Jack Swift
The BLM has currently proposed a Western Oregon Plan Revision which would in large measure extirpate the Oregon and California Railroad revested lands from the management control of the Clinton-Gore Northwest Forest Management Plan. The plan is aggressively opposed by environmental groups deeply committed to “Deep Ecology”: the preservation and creation of pristine natural woodlands untrammeled by human hands. The plan is favored by taxpayers and County governments who share in timber revenues generated by sustained yield timber harvesting.
A. WHAT ARE THE “O & C LANDS”?
The “O & C lands” are a peculiar portion of the public domain, essentially unique to Oregon and arising from a unique history. The terminology “O & C lands” derives from a land grant effected by Congress in 1866 whereby some four million acres of the public domain in Oregon were granted to the Oregon and California Railroad for the construction of a railroad connecting Portland, Oregon with the Union Central Railroad near Sacramento, California. As designed by Congress, the Oregon & California Railroad was to consist of two distinct corporations, one an Oregon corporation charged with construction starting in Portland, and one a California corporation which would begin construction near Sacramento. The arrangement called for each corporation to receive the promised grants as each completed twenty miles of construction.
The granted lands were not just the right-of-way lands for the course of the railroad. They also consisted of alternate sections of land extending 10 miles in either direction from the right-of-way. These were generally the odd numbered sections of land and this arrangement accounts for the generally checkerboard character of the present properties.
There were reasonable purposes behind this largesse on the part of the Congress. The granted lands could be used by the railroads as collateral for the financing of operations as the construction progressed. The granted lands could in turn be sold to settlers to populate the wilderness and provide a market for the completed railroad. To insure such settlement, Congress provided that the granted lands could be sold only to bona-fide settlers, that no more than a quarter section could be sold to any one purchaser, and that the lands could not be sold for more than $2.50 per acre. $2.50 per acre was the price charged by Congress for similar land under the Homestead Act.
The Oregon portion of the construction went through a period of legal chaos with two distinct entities at one time being incorporated by the State for the unique purposes of the grant but eventually the construction was effected, the lands were granted, and they were enrolled upon the county tax rolls. Nearly two million acres of the granted lands were sold by the Oregon corporation between the 1860s and early 1900s. To that point, the Oregon experience with the O & C Railroad grant was similar to the national experience in that era.
B. WHY IS THERE A PROBLEM?
Progress on the railroad went according to plan from Portland south. By the late 1870s construction had progressed to the mountains south of the Willamette Valley. Then things began to go awry. The majority of the remaining grant lands to the south were not really suitable to settlement in the Congressional scheme. They were mountain lands and heavily timbered. Even cleared of trees, these lands were neither arable nor suitable for settlement.
Sales faltered and in 1884 the Oregon and California Railroad declared bankruptcy. It was acquired by the Southern Pacific Railroad and in 1887 construction was completed to the Oregon line.
Because of developing market for timber per se, by 1900 the unsold timbered grant lands developed a value wildly in excess of the $2.50 per acre price limitation established by Congress. Not surprisingly, fraud entered the picture and the lands became the subject of highly illicit land speculation. Congress took action against further sales and litigation followed which reached the United States Supreme Court. Ultimately, in 1916, Congress declared a forfeiture of the unsold lands and revested them in the public domain under the administration of the Secretary of the Interior. It was an unfortunate fact that at the time of the revestment, the grant lands were on the public tax rolls in 18 Oregon counties. Counties had built their fiscal budgets around the tax income supposed to arise from these lands.
Federal fraud investigations began in 1900 which led to many criminal prosecutions and were the scandal of the day. In 1914 they led to civil action against the railroad. There followed 11 years of litigation, involving three trips to the Supreme Court. Confronted with the loss of their remaining grants, the railroad stopped paying taxes on the lands in 1914. Many counties, confronted with the revestment and taxes in arrears were facing bankruptcy.
Mindful of the inequities of the seizure vis-a-vis the O&C counties, and at the same time jealous of the Federal prerogative of immunity to taxation, Congress wrestled with the problem created by the revestment.
