SAN FRANCISCO -- Citing continuing egregious violations, state forestry regulators on Tuesday suspended the conditional logging license of Pacific Lumber Co., the largest private logger of old-growth redwoods.

The suspension could complicate a state and federal deal to spend $380 million in taxpayers' money to buy one of the oldest groves of virgin redwoods on earth from the company.

The suspension covers only the remainder of 1998, and the company may appeal it, but regulators have warned the company that it might not renew the license for 1999. This has provided ample fodder for environmental groups. It is unknown whether the suspension will affect the deal for a government purchase of the virgin redwood Headwaters Forest, but several environmentalists were quick to say that the suspension proved that Pacific Lumber, a subsidiary of Maxxam Inc., could not be trusted to carry out its share of the deal.

The California Department of Forestry said Pacific Lumber had repeatedly violated significant regulations, by, among other things, clearing redwoods and Douglas firs near an endangered coho salmon stream, driving heavy vehicles and equipment across a tributary, which clogged another coho salmon stream, and logging within a northern spotted owl nesting territory.

It was the second time in two years that Pacific Lumber, which has been battling environmentalists for more than 10 years over its logging practices, was found to have violated the state's rules to protect streams, wildlife and soil. In 1997, the state refused to renew the company's license because of illegal logging and other violations. It granted a conditional license this year after the company agreed to comply with a strict logging plan.

John Campbell, Pacific Lumber's president, said the company would do better.

"We remain committed to making the changes that are necessary to regain our leadership as a responsible steward of the state's timber resources," Campbell said.

The forestry department tallied 16 violations this time. Among them is the accusation that Pacific Lumber covered up its illegal logging near one salmon stream until loggers had finished hauling the trees to the mill.

Richard Wilson, director of the forestry department, said he had no choice but to suspend the company's license, despite the loss of jobs it would bring.

"The decision is not an easy one to make, considering the effects on employees," Wilson said, "but we simply cannot allow these violations to continue."

Mary Bullwinkel, a spokeswoman for Pacific Lumber, said the company had indefinitely laid off 180 lumber employees, of its total work force of 1,600. About 50 percent of the company's logging is done by independent contractors hired by Pacific Lumber to cut its trees. They will be allowed to continue logging.

Critics of the company said that rendered the suspension a mere slap since Pacific Lumber could hire more contractors to take up the slack in production created by the layoffs.

Federal and state agencies have been holding hearings to complete a deal by March 1999 that would protect Headwaters Forest. In the deal, the  company would hand over the 3,000-acre forest to the public for $380 million (with California paying $180 million and the federal government the rest). It would also set aside, for 50 years, a 4,500-acre buffer considered important for nesting marbled murrelets, an endangered sea bird that nests exclusively on the tops of old-growth redwoods.

In return, Pacific Lumber would be allowed to log 500 acres of virgin old-growth forest and 8,000 more acres with scattered stands of old-growth trees.

Paul Mason, president of the Environmental Protection Information Center, which is based in Garberville, near Pacific Lumber's headquarters in Scotia, said the license suspension was an acknowledgment that Pacific Lumber was "such a disreputable and dishonest timber company that they shouldn't be allowed to run a chainsaw in their own forest."

What has groups like the Environmental Protection Information Center most concerned is that as part of the Headwaters deal, Pacific Lumber would get what is known as an "incidental take permit." This would absolve it from liability for harming endangered species' habitats in the approved 8,500 acres if it has done so accidentally, or incidentally. The permit must be issued based on the company's concrete habitat conservation plan that shows how it will minimize harm to endangered species.

Ms. Bullwinkel of Pacific Lumber said the license suspension and the company's effort to get a permit in the Headwaters deal were separate issues.

But Kevin Bundy, another member of the Environmental Protection Information Center, said that considering what he called Pacific Lumber's flouting of basic state forestry rules, it could not be trusted to follow its habitat conservation plan.

"These are voluntary efforts that the company would have to enforce themselves," Bundy said. "It has all these written logging plans that obviously comply with rules. Then out in the woods, it does something else entirely."