Wednesday was a hectic and historic day for Roger Nyquist and fellow Linn County Commissioners John Lindsey and Will Tucker.

They announced plans to sue the state of Oregon — specifically the Oregon Department of Forestry — for $1.4 billion due to what the county sees as a breach of contract regarding state forest timber sales income directed to 15 Oregon counties, including Linn and Benton.

Depending on one’s viewpoint, the commissioners are either tilting at windmills like the whimsical Don Quixote or have loaded the slingshot to slay a giant — the state of Oregon — like the biblical story of David vs. Goliath.

Only time will tell.

Since 1998, the Department of Forestry has reduced annual timber harvests, leading to decreased payments to the counties. The commissioners are alleging the state has breached a contract that dates back to the 1930s.

On Thursday, after a whirlwind day of press conferences and phone calls, Nyquist said: “We’re happy that we’re finally having a solid conversation about this issue.”

After making the announcement at the State Capitol and later in Portland, Nyquist called 20 county commissioners informing them of what he hopes will be registered as a class-action lawsuit in Linn County Circuit Court.

By Oregon law, county counsel John DiLorenzo of Davis, Wright, Tremaine of Portland, had to give the state 30 days notice of the county’s intent to file the lawsuit.

In addition to Linn and Benton counties, the Oregon Forest Trust Land counties named in the lawsuit are Clackamas, Clatsop, Columbia, Coos, Douglas, Josephine, Klamath, Lane, Lincoln, Marion, Polk, Tillamook and Washington.

 “I would describe them as generally supportive to ecstatic,” Nyquist said of the reception from the counties. “A few heard it somewhere else first.”

If counties opt out of the lawsuit, the total amount being sought will be reduced accordingly, and if the litigants prevail, those counties will not receive any of the settlement money.

“There are philosophical differences galore about forest management and timber sales,” Nyquist said. “But when you put numbers in front of policy makers who have to balance budgets, things get real pretty quickly.”

Linn County has about 21,000 acres of state forest land; Benton County has about 8,000.

Nyquist said he’s confident a jury will find that the state has breached a 75-year-old contract with the affected counties that the forest lands would be managed to provide a steady stream of revenue from timber.

“It’s pretty straightforward. It’s either a contract or it it’s not,” he said. “We like our case a lot. The Supreme Court has ruled that the state has a contract with PERS employees. We believe this is the same thing. The state has a contract with the counties.”

Nyquist added, “It’s also about forest management. Are the state forest lands being properly managed for the greatest permanent value?”

Acquiring land

In the 1930s, the state began acquiring, due to tax foreclosures, what would grow to several hundred thousand acres of mostly cut-over timber lands  that would become the Forest Trust Land Counties.

Much of that land had been owned by large timber companies linked with railroads in the late 1800s.

During the Great Depression owners saw little value in retaining cut-over forest properties that would not produce income for decades, and quit paying taxes on those properties.

Counties eventually took control of the properties, but because they produced no income either through timber harvesting or taxation, they were a financial burden.

In 1939, under Gov. Charles Sprague and by approval of the Legislature’s State Forest Acquisition Act, the state began taking over the forest lands with an agreement to retain a management fee and return income generated by the properties back to the counties.

From 1939 to 1949, the first two of six state forests were developed, the Clatsop and Santiam state forests.

The basis of that contract was that the properties were to be “managed for the greatest permanent value.”

Linn County believes that means income generated by timber sales, although the county also believes best management practices should be followed on the land.

Six state forests in Oregon that encompass more than 800,000 acres. They are:

• Clatsop State Forest: 136,000 acres in Clatsop and Columbia counties.

• Elliott State Forest: 93,000 acres in Coos and Douglas counties.

• Gilchrist State Forest: 70,000 acres in Klamath County.

• Santiam State Forest: 47,871 acres in Linn, Marion and Clackamas counties.

• Sun Pass State Forest: 21,317 acres near Klamath Falls.

• Tillamook State Forest: 364,000 acres in Washington, Yamhill, Tillamook and Clatsop counties.

DiLorenzo said last week that two prior lawsuits have laid a foundation that a contract between the state and counties exists.

In 1986, the Oregon Supreme Court ruled (Tillamook County et al. v. Board of Forestry) that the conveyance of tax foreclosed lands by the Forest Trust Land counties created a “relationship” and a “protectable interest.”

In 2005, Tillamook County filed suit against the State of Oregon in a case known as Tillamook II.

Linn County's notice to the state filed this week made reference to those cases: “Judge Richard L. Barron affirmed the importance of the relationship between the Forest Trust Land Counties and the State and held that ‘the State is contractually bound not only because of what comes from the statutory scheme, which has been a consensual arrangement for more than 70 years, but also from the deeds entered into by the counties pursuant to the statutory scheme and which the State sought and bargained for.’”

According to the county’s brief, the Forest Trust Land Counties have tried repeatedly to persuade the Oregon Department of Forestry to live up to the state’s agreement.

In 2015, the counties supported legislation that would have required the state forester to manage the Forest Trust Lands to ensure that at least 80 percent of the annual amount of harvestable timber expected would be grown on those lands. The legislation was opposed by the state. 

Calculating damages

According to DiLorenzo, the 15 Forest Trust Land counties have received about $35 million less per year than they should have since the state management plan was changed in 1998. 

That’s a total of $528.6 million. Interest on that comes to about $25.6 million.

