Image provided by: University of Oregon Libraries; Eugene, OR
About Capital press. (Salem, OR) 19??-current | View Entire Issue (May 19, 2017)
12 CapitalPress.com May 19, 2017 Oregon Details of public ownership of forest unclear Ditch company explores By CLAIRE WITHYCOMBE Capital Bureau Florence 101 Elliott State Forest er th Riv Smi Reedsport U mpq ua R. Lakeside cif ic O cean 38 Pa SALEM — Now that a proposal to sell an expanse of state forestland is off the table, the broad outlines of an alterna- tive arrangement are just start- ing to take shape. Until this week, the state was considering selling the Elliott State Forest for $220.8 million to a partnership be- tween a Roseburg timber com- pany and Indian tribe. The State Land Board voted unanimously to stop that sale process in favor of continued public ownership Tuesday. Offi cials must tread careful- ly because the Elliott State For- est is a state trust land. It’s re- quired to generate revenues via timber harvests for the Com- mon School Fund. Revenues collected from activity on the forest are invested in the fund, and some money is disbursed from the fund every year to the state’s public K-12 schools. The State Land Board — Gov. Kate Brown, Secretary of State Dennis Richardson and Treasurer Tobias Read — is in the driver’s seat. How they choose to move forward on the forest is not without controversy: environ- mental groups, education advo- cates, school kids, Indian tribes and the timber industry have all weighed in. “I would argue there are very high expectations and of- ten competing priorities from the public on what the Elliott should and can provide for Oregonians,” Liz Dent, head of the state forests division for the Oregon Department of For- estry, told land board members during their meeting Tuesday. Some argue that environ- mental activists put the state in the position of needing to sell the forest after aggressive fed- eral lawsuits challenged how the state managed it. Increased restrictions drastically reduced how much timber could be har- vested on the forest and made the Elliott a fi nancial liability to the Common School Fund. Environmentalists, mean- while, counter that the state needs to manage public natural resources to forestall climate change and take a stand under a presidential administration decidedly unfriendly to envi- ronmental protections. Many aspects of continuing public ownership are yet to be determined, although the over- all intent is to keep the land 126 ORE. Area in detail N. Bend s Coo Coos Bay N Rive r 101 Capital Press graphic public while meeting the state’s obligations to the fund. How will the state pay for the forest? Brown has proposed using up to $100 million in bonds to buy a portion of the forest. That arrangement would mean a few things: $100 mil- lion that could be used for other state projects, such as building roads, would be used to buy a part of the Elliott, because the state has a limited amount of money it can borrow. It also means that the state would not only have to pay back that $100 million over time, but would also have to pay interest. The cost of that would be borne by the state’s general fund. Just how much the state pays in interest — on top of the $100 million it owes — de- pends on the bonding vehicle, Jason Miner, an adviser to the governor on natural resource issues, told the board Tuesday. The $100 million, if bor- rowed, would be deposited in the Common School Fund. Revenue from sales of timber harvested on the land would go to the Common School Fund, as well, and would not be used to pay off the bond. This arrangement requires legislative approval. Read con- tends there’s support for it in the Legislature, an argument supported by the testimony of Senate President Peter Court- ney, D-Salem, at the February meeting of the land board, who said he’d help the board fi nd a way to keep the Elliott public. But Richardson opposes bonding to buy a part of the forest. “I do not support a plan that relies on borrowing $100 mil- lion to buy a forest we already own,” Richardson said in a written statement Wednesday. Instead, he has suggested swapping the Elliott for com- mercial-grade sections of fed- eral forest — in other areas of the state that aren’t home to en- dangered species — that could be “monetized” by logging. Who will have access to the forest? Under the governor’s plan, public access would be main- tained throughout the forest, except in areas that are unsafe due to logging or wildfi re, or to protect certain resources. Under the acquisition pro- posal submitted by Lone Rock Resources, a Roseburg timber company, and the Cow Creek Band of Umpqua Tribe of Indi- ans only half of the land would have been accessible to the pub- lic. Who will manage the for- est? It’s not clear which public agency may manage the Elliott. Read has proposed that Oregon State University acquire it and run it as a research forest. There still could be a role for other groups, such as Indian tribes, to play in managing the land, Miner told the board. The $100 