Friday, February 25, 2022
CapitalPress.com 5
County authority debated at Oregon Court of
Appeals hearing over $1 billion timber judgment
By MATEUSZ PERKOWSKI
Capital Press
The fate of a $1 billion judgment
against Oregon’s state government won
by 14 counties may hinge on whether it
needed their approval to make forest pol-
icy changes.
The state government tried to con-
vince the Oregon Court of Appeals to
throw out that award during oral argu-
ments Feb. 22, claiming it’s never needed
permission to reduce logging on forest-
lands donated by the counties.
Lawmakers didn’t intend to tie their
hands in perpetuity in setting how state
forests would be managed under a 1941
law that required they provide the “great-
est permanent value,” said Benjamin
Gutman, the state’s solicitor general.
“The legislature knew it would have
to tweak various aspects of this. None of
that exudes an immutable contract,” he
said. “That’s just not refl ected in the text
or the legislative history of the statute.”
The local governments countered that
they must sign off on changes aff ecting
the forestlands, which they donated to
Oregon’s government in the 1930s and
1940s, since they generated money for
county coff ers.
“Contracts can evolve but they
require mutual assent. There is no evi-
dence of mutual assent here,” said John
DiLorenzo, attorney for Linn County,
the lead plaintiff , and the other aff ected
counties and taxing districts.
The legal dispute was heard by the
state’s appeals court more than two years
after a jury decided Oregon owes the
counties $1 billion for contract breach
— and roughly six years since they fi led
a lawsuit alleging state forest logging
reductions had cost them money.
At its core, the case is about what it
means to manage Oregon’s state forests
for the “greatest permanent value,” as
required by state law.
While the state government argues it
necessarily encompasses environmen-
tal and recreational considerations, the
14 counties claim they donated nearly
700,000 acres with the contractual
expectation that logging revenues would
be maximized.
“This was a key provision and it was
absolutely necessary to induce the trans-
fer of the lands,” DiLorenzo said. “The
state has decided to unilaterally change
that promise.”
In 2019, the counties and nearly 150
taxing districts within them convinced
the jury that Oregon had violated a con-
ee
fr
Oregon wine sales
boom but depend
on aging customers
By MATEUSZ PERKOWSKI
Capital Press
Mateusz Perkowski/Capital Press
The Oregon Court of Appeals has heard oral arguments in which the state
government sought to overturn a $1 billion judgment won by 14 counties
over its state forest policies.
tract to focus on cash-generating timber
harvests.
However, the state government claims
the lawsuit shouldn’t have even gone to
a jury because the counties are subdi-
visions of Oregon and can’t sue it for a
breach of contract.
“It’s a statutory obligation, not a con-
tractual obligation,” Gutman said.
Counties cannot seek fi nancial com-
pensation for “matters of statewide pub-
lic concern,” such as the management of
state forestlands for compliance with fed-
eral environmental laws and public recre-
ational needs, the state said.
It was entirely reasonable for the
counties to convey their forestlands to
the state, since the properties threatened
to become a drain on their fi nances at the
time, he said.
“We’re talking about lands that were
badly burned, that weren’t generating
revenue at all,” Gutman said. “The coun-
ties didn’t have the resources to rehabili-
tate them on their own.”
This argument didn’t sit right with the
county governments, who argued they’d
have no meaningful partnership with
Oregon’s government if they couldn’t
rely on contracts — such as those for
public health services.
It wouldn’t have made sense for the
counties to convey their properties if the
n
sio
s
i
m
ad
state government could only generate
timber revenue if it wanted to, DiLorenzo
said. “Who would have transferred all
that valuable land for that reason?”
The question, then, wasn’t only about
the “greatest permanent value” gained
from state forestlands, but who legally
gets to decide that value, he said.
Once both sides had fi led their written
arguments in the case, the appeals court
came back and asked them to clear up a
further matter.
Have the counties historically agreed
to changes in the Oregon law that gov-
erns state forestland management? And if
so, what was the legal “mechanism” for
those agreements?
Attorneys for Oregon and the 14
counties — Benton, Clackamas, Colum-
bia, Coos, Douglas, Josephine, Klamath,
Lane, Lincoln, Linn, Marion, Polk, Til-
lamook and Washington — did not see
eye-to-eye on this history.
The state government claimed the
legislative history of bills that aff ect state
forest management shows that counties
never had to give their approval for pol-
icy changes.
“There’s no reason to believe they
had the individual authority to approve
changes,” Gutman said. “If you take the
plaintiff ’s contractual claims seriously,
that mechanism has to be fi xed.”
Oregon wine producers
are outpacing other wine
regions in sales but face the
same industry-wide prob-
lem of aging core consum-
ers, experts say.
“It’s pretty stunning how
far ahead of the pack Ore-
gon was in 2021,” said Tom
Danowski, president and
CEO of the Oregon Wine
Board.
With 24% sales growth
last year, the state is “the
best performing region out
of all the majors” and con-
tinues to be the best posi-
tioned for more growth, said
Rob McMillan, executive
vice president and founder
of Silicon Valley Bank.
“Oregon is rocking it.
Oregon is the best thing
going on in the wine indus-
try, as far as I’m concerned,”
McMillan said Feb. 15
during the virtual Oregon
Wine Symposium.
The industry’s strong
fi nancial results don’t mean
it can aff ord to rest on its
laurels, especially with wor-
rying trends developing, he
said.
Wine consumption has
fl attened after a long period
of growth while consump-
tion of spirits has been grow-
ing and taking market share,
McMillan said.
The wine industry overall
is too reliant on older con-
sumers and Oregon shares
the same problem, he said.
For example, when asked
what they’d bring to a party,
roughly half of consumers
older than 65 said “wine” in
a survey, he said.
For other age groups, the
percentage who answered
“wine” was 30% or less,
McMillan said. “If we’re
not collecting mindshare
for people under 65, that’s
a serious threat we need to
address.”
Higher wine prices at
restaurants and reduced
sales of economically priced
wines at grocery stores don’t
bode well, as they often
serve as “on-ramps” for new
consumers, he said.
The wine industry is an
“incredibly good steward
of the land” but that envi-
ronmental consciousness
often “doesn’t end up on
the label,” which is a missed
opportunity, McMillan said.
One potential to create
new “on-ramps” is the rising
popularity of smaller wine
containers with a lower price
point, he said.
“We can’t depend on
65-plus consumers but that’s
what we’re doing and that’s
a mistake,” McMillan said.
“We’ve got to market to
people younger than 65.”
On the positive side, the
wine industry has found
ways to capitalize on chang-
ing consumer behaviors
during the coronavirus pan-
demic, said Lesley Ber-
glund, a coach with the
Wine Industry Sales Educa-
tion company.
“For most wineries, our
direct-to-consumer business
is better than ever,” she said.
The robust sales seen by
Oregon wineries led to a
stellar year in mergers and
acquisitions in 2021, with
more on the way, experts
said.
“Oregon has incredible
value to price,” both in terms
of wine quality and real
estate, said Erik McLaugh-
lin, CEO of METIS, a
merger consulting fi rm.
By all indications, 2022
is likely to be another major
year for mergers and acqui-
sitions, he said.
“We’ve never seen a pipe-
line like this,” McLaugh-
lin said. “We’re defi nitely
in a high-activity cycle. The
highest we’ve seen.”
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