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Wednesday, May 29, 2024 | Back issues
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Billion-dollar logging decision reversed in Oregon

An Oregon appellate court found the lower court was wrong to award over $1 billion to rural counties that claimed the state had failed to log enough to meet a century-old contract.

(CN) — An appellate court in Oregon carefully carved out the difference between value and price in a decision with major ramifications for logging operations in the forest-dense state in the Pacific Northwest. 

The court reversed jury verdict awarding rural counties $1.1 billion in missed revenue after the state declined to perform logging operations in certain portions of the state-owned forest due to environmental concerns. 

The 13 rural counties involved in the suit argued the state had a contractual obligation to maximize revenue from timber harvests according to a law created in 1911, which stipulated that the counties could sell forest lands to the state so the state could manage them for timber harvest with the entities ultimately splitting the profits. 

The arrangement has been a boon for rural counties, which have secured millions of dollars annually from the profits and seen their budgets bolstered their budgets, particularly for education. 

But when the state peeled back its timber harvesting efforts in the 2000s, rural counties began to feel the pinch and contended Oregon failed to maximize profits as required by contractual obligations. 

A jury agreed this year, awarding the counties billions in lost revenue. 

But the Oregon Court of Appeals ruled Wednesday the verdict and subsequent judgment were predicated on a misreading of the concept of value versus price. 

“The text and context regarding the phrase 'greatest permanent value of such lands to the state,' as set forth in Oregon Laws 1941, chapter 236, section 5, does not clearly and unmistakably create a contractual obligation,” wrote Judge Douglas Tookey on behalf of the unanimous panel. 

Tookey said value also includes other issues that conflict with revenue maximization, including environmental and sustainability considerations. 

Specifically, a law passed in 1998 requires the board that manages the forests on behalf of the state to interpret the concept of “greatest permanent value” as “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.”

So value includes not only maximization of profits from timber, but also providing other economic benefits such as recreation, and environmental benefits to the ecology and wildlife, according to the court of appeals. 

The victory is a major one for the state, but the case will be remanded to the lower court, where the judge will again decide on whether to dismiss the case based on the state’s arguments, which have been confirmed by the court. 

However, the rural counties could come up with alternative arguments that incorporate the appellate court’s latest decision, so the case is not over, just back on with a decided tilt toward state agencies. 

Attorneys for the counties argued they would have never agreed to transfer their lands to the state in the 1910s and 1920s without assurances that the state would do everything to maximize revenues. 

“The counties would never have transferred their property to the state without an assurance that the state would apply sustained yield principles to maximize revenue from the land on a long-term basis,” said John DiLorenzo during oral argument in February.  

But the state said the law has always reflected that value is not restricted to price, but encompasses other aspects that affect humans and wildlife. 

Representatives from the counties have already indicated they will appeal. 

“We knew from day one this was ultimately headed to the Supreme Court,” said Robert Nyquist, chair of Linn County’s Board of Commissioners. “We have no option at this point other than to appeal this decision.”

Linn County is one of the 13 counties suing the state. 

But environmentalists celebrated the decision. 

“The case is a big backfire for the large timber landowners and industry trade groups who initially funded it,” Ralph Bloemers, an attorney with Crag Law Center, told Oregon Live

Oregon Governor Kate Brown echoed the sentiment. 

“Today’s decision by the Oregon Court of Appeals is a validation of the fact that a balanced, science-based approach to public forest management will produce the greatest long-term outcomes for all Oregonians, including the counties and taxing districts that receive revenue from state forests,” she said in a statement. 

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Categories / Appeals, Economy, Environment

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