Cnty. of Linn v. State

319 Or.App. 288

COUNTY OF LINN, on behalf of itself and others similarly situated, Plaintiff-Respondent Cross-Appellant, v. STATE OF OREGON and State Forestry Department, an Oregon administrative agency, Defendants-Appellants Cross-Respondents.

A173658

Court of Appeals of Oregon

April 27, 2022

Argued and submitted February 22, 2022

Linn County Circuit Court 16 CV0770 8; Thomas McHill, Judge.

Benjamin Gutman, Solicitor General, argued the cause for appellants-cross-respondents. Also on the briefs were Ellen F. Rosenblum, Attorney General, Carson L. Whitehead Assistant Attorney General, and Christopher A. Perdue Assistant Attorney General.

John A. DiLorenzo, Jr., argued the cause for respondent-cross-appellant. Also on the combined answering and cross-opening brief were John F. McGrory, Jr., Gregory A Chaimov, Aaron K. Stuckey, Kevin H. Kono, Christopher Swift, Alicia Leduc, Trinity Madrid, and David Wright Tremaine LLP. Also on the reply brief were John F. McGrory, Jr., Gregory A. Chaimov, Carol J. Bernick, Aaron K. Stuckey, Kevin H. Kono, Chris Swift, Trinity Madrid, and Davis Wright Tremaine LLP.

Ralph O. Bloemers and Crag Law Center fled the brief amici curiae for Northwest Guides & Anglers, North Coast Communities for Watershed Protection, Oregon Wild, Native Fish Society, Wild Salmon Center, Cascadia Wildlands, Center for Biological Diversity, Umpqua Watersheds and Beyond Toxics.

Ryan P. Steen, Kirk B. Maag, Crystal S. Chase, and Stoel Rives LLP fled the brief amicus curiae for Oregon Forest & Industries Council. Rob Bovett and Lauren Smith fled the brief amicus cur-iae for Council of Forest Trust Land Counties.

Before Tookey, Presiding Judge, and Aoyagi, Judge, and Kistler, Senior Judge.

TOOKEY, P. J.

In 2016, plaintiff Linn County brought this class action against defendants, the State of Oregon and the State Forestry Department, alleging a single claim of breach of contract and seeking over $1 billion in damages.

Linn County's complaint alleged that it and other Oregon counties had transferred forestlands to the state pursuant to Oregon Laws 1939, chapter 478, amended by Oregon Laws 1941, chapter 236, codified as amended at ORS 530.010 to 530.181 (the Act); that the Act required the state to return to the counties a specified portion of the revenues derived from defendants' management of those forestlands that defendants had a contractual obligation under the Act to manage the forestlands in a manner so as to "maximize the potential revenue that should be generated" from the forestlands; and that defendants breached that contractual obligation by failing to manage the forestlands so as to maximize revenue.

Defendants moved to dismiss on the ground that the Act did not create a contractual obligation on the part of defendants to manage the forestlands so as to maximize revenue. After denying the motion, the trial court certified a plaintiff class comprising the fifteen Oregon counties that transferred land to the state pursuant to the Act, as well as certain governmental entities with whom those counties share such revenue.

The case was tried to a jury, which found in favor of plaintiffs, awarding them over $1 billion in damages for past and future economic losses. Defendants appeal the resulting judgment, raising 28 assignments of error.

Because it is dispositive, in this opinion we address defendants' seventh assignment of error, in which they assert that the trial court erred in denying defendants' motion to dismiss. In their motion to dismiss, as noted, defendants argued that they did not have a contractual obligation under the Act to manage the forestlands to maximize revenue. As addressed below, analyzing that assignment of error requires that we consider the obligations owed by the state to various Oregon counties with regard to lands acquired by the state under the Act. Specifically, as explained below, we must consider whether the provision in Oregon Laws 1941, chapter 236, section 5, codified as amended at ORS 530.050, requiring the Board of Forestry (the Board) to manage certain lands "so as to secure the greatest permanent value of such lands to the state," is a term in a statutory contract between the state, on the one hand, and various Oregon counties, on the other.

Considering the text, context, and legislative history of the provision of Oregon Laws 1941, chapter 236, section 5, requiring the Board to manage lands transferred by counties to the state under the Act "to secure the greatest permanent value of such lands to the state," 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. Accordingly, we reverse and remand.^[1]

I. BACKGROUND

A. The State, the Counties, and Management of Oregon's Forestlands

Oregon counties and the state have a long history of cooperation in the management of Oregon's forestlands.

