Last week’s removal of a four-year extension of the federal timber safety net from the energy bill passed by the U.S. Senate hasn’t spelled defeat for the program that provides Douglas County with $52 million a year.

Congressional leaders were working over the weekend to continue the push to have the reauthorization of the county payments bill approved before the holiday break.

However, Oregon Sen. Ron Wyden said he was “deeply disappointed” that the timber payments legislation was removed from the energy bill. After Thursday’s vote on the bill, Wyden met with Senate Majority Leader Harry Reid of Nevada, Sen. Max Baucus of Montana, chairman of the Senate Finance Committee, and Sen. Jeff Bingaman of New Mexico, chairman of the Senate Energy and Natural Resources Committee.

The Senate leaders told Wyden they remained committed to continuing the payments program for more than 700 counties in 41 states with federal forests within their borders, Wyden spokesman Tom Towslee said.

“They agreed to put it wherever they could,” Towslee said. “We’re trying to find a home for the county payments bill.”

The $1.5 billion safety net extension wasn’t singled out for removal from the energy bill, Towslee said. It was contained in a package of programs for which funding was being sought. The entire package was removed before it was presented to the Senate for the vote.

One possibility for reviving the safety net extension is to have it placed in the omnibus spending bill that is under discussion by Congress. President George W. Bush has threatened to veto the bill, however, unless it stays below a $933 billion cap he set in his budget message.

The extension is essential, county and congressional officials say, to provide time to come up with a plan to increase forest revenues that would provide counties with added income to replace safety net revenues.

Douglas County receives about $39.17 million annually in money used for county programs. The rest of the $52 million goes to the state school fund and for forest projects that don’t involve county departments or employees.

One idea that has been mentioned is providing the 18 western Oregon counties that contain Oregon & California Railroad lands with 75 percent of O&C timber revenues. Under the 1937 O&C Act, the forests were to be managed on a sustained yield basis for timber production. Through that, counties were to receive half of the timber receipts and another 25 percent after the federal government was repaid the money used to buy back the property following a massive land scandal.


<b> Fraud led to public ownership of O&C lands.</b>

In 1866, Congress approved a bill from Oregon Sen. George H. Williams to grant 3.7 million acres to a company designated by the Oregon Legislature to construct a rail line from the Columbia River through the Willamette Valley through the Siskiyous Mountains to the California border.

The bill stipulated that homesteaders could buy 160-acre parcels at a price “not exceeding $2.50 an acre,” according to a 2006 history of the O&C lands by Joseph S. Miller.

While that might have been a fair price for prairie lands in Nebraska or Iowa, the virgin forests of western Oregon were considered much more valuable. As a result, speculators and land looters found ways to circumvent the purchase restrictions and bought up large tracts of land.

A scandal ensued and eventually 1,032 people were indicted. The arrest list included both of Oregon’s senators, its representatives, the state’s U.S. attorney, U.S. marshal and U.S. surveyor general, along with a staggering list of businessmen and prominent citizens.

Those who carried out the fraud approached the dregs of Portland society and offered them a pittance, a bottle of whiskey, in some cases, Miller wrote, to apply for the land grants. The fraudulent land applications were approved by local General Land Office (predecessor to the Bureau of Land Management) officials and ratified by G.L.O. Commissioner Binger Hermann, a former U.S. Representative from Roseburg.

“The fix was in from top to bottom,” wrote Miller, who spent four decades as a lobbyist in Washington, D.C., for the Association of Oregon Counties. “This was the modus operandi of how more than 3 million acres of Oregon’s choicest timberlands were looted from the citizens of Oregon and the nation.”

Presidents William Henry Harrison, Grover Cleveland and William McKinley had looked the other way when informed of the corruption taking place in Oregon. It wasn’t until after McKinley was assassinated in September 1901 that anything happened.

The new president, Teddy Roosevelt, loathed corruption, even when it involved members of his own party. He instructed Ethan A. Hitchcock, the Interior secretary who informed him of the land fraud, to take action.

One of his first acts was to fire Hermann, but only after giving him a month to clean out his office. The time allowed Hermann to destroy thousands of documents, letters and other materials detailing the land fraud. With the evidence gone, Hermann was able to escape conviction during the later corruption trials.

Eventually, the federal government bought back the land that was fraudulently purchased. That became the cornerstone for the 2.4 million acres set aside as the O&C lands.


<b>Payment formula</b>

Twenty-five percent of the proceeds from timber production on the O&C lands was to be provided to the federal government to pay back the costs of buying back the tainted land and then given to the counties as a payment in lieu of property taxes that would have been assessed if the land was in private ownership. It took until 1952 before that debt was paid back. The counties later agreed to give up that 25 percent in exchange for management of the O&C lands.

