1. Does the legal mandate of the Oregon Department of Forestry to maximize revenue from the Common School Forest Lands actually excuse it from making adequate provisions for the preservation of old growth habitat and the creatures dependent on it?
2. Does this legal mandate actually excuse the Oregon Department of Forestry from the direction of the Board of Forestry and other guidance like that from the Governor's Office in regard to the Common School Forest Lands?

These are vital issues in the management of Oregon's State Forests because the Oregon Department of Forestry's perception of the need to maximize revenue effects not only Common School Forest Lands, but in an analogous way, its management of the Board of Forestry Lands, as well. This perception lies behind the reluctance of the Oregon Department of Forestry to adequately address the question of old growth habitat and the creatures dependent on it. If this legal issue could be resolved, it would make possible a more objective discussion with the Oregon Department of Forestry about ecological issues.

Part I of this report drew the following response from the Oregon Department of Forestry:

"The mandate for Common School Forest Lands rests in the State Constitution, and has not changed since the Eastern Region Long-Range Forest Management Plan was adopted in 1995. The most definitive work on the meaning of the relevant language in the Constitution is a formal opinion by former Attorney General Charles Crookham, 46 Or Op Atty Gen 468 (1992). The quotes from the Eastern Region Plan that you reference in your web-page material are consistent with that formal opinion.

"For purposes of clarification, I would like to point out that recent actions by the Board of Forestry relative to policy for the management of lands under their jurisdiction, and recent testimony by the Governor on the NW and SW Oregon State Forest Management Plans, do not relate to the authority of the State Land Board or the mandates for management of Common School Land. Those actions and comments were in the context of those forest management plans, which comprise forests that are primarily Board of Forestry Lands. The mandates for management of Board of Forestry Lands derive from Oregon Statutes and Administrative Rules, not the Constitution." (Letter of March 8^th, 2001 from James E. Brown.)

In the face of such legal certainty we could end up feeling that there is little we could do outside of the daunting task of bringing about a change in the State Constitution, itself. In fact, however, this legal mandate is not what it is made out to be. The actual situation is more complicated, but also more promising. Let's try to unravel it piece by piece.

The Oregon Constitution

First we will look at the Oregon Constitution, Article VIII, Section 5, which is what the Oregon Department of Forestry is referring to.

"(1) The Governor Secretary of State and State Treasurer shall constitute a State Land Board for the disposition and management of lands described in section 2 of this Article, and other lands owned by this state that are placed under their jurisdiction by law. Their powers and duties shall be prescribed by law.

"(2) The board 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."

There is nothing here that would prevent the Oregon Department of Forestry from addressing the issue of our conservation of old growth habitat and the creatures dependent on it. Quite the contrary, for it would fall under the heading of "the conservation of this resource under sound techniques of land management."

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The Oregon Revised Statutes

The Oregon Department of Forestry, both in writing and in its actions, has acted as if it must manage Board of Forestry Lands and Common School Forest Lands according to two different standards, as if the guidance of the Board of Forestry applied to the first, but not to the second, and as if it had to realize more revenue from the Common School Forest Lands than from the Board of Forestry Lands. This makes no ecological sense, for it is as if the best available science applies to one piece of land and not to the one next to it. And it goes against the actual language of the Oregon Revised Statutes which reads:

"(1) Notwithstanding the provisions of any other law, or authority granted thereunder, after the board resolutions and legal descriptions are filed with the Secretary of State as required by ORS 530.480, the State Forester hereby shall be authorized, under the supervision of the State Board of Forestry and the regulations of said board, to manage, control and protect the Common School Forest Lands… In each instance the State Forester shall manage, control and protect such forests and forestlands so as to secure the greatest permanent value of the lands to the whole people of the State of Oregon, particularly for the dedicated purposes of the lands and the common schools to which the resources of the lands are devoted."

Further, in the very next number of the Oregon Revised Statutes, 530.500, which deals with "authority of the State Forester in management, protection, utilization and conservation of lands and waters," we read under (3) that the State Forester may:

"Permit the use of the lands for other purposes, including but not limited to fish and wildlife environment, landscape effect, protection against flood and erosion, recreation and production and protection of water supplies when such use is not detrimental to the purpose for which such lands are dedicated."

It is clear that these passages in the Oregon Statutes refer to the Common School Forest Lands. Why then does the Oregon Department of Forestry feel that it is excused from following the guidance of the Board of Forestry when it comes to Common School Forest Lands? Why does it feel that it is exempt from heeding the Governor's guidance even though, together with the Secretary of State and the Treasurer, he forms the State Land Board? The reason is that it feels that it has a constitutional mandate that overrides this guidance. But it is a constitutional mandate that is not in the Constitution, as we have just seen, so where does it come from?

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It comes from the 1992 opinion of the state Attorney General, Charles S. Crookham. This document plays a central role in how the Oregon Department of Forestry perceives its mandate, and therefore we will need to look at it in some detail.

Opinion No. 8223 of the Attorney General, July 24, 1992

This opinion of the Attorney General addressed five questions presented by the State Land Board. The first question reads: "Does the Oregon Admission Act limit the State Land Board (board) in applying the standard in Article VIII, section 5(2), of the Oregon Constitution, for management of Admission Act lands?"

The answer given is: "The Oregon Admission Act does impose an obligation upon the board to manage Admission Act lands "for the use of schools." This objective is consistent with the duty imposed by Article VIII of the Oregon Constitution for management of those lands. The management standard in Article VIII, section 5(2), to obtain the "greatest benefit" for the people, presumes an objective that is found elsewhere in Article VIII. In that sense, therefore, the Admission Act does not limit the board in applying the management standard in Article VIII, section 5(2)."