In 1911, the legislature created the Board, which was responsible for appointing a State Forester. Or Laws 1911, ch 278, §§ 1, 2. The 1911 enactment provided that the State Forester "shall execute all matters pertaining to forestry within the jurisdiction of the State," and required the State Forester to, among other actions, "co-operate with land owners, counties or others in forest protection." id. § 2.

In 1931, the legislature enacted legislation authorizing the Board to acquire lands from Oregon counties. Under that enactment, the Board was authorized to acquire land via "gift" or "purchase," or "transfer of title to the state by any county," as long as such lands were "suited chiefly" for "[g]rowing forest crops, water conservation, watershed protection, [or] recreation." Or Laws 1931, ch 93, §§ 1, 2. Lands acquired under the 1931 enactment were to be "administered and managed by the state board of forestry for any or all of the following purposes: (a) Continuous forest production and so far as practicable to promote sustained yield forest management for the forest units of which such lands are a part; (b) water conservation or watershed protection; [or] (c) recreation." Id. § 3.

With regard to land acquired by the state under the 1931 enactment, the 1931 enactment required the state to pay to the counties "5 cents per acre annually and 12 1/2 per cent of all revenues received from said lands." Id. § 5.

A new scheme for acquiring forestlands-the Act- was enacted in 1939, Or Laws 1939, chapter 478, and the Act was amended by Oregon Laws 1941, chapter 236, in 1941.

Currently, the Act is codified at ORS 530.010 to 530.181. The Act authorizes counties to convey land to the Board, and such land is then designated as state forest. ORS 530.010; see also Tillamook Co. v. State Board of Forestry, 302 Or. 404, 407-09, 730 P.2d 1214 (1986) (describing the statutory scheme). As was the case under the 1931 enactment, under the Act, the state bears certain management responsibilities for that land, and the state and the county that conveyed the land to the state divide revenues derived from that land under a statutory distribution formula. ORS 530.050 (setting forth management responsibilities of the State Forester); ORS 530.110 (setting forth distribution formula for revenue derived from land acquired under the Act).

Because they are central to our analysis of defendants' seventh assignment of error, we next set forth the relevant provisions of the 1941 Act.

B. The 1941 Act

Under section 1 of the 1941 Act, the Board was authorized to "acquire, by purchase, donation, devise or exchange" from any "public, quasi-public or private owner" land that was "chiefly valuable for the production of forest crops, watershed protection and development, erosion control, grazing, recreation or forest administrative purposes." Or Laws 1941, ch 236, § l.^[2] The Board, however, was prohibited from acquiring land without the approval of the county in which such lands were situated. Id. Land acquired under section 1 was designated as "state forests." Id.

Section 3 of the 1941 Act authorized Oregon counties "to convey to the state for state forests any lands heretofore or hereafter acquired by such county *** in consideration of the payment to such county of the percentage of revenue derived from such lands as provided in section 9 of this act."^[3]Section 9 of the 1941 Act, in turn, provided a distribution formula for "all revenues derived from lands acquired from counties pursuant to section 3."^[4] Under the formula set forth in section 9, after five cents per acre was deducted, 75 percent of all revenue derived from land acquired from counties was to go to the counties, and 25 percent was to be retained by the state. Id. § 9.

Section 5 of the 1941 Act directed how the Board was to manage lands acquired under the Act, which, in this opinion, we refer to as the "management standard." That section of the 1941 Act provided that the Board "shall manage the lands acquired pursuant to this act so as to secure the greatest permanent value of such lands to the state" and, to that end, authorized and empowered the Board to engage in certain acts. Id. § 5 (emphasis added).^[5] Among those acts, the Board was authorized and empowered to "protect said lands from fire, disease and insect pests"; "sell forest products from said lands"; execute contracts for "mining and removal of minerals and fossils"; "permit the use of said lands for grazing, recreation and other purposes when, in the opinion of the board, such use is not detrimental to the purposes of this act"; and "do all things and to make all rules and regulations, not inconsistent with law, necessary or convenient for the management, protection, utilization and conservation of said lands." Id. The management standard in Section 5 of the...