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Justices let stand Court of Appeals ruling that tossed out a $1 billion judgment won by counties for past losses.

COURTESY PHOTO:XXXXXX - The Supreme Court Building in Salem, now undergoing renovation. The court announced Friday, Sept. 16, that it would let stand an April 27 decision by the Court of Appeals tossing out a $1 billion judgment won by 13 counties against the state in 2019 in Linn County Circuit Court for past losses and future proceeds from timber sales on state forests. A total of 15 counties ceded lands to the state in 1941 to be managed for their "greatest permanent value," but the state Board of Forestry interpreted it in 1998 to include other values, such as recreation and protection of water quality. A panel of appeals judges concluded there was no enforceable contract between the counties and the state.The Oregon Supreme Court will not hear an appeal by 13 counties that sought more than $1 billion from the state for past losses and future proceeds from some timber sales on state forests.

The court announced its decision not to take up the case on Friday, Sept. 16. As is usual, the justices did not specify reasons for their rejection of the appeal, which was among those the court listed in its release that it would not hear.

The court left in place an April 27 decision by the Oregon Court of Appeals, which tossed out a $1.1 billion judgment that the counties won in 2019 in Linn County Circuit Court. A three-member appeals panel ruled then that the counties did not have a legally binding contract with the state when the forest lands were transferred in 1941 to secure their "greatest permanent value."

Acting as the Council of Forest Trust Land Counties, they argued that maximizing timber production should be the predominant use on those 700,000 acres of forest lands, and filed their lawsuit in 2016. (Two of the 15 member counties, Benton and Clatsop, opted out of the lawsuit.)

The state Board of Forestry defined "greatest permanent value" in 1998 and began multiple-use management of the forests in 2000. Among those uses: Recreation and protection of water quality.

"Considering the text, context, and legislative history of the provision of Oregon Laws 1941 … we conclude that that provision is not a term in a statutory contract between the state on the one hand, and various Oregon counties on the other," Judge Douglas Tookey wrote for the three-member appeals panel.

The state had appealed a $1.1 billion judgment by a Linn County jury for the counties after a trial conducted by Circuit Judge Daniel Murphy, who has since retired. The counties had urged the Court of Appeals to reinstate Oregon's requirement for prejudgment interest, which would have boosted the award to $1.4 billion.

In the 2019 budget year — from July 1, 2018, to June 30, 2019, the most recent on record by the counties — Tillamook County led with $24.7 million in state timber receipts, followed by Clatsop County at $19.7 million, Washington County at $14.1 million, Marion County at $8.6 million, and Linn County at $5.9 million. Columbia County was seventh at $2.9 million.

Clackamas County, which has little state forest land, was 12th at $407,000. Multnomah County is not a member.

Total state payments to the counties that year were $86.9 million. The largest state forests are Clatsop and Tillamook, the latter crossing into Washington County.

Arguments

Virtually all of the current state and federal environmental protection laws came into effect after 1941. (Federal laws still would apply, regardless of the outcome.)

The Court of Appeals panel said:

"Nothing in the text of Oregon Laws 1941 … suggests that the Legislature intended the 'greatest permanent value' management standard to be an immutable promise."

In the counties' argument for the Supreme Court to hear their appeal, filed July 6, Portland lawyer John DiLorenzo concluded:

"The counties irrevocably conveyed hundreds of thousands of acres of land in reliance on the promise of management to secure their greatest permanent value. That promised revenue is a critical source of funding for services to rural Oregonians in particular. The class members cannot get their lands back, and they have no ability to recoup that funding other than holding the state accountable to its promise.

"The court should take review to correct this injustice — or, if it is truly the case that the state can manage Forest Trust Lands without regard to generating revenue for the counties that contributed that land in reliance on the state's inducements, then it should be the highest court in the state that makes that determination."

State lawyers argued that the counties had little chance of prevailing, and the high court would simply prolong the dispute if the justices heard the appeal.

"Moreover, keeping this case technically alive for another year or more is likely to hamper legislative and executive branch leaders trying to tackle the needs of rural communities constructively and collaboratively with the counties," their response argued.

Stimson Lumber and Hampton and Associates, two companies based in Washington County, paid for some of the preliminary research before the original lawsuit was filed in 2016.

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