The 1916 Act (39 Stat. 218)
Initially the 1916 Chamberlain-Ferris Revestment Act provided for the immediate payment out of general funds of the Treasury of the accrued and unpaid taxes. At the same time, a special fund was created within the Treasury called “The Oregon and California land-grant fund.” This fund received the income from land and timber sales operations on the revested lands. That income was to be used to compensate the railroad for the lost land according to court judgment, pay off lien-holders on the revested lands, and reimburse the Treasury for payment of the accrued taxes at the time of the revestment. It was a provision of the 1916 Act that once the obligations against the fund had been paid by the income from timber and land sale operations, the fund would annually pay 25% of surplus revenues to the State for schools, 25% to the effected counties for schools and roads, 40% to the Reclamation Act fund, and 10% to the general fund of the United States.
The 1926 Act (44 Stat. 915)
In 1925, the Federal District Court in Portland finally adjudged who was due what under the termination of the land grant. The next year Congress revisited the issue in 1926. It passed the Stanfield Act which provided for the payment to the O&C counties of a sum of money equivalent to what the taxes would have been on the properties had they remained in private ownership for the years 1916 to 1926. In addition it provided for the annual payment to the counties of a sum equivalent to the annual taxes. The moneys so received by the counties were to be treated, distributed and used in the same manner as tax revenues and levees. Again, payment was from the general fund and created a charge against The Oregon and California land-grant fund. Apparently, the 1916 plan was something of a failure in that the O&C fund had not achieved a credit balance. The 1926 Act provides that the 25/25/40/10 participation in land revenues set up under the 1916 Act would not occur until and unless all charges against the land-grant fund had been fully liquidated and reimbursed.
The 1937 Act (50 Stat. 874)
The period 1926 to 1937 saw the coming of the great depression and apparently the 1926 Act did not solve the counties’ revenue problems. Congress visited the issue again in 1937. This 1937 Act is known as The O&C Sustained Yield (or McNary) Act. This Act again addressed the problem of the indebtedness of the O&C land-grant fund. It established the management of the timber lands involved as being dedicated to permanent forest production in comport with the dictates of sustained yield. In pertinent part, the Act mandates that “timber from such lands in an amount not less than one-half billion feet board measure, or not less than the annual sustained yield capacity when the same has been determined and declared, shall be sold annually, or so much thereof as can be sold at reasonable prices on a normal market.”
The objectives of this sustained yield concept of management were to provide a permanent source of timber supply, protect watersheds, regulate stream flow, contribute to the economic stability of local communities and industry, and to provide recreational facilities. Although the Act has been amended over the years, and although parts of it have been repealed, it remains the operative present day law for the administration of these O&C lands in the present United States Code beginning at Title 43 § 1181a.
The Act also established another unique characteristic of the O&C lands. Federal forests in the United States are generally managed through the Dept. of Agriculture by the U.S. Forest Service. The O&C are not. The Act specifically assigned their management to the Dept. of the Interior and they are managed by the BLM. This was no accident. The Dept. of Agriculture had a history of rampant clearing and elimination of forest for purposes of rendering the land arable and suitable for settlement and agriculture. This was consistent with the historic intent of Congress, particularly as evidenced by the long-lasting Homestead Act.
By the late 1930s a spirit of conservation was entering the land and public consciousness. In Washington there was great infighting between Interior and Agriculture over the new spirit of conservation for natural resources. Specifically, Interior was advocating a novel concept of “sustained yield” utilization. The assignment of the O&C to Interior was Congress’ decision to try it out. Because in 1960 Congress established the Multiple Use - Sustained Yield Act for management of the national forests, one could assume Congress was satisfied. The Multiple Use Sustained Yield Act is still the bedrock law regarding our national forests.
The 1937 Act provides for a four-way distribution of the revenues from the sustained yield utilization of these lands. The first 50% of revenues generated goes to the O&C counties to be used as other county funds. The next 25% was to be used to pay taxes on the lands accrued and unpaid under the 1926 Act, with provision that once such accrued taxes had been paid this 25% should be used to pay off the accrued indebtedness of the O&C fund to the general fund of the Treasury. Upon satisfaction of all indebtedness of the fund, this 25% would then be paid to the counties also. In the literature, this 25% is often referred to as the “plow back.” The final 25% is for the administration of the Act with any surplus being credited against the indebtedness of the O&C fund. All reimbursable historic charges against the O&C fund had finally been paid off by 1951 and in 1952 the counties in fact received both the authorized 50% and 25%. Since 1953 they have not. Since then, by way of annual appropriation acts, Congress has directed that the first of the two 25% portions be used to pay for administration expenses, with any surplus in the second 25% portion dedicated to the same administration being credited to the general treasury. In this regard, annual appropriations have acted as annual one-year amendments to the original act. (See Skoko v. Andrus, 638 F.2d 1154 (9th Cir. 1979).)
