Another logjam?

Forestry firm fears ruling will tie up private timber
Matt Donegan, left, co-president of Forest Capital Partners, Oregonís second-largest landowner, and Ken Cummings, regional manager, talk Monday at Murphy Veneer in White City.Julia Moore

Oregon is still the No. 1 lumber and plywood producer in the country and the timber industry remains the No. 2 employer in the state. That could all change if a recent federal court decision alters forestry rules for private and state lands, says the co-president of the state's second-largest landowner.

Forest Capital Partners co-founder Matt Donegan said a U.S. 9th Circuit Court of Appeals ruling could throw private and state lands into the same cycle of appeals and litigation that ground federal timber sales to a halt.

The ruling in August 2010 redefined forest roads as specific pollution sources that would require Environmental Protection Agency permits — permits that could be litigated just as federal timber sales have been.

Donegan said, if left standing, the ruling "could kill the Northwest timber industry" and noted that the decision has raised opposition from Democrats and Republicans alike in Congress. The industry hopes that the decision will either be overturned by the U.S. Supreme Court or eliminated by legislative action.

Donegan was in Southern Oregon Monday touring some of the 150,000 acres the timber management company owns in its Medford region. Forest Capital owns 600,000 acres statewide, part of its 2 million acres of working timberland here and in Idaho, Louisiana, Minnesota and Washington.

The company acquired the former Boise Cascade timberland holdings in 2004 and selected Portland as the firm's western headquarters.

"It was a natural choice," said Donegan, pointing to Oregon State University's top-rated Forestry School as just one example of the connection the state has with working forests.

Forest Capital has 140 foresters and support staff working out of 17 field offices; 55 of those jobs are in Oregon. The company is in the tree-growing business, but does not operate mills or finishing plants.

Housing starts are sagging nationally, but Forect Capital will be ready when the market bounces back.

"The survivors will do well," Donegan said, noting the "unprecedented" demand now coming from China. "If you hold on, good days are coming."

But those good days may never come, Donegan said, if the 9th Circuit's decision ties private and state timberlands in legal knots. In overturning a lower-court decision, the 9th Circuit agreed with the National Environmental Defense Council that logging road runoff — when managed by a system of ditches and culverts and deposited into rivers and streams — is point-source pollution and therefore subject to Clean Water Act permitting requirements.

A bipartisan contingent of Northwest senators introduced legislation last month in response to the 9th Circuit's decision.

Senators Ron Wyden, D-Ore.; Mike Crapo, R-Idaho; Jim Risch, R-Idaho; and Mark Begich. D-Alaska, said the appeals court's decision could have far-reaching, negative impacts on public and private forests, as well as the communities around them, increasing litigation, while reducing sustainable timber harvesting.

"Two decades of appeals and litigation over forestry on federal lands have created a train wreck for our state and region," Wyden said in a statement. "Now, in its decision to reject 35 years' worth of established Environmental Protection Agency policy, one court would shut down forestry on private, state and tribal lands by subjecting it to the same, endless cycle of litigation.

"More needs to be done to address the poor condition of forest roads and to protect our water resources," Wyden continued, "but let's first look for solutions that avoid the epidemic of litigation and appeals that, in the long run, serve no one's best interests."

Donegan said the effect of the ruling would be to cast doubt on the value of investing in private forestlands, since harvest efforts could be tied up for years by litigation.

"A big chunk of what we do would be gummed up," he said.

The decision also could backfire on those seeking to protect forestlands because once the private lands were no longer valuable for the timber they produce, they would be more prone to development.

"The single-largest threat to working forestland is when a mill shuts down," Donegan said. "The land gets developed and there is fragmentation, rather than good forest practices."

Reach reporter Greg Stiles at 541-776-4463 or email business@mailtribune.com.


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