Andy Kerr

Conservationist, Writer, Analyst, Operative, Agitator, Strategist, Tactitian, Schmoozer, Raconteur

The Elliott State Forest Will Not Be Privatized—But Will It Be Saved?

On the morning of Tuesday May 9, a little known public body called the State Land Board met in a state office building in Salem. While the SLB itself is little known, its three members are Oregon’s highest elected officials: Governor Kate Brown, Secretary of State Dennis Richardson, and State Treasurer Tobias Read. The main topic of the bimonthly meeting was the fate of the Elliott State Forest (ESF), located in Coos and Douglas counties in the Oregon Coast Range (see map below).

Three months previously, ironically on February 14, Oregon Statehood Day, the SLB had voted to proceed with selling the 82,461-acre forest. In a shocking and surprising development, State Treasurer Read failed to join with Governor Brown, both Democrats, to support keeping the ESF “public.” Instead Read joined with Secretary of State Richardson, a Republican, to vote for selling the forest for $220.8 million to a timber syndicate called Lone Rock Resources.

The Oregon Department of State Lands was directed to proceed with the sale.

 .Though large, the trees are relatively young in that the Elliott State Forest is very productive. Image David Tvedt.

.Though large, the trees are relatively young in that the Elliott State Forest is very productive. Image David Tvedt.

The condemnation of the SLB action was immediate, massive, broad, and deep. Newspapers editorialized to keep the Elliott “public.” Unfairly, but understandably, most of the wrath befell Read and not Richardson. Liberal Democrat Read was expected to support public lands, while conservative Republican Richardson was expected to support privatization.

How could it have come to this in the generally progressive and very pro–public land state of Oregon? Even Donald Trump (not my favorite president; in my mind, he’s in a tie with James Buchanan at this point) doesn’t favor privatizing public lands. He may want to degrade them for short-term industrial profit, but he doesn’t want to transfer title from the United States. How could the Oregon state treasurer be to the right of Donald Trump regarding public lands?

The Elliott State Forest is not, in fact, public land. Rather, it is trust land with public value and public access, so the public generally considers it public land. The legal distinction is vitally important in this saga.

The ESF is an asset of the Common School Fund (CSF), a fund established by the Oregon Constitution to hold and manage specific assets for the benefit of Oregon’s public school children. The children are the beneficiaries of the trust and, constitutionally, the SLB is the fiduciary for the trust. Wikipedia tells us:

A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other asset for another person. . . . In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance, and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts.

As “fids,” the SLB members are obligated to manage the CSF for the benefit of the children. At all times and in all matters, they must act in the best interests of the schoolchildren of Oregon.

Added to this fiduciary obligation are specific legal commands in the Oregon Statehood Act of 1859 and the Oregon Constitution. The statehood act granted sections 16 and 36 (or substitute lands) in every township in Oregon “for the use of schools.” This worked out to be ~3.4 million acres. Today, the CSF holds only ~1.5 million acres of “constitutional” lands, the rest having been sold in previous centuries, often under fraudulent circumstances. In 1930, almost all the state sections inside of national forests across the state were swapped out for a solid block of national forest in the Coast Range that is now the Elliott State Forest.

The Oregon Constitution prescribes that the SLB shall “manage lands under its jurisdiction with the object of obtaining the greatest benefit for the people of this state, consistent with the conservation of this resource under sound techniques of land management.” The latter clause was an amendment approved by the voters in 1968.

The courts have concluded over the centuries that a fiduciary has wide latitude in determining what is best for the beneficiary. A fiduciary is not obligated to immediately sell an underperforming asset, although a fid can choose to do so. That was what two SLB members chose to do last February.

Why is the ESF underperforming as an asset? The ESF is home to three species listed under the federal Endangered Species Act: the northern spotted owl, the marbled murrelet, and the coho salmon. Litigation was brought by the Audubon Society of Portland, the Center for Biological Diversity, and the Cascadia Wildlands against the Oregon Department of State Lands for violations of the federal Endangered Species Act. After that, timber sales—and therefore timber sale receipts to the CSF—plummeted.

This drop in ESF timber receipts precipitated a crisis, albeit a manufactured one. The Oregon timber industry has long lusted to privatize the ESF, having commissioned an appraisal of the land in 2005 that showed more money could be made converting the “public” forestland to private timberland and investing the sale proceeds in more lucrative investments.