Since 1937 the Federal government and the counties have generally shared the revenues from timber sales on a 50%-50% basis with the Federal government paying the expenses. For some forty years, things worked well for the affected taxpayers in South-Western Oregon under this scheme. Timber production was limited to quantities which could be sustained by the practice of re-generation. Local economies were provided multitudes of jobs and the purchasing power of those employed. Outdoor enthusiasts enjoyed the access to public lands provided by logging roads. The country benefited from the use of the timber produced. No one was confronted with unmanageable tax liabilities. Then along came the owl.
C. THE COMING OF THE CRISIS
In the 1970s and 1980s a great fight arose in California between environmentalists and the timber industry regarding the harvest of old growth redwood trees. At issue were stands of the oldest living examples. It was noted by the environmentalists that these old growth stands were often inhabited by northern spotted owls. There ensued a political push to add the owl to the endangered species list as “threatened” on the basis that his habitat was being destroyed. The environmentalists were successful and in 1990, the owl was declared “threatened.”
Based upon its new status, a lot of litigation was initiated in the 1990s attacking timber harvests up and down Oregon, environmentalists finding owls wherever they found old growth. Site by site litigation stifled timber sales and production revenues to the counties dwindled.
Important Litigation
The ongoing litigation produced two significant and controlling cases. In Headwaters, Inc. v. B.L.M., 914 F.2d 1174 (9th Cir. 1990) the Ninth Circuit established that the 1937 O&C Act mandated that the primary utilization of the O&C lands is for timber production managed in conformity with the provision of sustained yield. Portland Audubon Society v. Babbitt, 998 F.2d 705 (9th Cir. 1993) established that dictates of the Endangered Species Act applied to the O&C lands and that the bird-watching of owls was not to compromised by logging operations.
In the midst of the era of litigation, production in the affected counties began to vary wildly. In 1990, Josephine County received a record high $24,608,000 in O&C sustained yield payments followed by $8,346,000 in 1991. In the same two years, Douglas County went from $51,138,000 to $17,447,000 and Jackson County went from $31,922,000 to $10,826,000. Given the state of the litigations and the Portland Audubon ruling, things did not look good for the counties.
The Act of 1993 (107 Stat. 682)
In response to the compromised situation, Congress passed Section 13983 of The Omnibus Budget Reconciliation Act of 1993. That section provided for annual payment to the O&C counties for the years 1994 through 1998 of a special payment amount consisting of a declining percentage of the average annual revenues received by the counties from 1986 through 1990. The Section also provided for payment in the years 1999 through 2003 of the greater of the 50% mandated under the O&C Act or the special payment. This Act put the O&C counties on the Federal Welfare rolls. Funds paid the counties since 1994 have come from the general funds of United States Government derived from Federal taxpayers. As conceived by the 1993 Act, the amounts paid have dwindled. Josephine County in 1994 received $9,493,000; in 1995, $9,158,000; in 1996, 8,823,000; in 1997, 8,488,000; and in 1998, $8,153,000.
The Clinton-Gore Master Plan
With provision to maintain the counties on the public dole, the Clinton administration in 1994 adopted a master plan to make other use of forest lands in the Pacific Northwest. This is the Northwest Forest Plan of 1994 which is reflected in the 1995 Resource Management Plans of the BLM in Western Oregon, so-called RMPs. These plans call for the establishment of extensive reserves in the Oregon timber lands, up to 10 million acres of the 22 million in Federal ownership. These reserves are primarily for the benefit of spotted owls. Under these plans as adopted, 80% of the timber producing lands available for sustained yield harvest under the Act of 1937 in The Medford District of the BLM, encompassing both Jackson and Josephine Counties, have been reserved for the benefit of the owls and other cherished but endangered species. These plans devastated the economies and industries of South-Western Oregon and, but for the 1993 Act, the Clinton-Gore Master Plan would have devastated the budgets of the O&C counties themselves.