One of the biggest misconceptions among the public, Douglas County Commissioner Doug Robertson said, is that the O&C lands and national forests managed by the U.S. Forest Service are all the same. They aren’t, he said. The national forests are meant for multiple use, including timber production, while the O&C lands, which make up about 7 percent of the state’s timber base, are legislated for sustained yield — harvesting timber in a way in which no more is taken away than what is being produced.

“The first thing that people have to realize is that this is a very unique category of land,” Robertson said. “It only comprises 2.2 million acres. There’s 16 million acres of Forest Service lands in our 11 national forests in Oregon.”

Currently, Douglas County receives $24.72 million per year as its share of O&C safety net revenues. Forest Service safety net revenues come to $14.45 million per year. Those figures are based on the annual timber receipt payments made to Douglas County between 1986 and 1990.

Under the Northwest Forest Plan, an annual cut of 205 million board feet is permitted. During the 13 years of the plan, the average cut equaled only about 134 million board feet. Harvest levels are meant to balance timber production and species protection.


<b>Court ruling could impact management plan</b>

The conventional thinking, Robertson said, has been that protections afforded under the federal Endangered Species Act trump the mandate of the O&C Act to provide for sustained yield timber production. However, an Arizona case decided last summer by the U.S. Supreme Court has called that into question.

The high court in that case, National Association of Homebuilders vs. Defenders of Wildlife, rejected arguments that the Arizona Department of Environmental Quality had failed to consider the impact that issuing water discharge permits would have on plants and animals. Arizona DEQ officials successfully argued they weren’t covered by the Endangered Species Act nor were they required to consult with the U.S. Fish and Wildlife Service before deciding whether to issue the permits.

“Now we have a U.S. Supreme Court decision saying that if you have nondiscretionary directives within your enabling legislation that takes precedence. You have to do that,” Robertson said.

The ruling, Robertson said, could impact the revised management plan the BLM is currently developing for the Oregon O&C lands and lead to increased timber production.

“There are two things in the O&C Act that are nondiscretionary: Timberlands that can be classified as timberlands must be — must be — so classified and all timberlands must be managed under the principal of sustained yield,” Robertson said. “Sustained yield means that you cut no more timber than grows on that landscape in any one-year period — must, nondiscretionary, that’s how you have to manage that land base.”


<b>Extension now, other action later</b>

U.S. Rep. Peter DeFazio said his current focus is on extension of the safety net. DeFazio, who pushed for retaining the current funding formula, said Oregon counties will be hurt by any rampdown in safety net revenue. He said the federal government has a contractual obligation to remedy the loss of revenues and revenue capabilities on the forest lands.

DeFazio is also working on legislation that would provide Oregon counties with the full 75 percent share of O&C timber receipts. DeFazio, who opposed the Northwest Forest Plan brokered by former President Bill Clinton because it focused too much on old-growth forests, which divided people, has long advocated for accelerating forest thinning projects that would provide timber, improve forest health and yield other material that could be used for biomass projects.

“I’m still working to garner support,” DeFazio said. “I’ve been trying for 13 years to get support for an alternative approach based in thinning. I’ve been meeting and talking with industry members, environmental groups, county commissioners and working to garner some support for a new approach that could provide some more base revenue. When you add in the residual shares and (payment in lieu of taxes payments on federal lands), we might be able to make up some significant portion of the loss.

Wyden, who chairs the Senate Forests and Public Lands Subcommittee, said during a hearing Thursday in Washington, D.C., that at the current rate it would take 75 years just to treat the most critical forests in Oregon. He said only about 130,000 acres are thinned annually in the state.

Extension of the safety net is the most critical action needed now, said Rocky McVay, executive director of the Association of O&C Counties.

“It’s pretty hard to talk when you’re throwing yourself under the wheels of the truck. That’s pretty much the situation the counties find themselves in now,” McVay said.


<b>County looks to maintain services</b>

If the safety net extension eventually passes in its current form, Douglas County will look to maintain most services and keep any layoffs to a minimum, Robertson said.

The county has reserves of about $50 million in its general fund and another $80 million in its public works fund, along with $3 million to $4 million in its forest fund. The county would look to those funds to help supplement reduced safety net revenues but wouldn’t want to rely on them too heavily.

“We have to be very judicious with the reserve fund,” he said.

As safety net revenues ramp down, Robertson said he hopes that added income from a higher O&C revenue rate and increased timber revenues could offset the losses.

He said the county will also look at areas where it spends money to operate state services. The District Attorney’s Office, for example, is funded almost completely by the county. A portion of District Attorney Jack Banta’s salary is paid by the state, but the remainder, along with the salaries of other prosecutors and office staff, is paid by the county.

He would also like the federal government to consider a plan he introduced calling for the sale of half of the O&C lands and setting up trust funds that would provide money to manage the other half of the forests and to continue payments for the safety net counties.

“We can solve the problem and we can save the federal government money,” he said.


• You can reach reporter John Sowell at 957-4209 or by e-mail at jsowell@newsreview.info.