Jury: State at fault in timber lawsuit

 

November 27, 2019



Following a 19-day trial, a Linn County jury last week found in favor of 13 Oregon counties, led by Linn County, who sued the State of Oregon for breach of contract by failing to properly manage forest policy and promote timber harvests on Forest Trust land.

Jurors awarded $1 billion in damages.

The trial was held in Linn County Circuit Court from Oct. 24 to Nov. 20, with the jury returning a verdict on a 10-2 vote in favor of Linn County and the 13 other counties on Wednesday, Nov. 20.

Named as part of the class action are Benton, Clackamas, Columbia, Coos, Douglas, Josephine, Lane, Lincoln, Linn, Marion, Polk, Tillamook and Washington counties and approximately 140 taxing districts within those counties and within Clatsop County, which declined to participate in the lawsuit.

Linn County was awarded $37.5 million in past damages and $14.5 million in future damages. The largest award went to Tillamook County and Tillamook taxing districts, with $247 million in past damages and $144 million in future damages.

“I would like to thank the dedicated lawyers and staff at the Oregon Department of Justice who worked tirelessly to bring this case to verdict,” said Oregon Department of Justice Deputy Attorney General Fred Boss. “While we are disappointed in last week’s verdict, we believe there are strong arguments to be made on appeal, and we plan to appeal this decision.”


“This is phenomenal,” said Linn County Commissioner John Lindsey. “We’ve always known we were right. This is a win for local government.”

The case centered around land deeded to the state by some Oregon counties under a contract for forest management, Lindsey said. “One party changed the contract without the other parties’ permission.”

Other counties did not give up their lands to the state, Lindsey said, and their forests still support viable commercial operations – Hood River County is one example.

Instead a small group of people from Portland, who feel they have a better use for it, “dictate rural policy,” Lindsey said, without paying for it and without benefiting the rural counties the contract was meant to help.

According to the complaint filed by Linn County, beginning in the 1930s, Oregon counties acquired hundreds of thousands of acres of forest lands by tax foreclosure. In many cases, the owners abandoned the land during the Great Depression and as a result of forest fires in the 1930s and 1940s.


The removal of the land from the tax rolls created substantial revenue loss to the counties and imperiled the economic welfare of the counties and the state, the complaint said. To address the problems, in 1941, the state and counties enacted legislation to convey the land as part of a Forest Trust to the state to manage for the benefit of the Forest Trust land counties and local districts within the borders of the Forest Trust lands.

The state was entitled to keep a portion of the revenue derived from the forests as a management fee, and the remaining revenue was supposed to be returned to the Forest Trust counties and other local governments.

Linn County deeded more than 21,000 acres of forest to the state. Forest Trust counties conveyed more than 654,000 acres of land to the state.

That land was supposed to be managed “so as to secure the greatest permanent value” of the lands, the complaint said.

That term was undefined at the time, said John DiLorenzo, the attorney representing Linn County, when the county announced the lawsuit in 2016. He believed that it meant the state was supposed to establish a permanent financial return over time, which was a contractual obligation.

In 1998, a new administrative rule stated that the greatest permanent value “means healthy, productive and sustainable forest ecosystems that over time and across the landscape provide a full range of social, economic and environmental benefits to the people of Oregon.”


Those benefits range from sustainable production of forest products to habitats for native wildlife, clean air and water, recreation and protection from floods and erosion.

The plaintiff argued that the rule defined “greatest permanent value” in a way that does not emphasize maximization of revenues to the counties and their intended beneficiaries, and that none of the counties consented to the rule.

“These counties have been deprived of $35 million a year, which otherwise would have been theirs had the state been managing these timber lands as a landowner should, complying with all the overlays, Forest Practices Act, the Endangered Species Act and the like,” said Roger Nyquist, chairman of the Linn County Board of Commissioners, when announcing the lawsuit.

The state has the option of breaching the contract, DiLorenzo said at the time, but it has to pay the value of the contract, estimated at more than $881 million, a total of about $1.4 billion.

The statutes have always provided for multiple use, Scott Kaplan previously argued during the case. “The 1939 statute, in addition to recognizing the production of forest crops, recognized watershed protection and development...recreation, grazing, and forest administration.”

Kaplan cited a 1938 ballot initiative that addressed “the need for the protection and conservation of fish, aquatic life, and migratory birds and the importance of controlling the pollution of the waters. People of Oregon had other values beside timber production. The forests themselves weren’t simply viewed as a crop to be harvested.”

The jury award represents funds that should have been distributed to the class members if the forests in each of the Forest Trust counties were managed in accordance with best management practices required of private landowners while honoring federal regulatory requirements, from 2001 to present and for the next 50 years, according to the complaint.

 
 

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