Linn County’s $1.4 billion breach-of-contract lawsuit against the Oregon Department of Forestry can move forward as a class action suit, Circuit Court Judge Daniel Murphy ruled this week.
That means nearly 150 taxing districts will have the choice of remaining participants in the lawsuit, or opting out, Linn County Commissioner Roger Nyquist said.
Litigants were informed of Murphy’s decision during a status conference call Tuesday, although the order had not been signed as of Thursday afternoon.
Murphy said the class will include “Linn County and all other Oregon counties that conveyed forest lands to the State of Oregon pursuant" to state laws.
He also ordered the plaintiffs and defendants to cooperate in the preparation of a proposed notice to class members and to present their proposal to the court.
“We believe this means we are headed to a trial in early 2017,” Nyquist said. “It’s a welcome development in our pursuit of the state’s breach of contract. Most importantly, it’s important to rural communities all over Oregon.”
Nyquist said the affected taxing districts can decide individually whether they want to participate. For example, a county may opt out of the lawsuit, but a fire district within that county may decide to remain a participant.
“This is an asset to all of the taxing districts. The elected officials and policy makers have a fiduciary responsibility to all of their citizens to pursue the inherent value of the contract to them,” Nyquist said.
In March, Nyquist and fellow commissioners John Lindsey and Will Tucker filed a breach of contract lawsuit seeking $1.4 billion in past and future damages, naming as defendants the Oregon Department of Forestry and the state of Oregon.
The commissioners contend that the state and the Department of Forestry have reduced timber sales on state forests and that those reduced sales have meant a drop in revenue for affected counties and taxing districts.
The lawsuit rests in large part on the definition of "greatest permanent value." When the lands in question were conveyed to the state, state officials said that the lands would be managed for their “greatest permanent value.” At the time, the counties and other taxing jurisdictions believed that meant they'd be managed for the largest sustainable timber harvest, the lawsuit claims.
Over the years, however, the state has expanded the definition of "greatest permanent value" so that it includes other factors as well, such as wildlife protection, watershed enhancement projects and recreation. As timber sales reduced, the amount of money funneled back to the counties and other taxing districts diminished. The county's lawsuit charges that's a breach of the original contract between the state and the counties.
Starting in the 1930s, the state began taking over mostly cut-over timber lands from counties throughout Oregon, because the previous owners had failed to pay property taxes on them, creating a financial burden for the counties.
Today, the state has more than 700,000 acres of forest lands. Linn County has the Santiam State Forest, which encompasses 47,871 acres. Others are Clatsop State Forest, 136,000 acres in Clatsop and Columbia counties; Elliott State Forest, 93,000 acres in Coos County; Gilchrist State Forest, 70,000 acres in Klamath County; Sun Pass State Forest, 21,317 acres in Klamath County; and Tillamook State Forest, 364,000 acres in Washington County.