million in bonds that form the crux of the gov- ernor’s plan would pay for eco- logically sensitive areas of the forest. Her proposal includes negotiating what’s referred to as a habitat conservation plan on the rest of the land. What is a habitat conser- vation plan? A habitat conservation plan is a guide for how federal agen- cies will work with states or oth- er entities to protect endangered species while harvesting timber. One question raised at Tues- day’s meeting is the likelihood of such a plan getting approved. Dent, the head of state for- ests for ODF, told the land board she was optimistic. The possible $100 million in bond capacity relieves pres- sure to produce higher levels of timber harvests and signaled that the state was willing to take steps to preserve endan- gered species; and the potential of privatizing the land “under- scored the need for collabora- tion” among state and federal agencies, Dent said. State offi cials want the hab- itat conservation plan to stay even if there’s a change of own- ership. How would the OSU ac- quisition proposal mesh with the habitat conservation plan? OSU’s purchase of the land hinges in part on the approval of a habitat conservation plan. Under Read’s plan, OSU would not only buy the rest of the forest for no more than $121 million, but would dedi- cate a fi xed amount of money per year to research associated with the forest. That research could be funded by harvest or “other revenues, but must be assured as an ongoing commitment to the long-term continuity of the research,” according to an April 25 memorandum of under- standing from OSU President Ed Ray to Read. But there are a number of terms that have to be met in order for the university to buy the forest. “In short, there must be a viable business plan,” the memo of understanding states. What happens if the ar- rangement with OSU falls through? The university isn’t obligat- ed to buy the forest. So if the deal doesn’t work out, Read says, a “stakeholder advisory board” formed to consult on management issues and timber harvests will recommend oth- er potential buyers to the State Land Board. Is the plan legally sound? All three members of the land board are adamant that they need to meet their fi duciary responsibility to the Common School Fund. What they decide will be scrutinized by the Ore- gon School Boards Association. The association warned the board last week that its mem- ber districts may sue unless the amount of money that the forest is worth — $220.8 million, ac- cording to a state assessment — is paid to the fund. Read argues that the $100 million lessens the immedi- ate pressures on the Common School Fund, which sustained net losses on the Elliott be- tween 2012 and 2015, and functions as a “down payment” while the state secures a perma- nent public owner. OSBA’s executive director said his organization would be monitoring the proposals closely, and that any resolu- tion must meet the board’s fi - duciary duty to the fund. Another consideration is the cancellation of the sale protocol. While the Depart- ment of Justice has said that the Department of State Lands and the Land Board are under no legal obligation to Lone Rock and the Cow Creek Band of Umpqua Tribe of Indians, the entities say they spent about $500,000 to comply with the sale protocol. switch to irrigation district By KATY NESBITT For the Capital Press JOSEPH, Ore. – For more than 40 years Associated Ditch Co. has struggled to fi nd the money to fi x its aging Wal- lowa Lake dam This spring the private company announced it is ex- ploring an old idea with new enthusiasm. Exhausting several ave- nues over the years, including selling water to a downstream user, the ditch company’s board has found the support it needs to form an irrigation dis- trict, making funding such as low-interest Clean Water State Revolving Fund loans easier to access. Following a rash of dam inspections in the wake of the 1976 Teton Dam failure in Ida- ho, the dam was deemed un- safe to store the ditch compa- ny’s entire water allotment. In order to bring the dam back to full storage capacity and pro- tect water used by upper Wal- lowa Valley farmers valued at $36,079,000 per year, the dam needs to be rebuilt. Any reconstruction, Tom Butterfi eld, former Associated Ditch Co. president said, must include fi sh passage. That dol- lar amount, he said, is still be- ing studied. Butterfi eld’s son Dan is now the ditch company’s pres- ident. He said forming a dis- trict had been considered in the past. Jay McFetridge, a multi-generational Wallowa Lake water user, said when his grandfather was president of the ditch company in the late ’70s and early ’80s and his father in the ’90s the wor- ry was over the equitability, or perceived lack thereof, in how votes are tallied among water users under the rules of a dis- trict versus the one-vote-per- acre agreement currently used. “My dad said his biggest reason that it wouldn’t work, and they would not pursue at all, was because of the vot- ing,” McFetridge said. This time