Current Litigation
To their credit, the counties through the Association of O&C Counties brought suit in the Federal District Court for the District of Columbia District in 1994, challenging the Northwest Forest Management Plan and the local RMPs. The case is Association of O&C Counties and Douglas County, Oregon v. Babbitt and Dombeck, Civ. No. 94-1044 (U.S.D.C. D.C.), Appeal No. 96-5222 (D.C. Cir.) In the same year, the American Forest Resource Council also brought suit in the same court with the same objective. American Forest Resource Council et al. v. Clarke, Civ. No. 94-1031 TPJ (U.S.D.C. D.C.), Appeal No. 02-5024 (D.C. Cir.) Both cases went into protracted litigation and appeal. These cases consolidated and then settled in 2003 with the agreement of the BLM to review and, perhaps, revise the local RMPs. Particularly, the BLM agreed to consider alternatives to the current plan of extensive reserves with an eye to implementing the sustained yield objectives of the 1937 Act. These reviews are currently underway and new RMPs incorporating whatever revisions will be concluded in 2008. The Western Oregon Plan Revision (WOPR) currently under review is the current approach proposal.
The Act of 2000 (114 Stat. 1607)
In 2000 Congress repealed its 1993 Act and replaced it with The Secure Rural Schools and Community Self-Determination Act of 2000. This act is once again one of welfare and dependent upon tax dollars for funding. It provides for payments out of the general fund to the O&C counties for the years 2001 through 2006. Last year, after great controversy, it was renewed for one year. This is the Act under which counties are now receiving payments with regard to the O&C lands. Unless renewed, the last payment under the Act was made in October of 2007 providing funding from June, 2007 to June, 2008. If the Act is not renewed or timber production undertaken, in June of 2008, taxpayers must make up the difference in the affected counties.
D. WHAT IS TO BE DONE?
The questions confronting every interested taxpayer, the timber industry, county governments, outdoorsmen, and the environmentalists are the same questions currently being addressed by the BLM in its review of local Resource Management Plans. Should there be a balancing of interests in the O&C lands between the dictates of sustained yield and immaculate preservation?
If so, what should the utilization plan look like? To what extent, if at all, can reservation of a parcel in a checkerboard establish a habitat? What is a reasonable reservation for species? Is reservation beneficial for the rest of the wildlife? What compromises are appropriate to achieve a balanced utilization?
The people need an opinion on these questions and their opinion deserves a hearing. The public interest is one of responsible stewardship of these lands. The natural resources at issue have the capacity to remove the O&C counties from the public dole. Balanced, responsible utilization of the resources under the principle of stewardship and sustained yield will provide for the economic well-being of South-Western Oregon, for individuals and industry as well as government. Balanced utilization will provide reasonable accommodation for the preservation of species. Balanced utilization will provide better habitat for wildlife, and will provide recreational access for all outdoor enthusiasts.
The 6% Solution
SORA recommends a plan of balanced utilization. Some lands should be preserved for their unique natural splendor. We have done that with national parks, monuments, and scenic river reserves. Some lands should be preserved for their legacy value as wilderness. We have done that. At the same time, some lands should be set aside for utilization and exploitation but strictly limited by principles of sustained yield. SORA believes the 1937 O&C Act does that. Finally, the majority of our public lands should be available for multiple uses and, where utilized commercially, limited again by principles of sustained yield. That is precisely the situation of the national forests. Our existing legislative scheme is a remarkably balanced plan.
The range of the northern spotted owl encompasses 24.5 million acres of public forest involving all categories of public ownership. The O&C lands constitute some 2.2 million acres of that total. Of the gross O&C lands there have been Congressional withdrawals and withdrawals for water quality and administrative purposes. At maximum, there are now available some 1.5 million acres for timber management (71% of the O&C). This is a mere 6% of the land allocation pie. It is a remarkable imbalance in favor of preservation over conservation. But it is all that is required to serve us all nicely.
All that is needed is that no special considerations of owl recovery be applied to the O&C beyond the reservations dictated by administration, Congress, and water concerns.
In short, SORA recommends that the law governing the management of these public lands be applied as written and intended.
To this end, the people need to speak: to their papers, to their elected officials, to the BLM, in writing, in testimony at hearings, and, if need be, in court.
SORA Publication No. 1A, October, 2007
