudice
at closing of the Takings Litigation.

5.        DEFICIENCY IN NET ASSETS

          A reconciliation of the cumulative activity component of the
Company's Deficiency in Net Assets is as follows:


<TABLE>

<CAPTION>

                                                        Nine Months
                                                           Ended
                                                       September 30,
                                                            1996
                                                       -------------
<S>                                                    <C>
Balance at beginning of period                         $    (13,834)
Net income                                                   36,693 
Assumption of net tax liabilities by Pacific Lumber          23,570 
Dividends paid                                              (59,600)
                                                       -------------
Balance at end of period                               $    (13,171)
                                                       =============

</TABLE>


ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
     AND RESULTS OF OPERATIONS

          The following should be read in conjunction with the response to
Part I, Item 1 of this Report and Items 7 and 8 of the Form 10-K.  Any
capitalized terms used but not defined in this Item have the same meaning
given to them in the Form 10-K.

          This section contains statements which constitute forward looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995.  These statements appear in various places in this section
and include statements regarding the intent, belief or current expectations
of the Company, its directors or its officers primarily with respect to the
future operating performance of the Company.  Readers are cautioned that
any such forward looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results
may differ materially from those in the forward looking statements as a
result of various factors.  This section identifies important factors that
could cause such differences.

RESULTS OF OPERATIONS 

          In order to take account of the relative values of the species
and categories of timber included in the Company Timber, the Mbfe concept
was developed for use in structuring the Timber Notes.  Under the Mbfe
concept, one thousand board feet, net Scribner scale, of residual old
growth redwood timber equates to one Mbfe.  One thousand board feet, net
Scribner scale, of each other species and category of timber included in
the Company Timber was assigned a value in Mbfe equal to a fraction of an
Mbfe.  This fraction was generally determined by dividing the SBE Price (as
defined below) applicable to such species and category for the first half
of 1992 by the SBE Price applicable to residual old growth redwood for the
first half of 1992.

          The Master Purchase Agreement generally contemplates that all
sales of logs by the Company to Pacific Lumber will be at a price which
equals or exceeds the applicable stumpage price for such species and
category, as set forth in the most recent Harvest Value Schedule published
by the California State Board of Equalization (the "SBE Price").  The
Harvest Value Schedule is published by the California State Board of
Equalization at six month intervals for purposes of computing yield taxes
imposed on the harvesting of timber.  SBE Prices are established by the
State of California for tax purposes and are intended by the taxing
authorities to represent average actual log prices (adjusted for an
estimated timber industry inflation factor) between unrelated parties
during the approximate twenty-four month period ended sixty days prior to
the date such SBE Prices are published.  SBE Prices may not necessarily be
representative of actual prices that would be realized from unrelated
parties at subsequent dates.

          Logging operations on the Company's timberlands are highly
seasonal.  Logging activity is normally significantly higher in the months
of April through November than in the months of December through March. 
Management expects that the Company's revenues and cash flows will continue
to reflect that seasonality.

          Log sales to Pacific Lumber
          Net sales from logs were $42.1 million and $38.5 million for the
third quarter of 1996 and 1995, respectively.  The volume of log deliveries
for such periods represented approximately 64,100 Mbfe and 60,000 Mbfe,
respectively.  Net sales from logs were $99.3 million and $78.3 million for
the nine months ended September 30, 1996 and 1995, respectively.  The
volume of log deliveries for such periods represented approximately 147,800
Mbfe and 128,300 Mbfe, respectively.  The increase in revenues for the
quarter and nine months ended September 30, 1996 compared to the same
periods in 1995 is due to a higher volume of log deliveries and, for the
nine months ended September 30, 1996, an approximate 10% increase in
average realized prices.  See also "--Trends".

          Operating income
          Operating income was $34.6 million and $31.1 million for the
third quarter of 1996 and 1995, respectively.  Operating income was $81.4
million and $61.6 million for the nine months ended September 30, 1996 and
1995, respectively.  These increases were primarily due to the increases in
log sales, as discussed above.

          Income before income taxes
          Income before income taxes was $28.3 million and $24.5 million
for the third quarter of 1996 and 1995, respectively.  Income before income
taxes was $62.2 million and $41.8 million for the nine months ended
September 30, 1996 and 1995, respectively.  These increases were primarily
due to the increases in operating income.

FINANCIAL CONDITION AND INVESTING AND FINANCING ACTIVITIES

          In January 1996 and July 1996, the Company repaid approximately
$8.5 million and $5.6 million, respectively, of the aggregate principal
amount outstanding on the Timber Notes in accordance with Scheduled
Amortization.

          The Company paid $59.6 million of dividends to Pacific Lumber
during the nine months ended September 30, 1996.  At September 30, 1996,
the Indenture permitted the payment of $7.2 million of dividends which were
paid on October 21, 1996.

