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Panel rules 15 counties lack binding contract with state based on maximum logging, instead of multiple use.

The Oregon Court of Appeals has tossed out a $1 billion judgment won by 15 counties against the state for past losses and future proceeds from some timber sales on state forests.

The court, in a decision released Wednesday, April 27, said the counties did not have a legally binding contract with the state when the 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.

The state Board of Forestry defined "greatest permanent value" in 1998 and began multiple-use management of the forests in 2000.

"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 panel.

Attorney General Ellen Rosenblum issued a statement praising the decision:

"The court agreed with the state's legal position in recognizing that Oregon's forests serve a full range of environmental, recreational, and economic uses that the Department of Forestry has authority to balance in order to secure the greatest value to all Oregonians."

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 part of this group.

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.

80-plus years

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."

The panel heard arguments on Feb. 22. The other judges were Robyn Aoyagi and Rives Kistler, also a retired Supreme Court justice.

The panel returned the lawsuit to Linn County, where a jury awarded a $1 billion judgment against the state in 2019. The judge in the case — Daniel Murphy, who has since retired — ruled that the counties had legal standing to sue the state, and that environmental advocates could not intervene. (The Court of Appeals allowed the advocates, and the Oregon Forest Industries Council, to take part in the state's appeal.)

Clatsop and Benton counties opted out of the lawsuit.

What's next?

The counties can request a hearing by the full 13-member court, which has done so only once since the number of judges was increased in 2013. They also can appeal to the Oregon Supreme Court, which has discretion over most cases it chooses to hear.

The counties were represented in court by John DiLorenzo, a Portland lawyer whose firm Davis Wright Tremaine stood to gain as much as 15% in contingency fees if the counties prevail, though the amount is set by the courts.

DiLorenzo said he would file an appeal with the Oregon Supreme Court. He said the decision by the panel fails to account for the negative social and economic effects on the counties by the state's failure to consult with them on forest management.

"The lack of productive employment in these communities has led to substance abuse, violence, lack of educational opportunity and general hopelessness and despair," he told the Capital Press.

The counties originally sought as much as $1.4 billion, but the amount was lowered to a maximum of $1.1 billion because Oregon's requirement for prejudgment interest was not applied. The counties asked the Court of Appeals to require it, but the panel dismissed the request when it nullified the judgment.

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

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NOTE: Adds reactions from Attorney General Ellen Rosenblum, John DiLorenzo, who was the plaintiffs' lawyer. Adjusts headline.

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