the suggestion came from Nate James of the Natural Resources Conser- vation Service when he was asked to help the board with its irrigation modernization plan. “About a year ago we met with Nate to look at fi nancing for piping spur ditches, screen- ing the ditches and possibly even putting in water measur- ing devices,” Butterfi eld said. James said he has worked with Wallowa Lake water us- ers individually to upgrade their systems, but with the scope and scale of the ditch company’s modernization needs, including reconstruc- tion of the dam, they need- ed extra funding sources not available to a private ditch company. A district, formed under state statute, would hold pub- lic meetings and be able to vote and process decisions in a timely manner. “They could see the bene- fi ts were very positive to going down this path,” James said. For technical assistance, James asked Farmers Conser- vation Alliance to work with the ditch company’s modern- ization committee. During their initial meeting, fi xing the dam was discussed. The alliance’s executive director, Julie O’Shea, said her organization started out manu- facturing fi sh screens for irri- gation districts, but after years of designing and installing screens she said her staff found it diffi cult to fi x one piece of an irrigation system without opening a box of other issues. “We realized there was a great need for irrigation dis- tricts to have people come in with expertise – not just from an engineering perspective, but a fi nancial and communi- ty-based one,” O’Shea said. Mateusz Perkowski/Capital Press Win a $200 Gift Card The U.S. District Courthouse in Eugene, Ore., where Oregon rad- ish seed growers are pursuing a $6.7 million lawsuit against a bank over alleged interference with crop sales. Oregon farmers sue bank for $6.7 million in radish seed dispute By MATEUSZ PERKOWSKI Capital Press Share your opinion about Capital Press and CapitalPress.com and you’ll be entered into a drawing to receive a $200 VISA gift card From now until May 31, 2017, you may access the survey online at CapitalPress.com/ readersurvey Capital Press is dedicated to bringing you the best in Ag news and advertising features from across the Northwest. To help us bring you an even better newspaper and website, we’re conducting a short reader survey of our subscribers and nonsubscribers. We’re inviting you to be a part of that survey. The contact information you provide will only be used for the drawing. We won’t rent or sell this information to any outside entity. The survey is being conducted for research purposes only. Your individual responses will be kept strictly confidential and no solicitation will occur due to your response. Thank you for helping us to make Capital Press and CapitalPress.com even more valuable to the communities that we serve. 190-050517 19-4/#13 A group of Oregon farmers is seeking $6.7 million from a bank for allegedly interfer- ing with sales of radish seed, causing it to lose value. The lawsuit fi led by the Radish Seed Growers’ As- sociation against Northwest Bank is the latest installment in a saga that began with the 2015 insolvency of Cover Crop Solutions, a seed com- pany. Cover Crop Solutions contracted with numerous Oregon farmers to grow a proprietary variety of radish seed but was unable to pay them due to fi nancial upheav- al caused by oversupply and weather disruptions. The seed company’s cred- itor — Northwest Bank of Warren, Pa. — then fi led a lawsuit against the growers, demanding ownership of the radish seed as collateral for a defaulted loan taken out by Cover Crop Solutions. In June 2016, U.S. District Judge Michael Mosman re- jected the bank’s claims that it owned the seed, but that hasn’t put an end to the mat- ter. Northwest Bank is now simultaneously challenging Mosman’s ruling before the 9th U.S. Circuit Court of Ap- peals and pursuing a malprac- tice complaint against the law fi rm that advised on the loan to Cover Crop Solutions. In the malpractice lawsuit, the bank acknowledges it had no collateral in the radish seed even as it argues otherwise before the 9th Circuit, ac- cording to the complaint fi led by the Radish Seed Growers Association, representing 38 growers, and two non-mem- ber farms. “These two positions are irreconcilable,” the complaint said. Due to the bank’s litiga- tion against the growers, they were unable to sell nearly 7.4 million pounds of radish seed in 2015, when it fetched roughly $1.30 per pound, the complaint said. Aside from losing value as it aged, the radish seed also competed against crops grown in later years, so farm- ers were only able to sell it for 56 cents per pound or less, the plaintiffs claim. The lawsuit aims to re- cover about $5.5 million in reduced seed value and $1.25 million in storage costs and additional expenses caused by Northwest Bank’s “wrongful interference.” The case has been assigned to U.S. Magistrate Judge Jolie Russo in Eugene, Ore. A representative of North- west Bank said the company doesn’t comment on pending litigation.