TRENDS

          The Company's business is subject to a variety of California and
federal laws and regulations dealing with timber harvesting, endangered
species and critical habitat, and air and water quality.  While the Company
does not expect that compliance with such existing laws and regulations
will have a material adverse effect on its financial position, results of
operations or liquidity, the Company is subject to certain pending matters,
including the resolution of issues relating to the Final Designation of
critical habitat for the marbled murrelet, which could have a material
adverse effect on the Company's financial position, results of operations
or liquidity.  Moreover, the laws and regulations relating to the Company's
business are modified from time to time and are subject to judicial and
administrative interpretation.  There can be no assurance that certain
pending or future governmental regulations, legislation or judicial or
administrative decisions would not materially and adversely affect the
Company or its ability to sell logs.  See also Notes 3 and 4 of the
Condensed Notes to Financial Statements set forth in Part I, Item 1 and
Part II, Item 1. "Legal Proceedings--Timber Harvesting Litigation" for
further information, including a description of the Headwaters Agreement.

          Judicial or regulatory actions adverse to the Company, increased
regulatory delays and inclement weather in northern California,
independently or collectively, could impair Pacific Lumber's ability to
conduct normal timber harvesting operations on the Company's timberlands.

ITEM 1.        LEGAL PROCEEDINGS

          Reference is made to Item 3 of the Form 10-K and Part II, Item 1
of the Company's Quarterly Report on Form 10-Q for the quarterly periods
ended March 31, 1996 and June 30, 1996 (the "Forms 10-Q") for information
concerning material legal proceedings with respect to the Company.  The
following material developments have occurred with respect to such legal
proceedings.

TIMBER HARVESTING LITIGATION

          In connection with the Marbled Murrelet action, on August 23,
1996, plaintiffs filed a renewed motion for preliminary injunction to
prevent harvesting of dead, dying or diseased trees ("exempt harvesting
operations") in Pacific Lumber's old growth timberlands.  In addition, on
September 12, 1996, plaintiffs requested an emergency TRO with respect to
such harvesting operations.  The court denied both of these motions.  On
October 9, 1996, Pacific Lumber was cited for accidentally downing a
hemlock tree and ordered to stop exempt harvesting operations in its old
growth timberlands for 24 hours.  Plaintiffs sought a TRO and preliminary
injunction based on this citation and related events.  After hearing
plaintiffs' motions, the court denied the plaintiffs' requests.  The CDF
has withdrawn the citation and asked that it be dismissed.

          In related matters, in August, 1996, the Sierra Club, EPIC and
others petitioned the BOF to adopt emergency regulations preventing Pacific
Lumber from undertaking exempt harvesting operations in its old growth
timberlands.  On September 9, 1996, the BOF rejected such proposals and
petitions.  In September and October, the BOF was formally asked to
reconsider its September 9, 1996 decision.  The BOF reconsidered this
matter and, ultimately, enacted no emergency regulation to prevent or
further restrict Pacific Lumber's exempt harvesting operations in its old
growth timberlands.

          On November 4, 1996, the U.S. Ninth Circuit Court of Appeals
heard oral argument concerning defendants' appeal of the preliminary
injunction issued on April 3, 1996 preventing harvesting on eight THPs to
the extent each relies on the Owl Plan; the court has not yet rendered a
decision in this matter.  In that regard, Pacific Lumber has obtained
regulatory reapproval of seven of the enjoined eight THPs without reliance
on the Owl Plan and has, to date, confirmed with the court that four of
those THPs are not subject to the preliminary injunction.

          In connection with the EPIC action, on September 24, 1996,
Pacific Lumber filed its petition for writ of certiorari requesting that
the U. S. Supreme Court consider its appeal of the permanent injunction
concerning harvesting operations in connection with a THP for approximately
237 acres of primarily virgin old growth timber (THP 90-237). 

          In connection with the Headwaters Agreement  (see Notes 3 and 4
of the Condensed Notes to Financial Statements set forth in Part I, Item
1), the two actions entitled The Pacific Lumber Company, et al. v. The
United States of America and Salmon Creek Corporation v. California State
Board of Forestry, et al. have been stayed by the court at the request of
the parties.

ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

          A.        EXHIBITS:

                    10   Agreement dated September 28, 1996 between MAXXAM
                         Inc., The Pacific Lumber Company (on behalf of
                         itself, its subsidiaries and its affiliates) the
                         United States of America and the State of
                         California (incorporated herein by reference to
                         Exhibit 10.1 to the Company's Form 8-K dated
                         September 28, 1996)

                    27   Financial Data Schedule

          B.   REPORTS ON FORM 8-K:

                    On October 3, 1996, the Company filed a Current Report
                    on Form 8-K, dated September 28, 1996, concerning the
                    Headwaters Agreement.

                                 SIGNATURES


          Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized, who has signed this report on
behalf of the Registrant and as the principal accounting officer of the
Registrant.


                                SCOTIA PACIFIC HOLDING COMPANY




Date: November 12, 1996        By:        GARY L. CLARK
                                         Gary L. Clark
                                 Vice President - Finance and
                                        Administration