Future damages in perpetuity are estimated at $881 million, based on a 4 percent revenue stream.

Tim Josi chairs the Oregon Forest Trust Lands Advisory Committee and has been a Tillamook County commissioner for 17 years.

“We have worked on this issue every month I have been in office,” Josi said late Friday.

Josi said he has not been able to meet with either his fellow commissioners or the trust committee members to discuss the lawsuit, so his statements were his own opinions.

“The Tillamook, Clatsop, Columbia and Washington counties were promised revenue from annual timber sales of 279 million board feet, but when the new management plan was adopted, it was for only 149 million board feet. That’s up to 180 to 190 board feet now, but under the true Forest Practice Act, that should be more than 300 million board feet.”

Josi said the counties have been trying to get the Oregon Department of Forestry to open up the management plan, but it hasn’t budged until fiscal considerations became so prominent.

“The department is projected to be broke by 2020 unless something is done,” he said. “A new management plan needs to be approved by November 2017, because timber companies have three years to complete sales.”

Josi said he believes many members of the environmental community would like to see the Department of Forestry go broke and its finances taken over through the state general fund.

“The environmental community keeps asking for more analysis on the properties, but any six-year-old can figure out it’s not going to work,” Josi said. “I think there are some in the environmental community who would like to see the state take over the entire department. If that happens, we can look at the U.S. Forest Service and Bureau of Land Management and see what happens when a forest management plan is funded by government. The cut will continue to shrink.”

Josi called the lawsuit a “wake-up call for the Board of Forestry. They are going to have to do something because we won’t just stand by and let our rights be taken away from us.”

Josi added he’s not certain a class-action lawsuit is the right way to go about it, “but that’s yet to be determined.”

Benton County Commissioner Jay Dixon said Friday that he and fellow commissioners Annabelle Jaramillo and Anne Schuster have not had an opportunity to talk about the proposed litigation.

 “We are certainly at this point named in it,” Dixon said. “We could make a decision at some point if we want to stay in it or not. We really have nothing to add at this point.”

Dixon said the issue could be talked about as soon as next Tuesday’s meeting, but at this point, the lawsuit was not on the agenda for that meeting.

“It’s always a concern when you don’t get the revenue you would like to get or thought you were going to get,” Dixon said.

Benton County loses an estimated $731,479 annually due to the new forest management plan.

Lane County Commissioner Jay Bosevich said that while he couldn’t speak for the entire Board of Commissioners, he supports Linn County’s action.

“When we do meet, I will advocate for us staying in the class-action,” Bosevich said. “I personally support Linn County’s actions.”

Although not notified of the litigation until after it was announced in Salem, Bosevich said it didn’t come as a complete surprise.

“I had some inkling that something was going on, but I didn’t know the details,” he said. “I had picked up some rumblings through my contacts in the timber industry.”

Lane County loses an estimated $1,451,433 annually due to the new forest management plan.

Clatsop County Commissioner Scott Lee is a former member of the Forest Trust Lands Advisory Committee.

Lee said the committee is composed of five members, including two permanent seats for commissioners from Clatsop and Tillmook counties since they represent the majority of state forest lands.

The three other seats are for representatives from the other 13 counties.

Lee said he was not informed of the proposed litigation until after it was announced in Salem.

“I heard about it the same time you did,” he said. “I had not heard anything about this from the committee. I did call a call from Commissioner Nyquist and I voiced some of my concerns about it.”

Lee added, “This is a tough one. My concern is that any lawsuits that could tie up my (county’s) revenue stream from the state forest are problematic. This could bring lawsuits from environmental groups, too.”

Lee said he does not want to see management of the Clatsop State Forest go the way of the Elliott State Forest, which has been the subject of numerous lawsuits.

“It’s important that we take a pragmatic, moderate approach, to work together and work with the Board of Forestry to get through the financial difficulties they have,” Lee said.

Lee said the Clatsop County commissioners have not deliberated on the issue, but plan to hold a work session in March.

Clatsop County loses an estimated $12 million annually due to the new forest management plan.

Douglas County Commissioner Tim Freeman said that as an individual board member, he is “excited about the fact that Linn County has stepped up to the plate and is finally going to hold the state accountable for its promise.”

Freeman said the board will meet soon in executive session with legal counsel to discuss options.

“Douglas County has the largest amount of O & C lands, which is different than State lands, but we have talked about what we see as mismanagement and lack of management of public lands,” Freeman said. “What the state is doing is similar.”

Freeman said the fact that Linn County had to give the state 30 days notice before the lawsuit is filed also gives commissioners in the other 14 counties time to hold meetings and determine whether they want to remain in the class-action.

“Our trust lands are connected to the Elliott State Forest and yes, we’ve talked about it not producing what it had historically, or what it should be producing,” Freeman said.

Douglas County loses an estimated $239,063 annually due to the new forest management plan.

Said State Rep. Sherrie Sprenger, R-Scio: “I’ve seen firsthand the devastating impact the state’s forest management policy has had on our rural communities. I hope that this new effort, regardless of outcome, results in a shift in the way the state regulates and controls our natural resources and allows our rural communities to have more influence on that process.”

Sprenger added, “I firmly believe that greater local control of our forests and other natural resources will have positive benefits for communities in Linn County, as well as those around the state.”

Contact Linn County reporter Alex Paul at 541-812-6114.

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