After more fully appreciating the intensity of Oregonians’ love for public lands, Treasurer Read changed his position on privatization. He says, and I believe him, he never wanted to sell the forest but felt he had to do so to fulfill his fiduciary duty. I—and many lawyers—differ with that judgment, but given the wide latitude afforded a fiduciary, it’s his call, not mine. But he came into the May 9 meeting with a different proposal.

Under Oregon’s open-meetings law, the majority of a public body cannot conduct any business except in public. Designed to aid transparency, the law is somewhat problematic with a three-member public body such as the SLB. Members and their staffs cannot communicate, discuss, and negotiate with each other in private. But the members can communicate their positions to the public, and SLB members can read websites like anyone else. So on that Tuesday morning in May, we all knew that the three SLB members would present three distinct plans.

The governor’s plan would secure $100 million of bonding from the Oregon Legislature that would be paid to the Common School Fund to divest the fund of the Elliott State Forest’s most important conservation lands (older forest and streamsides). The rest of the lands would remain in the CSF and become subject to a habitat conservation plan, a creature of the federal Endangered Species Act that allows legal “take” of listed species in exchange for other conservation activities.

The secretary of state’s plan would have the federal government swap young plantation stands elsewhere in the state for the ESF and return the ESF to the Siuslaw National Forest from whence it came in 1930. Richardson opposes the use of bond monies.

The state treasurer’s plan would use $100 million in bonding as proposed by the governor but would fully divest all of the ESF from the CSF by selling the remaining lands to a public body. In this way, the CSF would receive the full $220.8 million of asset value and the lands would become truly public lands. Read convinced Oregon State University President Edward Ray to agree to explore the option of acquiring the entire ESF using OSU’s independent bonding authority, as well as other funds.

All the plans have one thing in common: true public ownership. The privatization threat is dead and gone.

From there on, though, the nuances become important. Richardson doesn’t support state bonding. Read doesn’t want any part of the ESF to remain in the CSF. Although Brown proposed having part of the ESF remain in the CSF, she could support full divestiture to a public body. The upshot of all of this is that the SLB directed the Oregon Department of State Lands director to go forth and explore all three options and variants to them.

The existential crisis for public lands conservationists has passed, but the Elliott State Forest is not yet fully in the hands of conservation. It all depends on where the lands end up and the purposes for which they are bought out of the Common School Fund. Perhaps in a later blog post I will explore the strengths and weaknesses of each of the three approaches and offer up what I think is the best solution.

Though acting in this capacity as fiduciaries, the members of the SLB are still politicians. Each member of the Oregon State Land Board either is the governor or wants to be, and that is generally a good thing for public lands.

Governor Brown deserves our unreserved respect. She stepped up for the Elliott State Forest and refused to accept privatization.

State Treasurer Read deserves our reserved respect. New to the job, he made a very bad call. But he recognized the error of his ways and is now pushing for full divestiture.

Secretary of State Richardson deserves our reluctant respect in that he now supports public ownership for the Elliott State Forest. If Read hadn’t changed his position, Richardson wouldn’t have either. Given the high unlikelihood that the federal government would trade other lands for the Elliott State Forest, Richardson’s failure to support state bonding effectively means that the ESF wouldn’t be saved by his proposal. His rationale is in the form of a rhetorical question: “Why should the state buy something it already owns?” Simply framed, superficially enticing, but totally wrong. The State of Oregon doesn’t own it, but rather the schoolchildren now and in the future own it. Faced with a similar situation, the State of Washington since 1989 has been appropriating money from its general fund to buy high conservation value school trust lands out of their fiduciary bondage and into full public ownership.

The debate over the Elliott State Forest is not just about maintaining public access. It’s also about which public values the forest should be managed for. Will it be fully for the conservation and restoration of older forest and streams, or will a significant portion of it be managed for maximal timber production? As long as any of the Elliott State Forest is in the Common School Fund, the pressure to maximally log for revenue at the expense of the conservation of nature will continue.

The social license to clear-cut federal public forestlands has long passed and is now passing for state public forestlands. Last Tuesday, the Elliott State Forest was not lost to private exploitation. However, it has yet to be saved for this and future generations.

 Most of the Elliott State Forest is older natural forest stands. Source: Oregon Wild.

Most of the Elliott State Forest is older natural forest stands. Source: Oregon Wild.