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Linn County to lead $1.4 billion class-action lawsuit against state

Linn County to lead $1.4 billion class-action lawsuit against state

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In a legal action that could have major implications for Oregon Forest Trust Lands, Linn County officials said Wednesday they intend to file a $1.4 billion class-action suit against the state, charging that mismanagement of the lands has cost counties $35 million a year since 1998.

Linn County plans to file the lawsuit in 30 days in Linn County Circuit Court, alleging breach of contract, on behalf of it and 14 other counties that receive money based on annual timber harvests on the Oregon Forest Trust Lands.

Linn County Commissioners Roger Nyquist, John Lindsey and Will Tucker announced the legal action Wednesday morning at the state Capitol.

“This breach of contract has had devastating effects on local communities that have seen both poverty and unemployment rates skyrocket in the last two decades as a result of current practices,” Nyquist said. “While there has been much talk about the plight of rural Oregon by statewide policymakers, there has been no action to address the fundamental problem. This litigation serves as an action step to improve the local economies of small towns located near county Forest Trust Lands all over the state.”

The litigation names Gov. Kate Brown and State Forester Doug Decker. A spokesperson said Brown had no comment.

At issue in the legal action are 654,000 acres of Forest Trust Lands in Oregon, including 21,000 acres in Linn County, mostly in the Mill City area, with a small segment east of Lebanon.

There are about 8,000 acres in the northwest corner of Benton County.

Other counties with the lands are Clackamas, Clatsop, Columbia, Coos, Douglas, Josephine, Klamath, Lane, Lincoln, Marion, Polk, Tillamook and Washington.

In Linn County, taxing districts affected are the County School Fund, Linn-Benton-Lincoln ESD, School District 129 J (Santiam Canyon/Mill City), Mill City, Chemeketa Community College, Linn-Benton Community College and the 4-H Extension Service District. 

They are all potential plaintiffs in the lawsuit, as are more than 100 beneficiaries of the harvest revenue, including law enforcement agencies, school districts and other special districts throughout the counties.

Counties and districts can choose to opt out of the legal action, but if they take no action to do so, they will be included as plaintiffs. The plaintiffs are represented by attorney John DiLorenzo of Davis Wright Tremaine LLP of Portland.

Private industries that have approved a Common Interest Agreement and will provide some funding for the lawsuit are the Oregon Forest & Industries Council, Stimson Lumber Co., Hampton Tree Farms and the Sustainable Forests Fund.

Nyquist said the issue of less-than-expected state payments “has been an issue since I first came on the board. The opportunity (to pursue the lawsuit) has presented itself and we believe this is a clear breach of contract. We have talked with the Oregon Department of Forestry about this for 17 years and have gotten nowhere.”

Nyquist said the lawsuit will “hold the state and the Oregon Department of Forestry accountable for their actions.”

Nyquist estimates the change in management of the forest lands has cost Linn County “tens of millions of dollars” and has resulted in double-digit unemployment rates and increased poverty” in rural communities.

 “I regret it has come to this," Nyquist said. "In a perfect world, people sit down, resolve their differences and then go their separate ways.”

The following is the estimated annual loss in potential income experienced by each of the affected counties based on 2001-2014 figures:

Benton County, $731,479; Clackamas, $377,796; Clatsop, $12,024,122; Columbia, $598,043; Coos, $189,871; Douglas, $239,063; Josephine, $11,636; Klamath, $1,040,034; Lane, $1,451,433; Lincoln, $728,770; Linn, $2,385,188; Marion, $1,236,719; Polk, $163,297; Tillamook, $8,913,715; Washington, 5,147,916. Total: $35,239,089.

The issues leading to the legal action date back to the 1930s, when the state of Oregon established a “legal framework for the conveyance of forest lands from the county to the state,” the litigants noted in a press statement.

In exchange, the lands were to be managed and portions of revenues generated by timber sales distributed to the counties.

The commissioners noted that Oregon courts consistently have ruled that the state is contractually bound to manage Forest Trust Lands for the benefit of the 15 counties.

But in the press release, the commissioners said that “Beginning in 1998 the state breached the contract when it adopted a new rule that de-emphasized revenue generation for the counties in exchange for other objectives. The state then implemented a management plan without the informed consent of the counties that resulted in roughly half the revenues the counties should have received if the lands were managed in accordance with best management practices required of private landowners.”

The state of Oregon began acquiring the lands from the counties in the 1930s, in part due to abandonment by families during the Great Depression and in the aftermath of massive fires in the 1930s and 1940s.

Transferring property ownership to the state also removed those lands from county tax rolls.

The state and the Forest Trust Land Counties developed an agreement that the Oregon Department of Forestry would manage the lands for the benefit of the counties and keep a fee for its services.

Remaining income would be distributed to the counties.

The state agreed to manage the lands for grazing and forestry and later amended the agreement to include “the greatest permanent value” of the lands.

The litigants believe the counties understood the "greatest permanent value" clause to mean generation of revenues for the Forest Trust Land Counties, while working within accepted best management practices.

But that hasn't worked out that way, the litigants say, as land that was being used for timber harvests has been diverted to other uses such as recreation, habitat and aesthetics.

DiLorenzo, whose company has taken on the lawsuit on a contingency basis, called the action, “ … a straightforward breach of contract case. The state’s breach has strained citizens’ needs.”

He said he spoke with Gov. Brown’s legal counsel shortly before the press conference.

DiLorenzo said there have been two previous lawsuits concerning changes to the contract between the counties and the state over the years and both were won by the counties.

He said that although there are several possible outcomes associated with a lawsuit, DiLorenzo said there are two key questions a Linn County Circuit Court jury would have to answer: Was there a breach of contract? And what is monetary value of the breach?

The Oregon Forest & Industries Council is one of the private organizations supporting the litigation.

Spokesperson Sara Duncan said the council — composed of companies such as Weyerhaeuser, Avery Interests and Miami Corporation — was glad to support Linn County’s efforts.

“We’re very supportive,” Duncan said. “We think Linn County has a really good case. Our members have had long-term partnerships within these counties and a direct connection with the people who live and work in these communities who benefit economically and ecologically from the forest lands.”

Duncan said it appears the counties “have a very strong breach-of-contract case.”

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


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