The Opinion goes to the beginning of Oregon's history as a state in order to explain what this answer means. In a series of Acts the U.S. Congress gave the soon to be state of Oregon land to be used for the common schools. These Admission Act lands in Oregon were sections 16 and 36 of each township. The Act of August 14^th, 1848 states that these lands are "reserved for the purpose of being applied to schools." On January 7^th, 1853, Congress authorized the selection of "lieu lands" if these sections were already occupied: "Said lands so selected and their proceeds, shall be forever inviolably set apart for the benefit of common schools." In 1859 Congress passed the Admission Act, which admitted Oregon into the union, which stated that these numbered sections "shall be granted to said state for the use of schools."

So, while these different acts use different language, the opinion of the Attorney General reasonably assumes that the language of being "forever inviolably set apart" which was applied to the lieu lands, also applies to sections 16 and 36. And this requirement of being inviolably set apart carry over to the Admission Act, itself. Therefore, although the "precise nature of the obligations imposed by Oregon's Admission Act compact is not entirely clear," (p. 474) it does impose some kind of binding obligation on the state, although this might not be completely understood as a trust.

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This part of the opinion's analysis is relatively straight-forward. We need only note one technical question, which is just what this opinion refers to in terms of the Common School Forest Lands. Should it be restricted to the original sections of land granted to the state, and those received in lieu of the original lands, or should it be applied to all Common School Forest Lands? (See p. 468, note 1 and p. 480, note 13.) Put in another way, can the Oregon Department of Forestry defend its mandate on the ground of this opinion for those lands which are not part of the original Admission Act lands? This is an issue that will come up again.

The Original Oregon Constitution

The opinion next considers how these obligations compare to those imposed by the Oregon Constitution. Article VIII, section 2, of the original Oregon Constitution approved on Nov. 9^th, 1857 which reads: "The proceeds of all the lands which have been or hereafter may be granted to the state, for educational purposes… shall be set apart as a separate and irreducible fund to be called the Common School Fund, the interest of which, together with all other revenues derived from the school land mentioned in this section, shall be exclusively applied to the support and maintenance of common schools…" Section 5 of the same Article reads: "The Governor, Secretary of State, and State Treasurer, shall constitute a board of Commissioners for the sale of School and University lands, and for the investment of the funds arising therefrom, and their powers and duties shall be such as may be prescribed by law."

It is essential to note that the school lands are seen as a resource to be sold and the proceeds dedicated to the use of the schools. This same kind of understanding should be applied to the earlier acts of Congress, as well. The binding obligation of the state is to the proper care of the funds that have been entrusted to it by the sale of these lands.

The Amendments to Article VIII of 1968

So far the reasoning of the opinion has been easy enough to follow, but now it becomes less so. It had concluded its previous arguments by saying "that the obligations imposed upon the use of the Admission Act lands by the original provisions of Article VIII of the Oregon Constitution are consistent with those imposed by the Admission Act." But now it is faced with the fact that in 1968 the language of Article VIII was substantially altered. The amended Constitution now reads, as we saw before:

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(1) The Governor, Secretary of State and State Treasurer shall constitute a State Land Board for the disposition and management of lands described in section 2 of this Article, and other lands owned by this state that are placed under their jurisdiction by law. Their powers and duties shall be prescribed by law.

(2) The board 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 opinion asks "whether the new management standard was intended to alter the trust impressed upon the Admission Act Lands by Article VIII, and to authorize the use of such lands for purposes other than for the schools." Here we have to look very carefully at the opinion's analysis. It wants to read the phrase "the greatest benefit for the people" in a way that is consistent with the dedication of the Admission Act Lands "for the use of the schools, and that exclusively" so to avoid any conflict between the Admission Act and the Constitution.

And it answers: "Without more, we are unwilling to read into such vague and ambiguous language an attempt to alter or supplement the original trust purpose…"

But since the 1968 amendment "does not dispositively reveal the voters' intent" the opinion will go on to look at the 1968 Voters' Pamphlet and House Joint Resolution 7 from which the amendment originated.

Once again, it finds no intent to change the purpose for which the Admission Lands are used. "In sum, we think it highly unlikely that the people of Oregon would so significantly alter a trust that had been in place since statehood and recognized by the Oregon Supreme Court, without more discussion and clearer language. For these reasons, we conclude that, although the 1968 amendment altered the scope of the board's general management authority regarding lands under its jurisdiction, it was not intended to and did not alter the fundamental purpose of the Admission Act lands, which is to benefit the schools of the state."

Once this conclusion is in place, the opinion will examine the nature of the Board's management duties under Article VIII, Section 5 (2). The "greatest benefit…" is not an objective, it argues, but would require an objective to be identified, for example, "production of income, recreation, conservation." But it has already concluded that the Amendment did not alter the purpose of the trust imposed by the Admission Act so it understands "the greatest benefit" to mean the use of "the land for schools and the production of income for the Common 6/19

School Fund," "consistent with the conservation of the lands under sound techniques of land management." (p. 481)

Now this is a very narrow reading of the 1968 Amendment, but even with this reading there is nothing to prevent the State Land Board from taking appropriate measures for the conservation of the land.

But there is a lot more going on here. While it is true that the 1968 Amendment did not directly intend to alter the purpose of the Common School Forest Lands, it must have intended something. It is not enough to call it vague and ambiguous and leave it at that. The original Admission Act envisioned that the Common School Forest Lands were to be sold, as we saw, and the funds generated by the sale of these lands were to be entrusted to the State for the Common Schools. It was the revenue generated from the sale of the lands that was the object of the trust. That revenue must be used for the common schools.

The 1968 Voters' Pamphlet

The 1968 Amendment, as presented by the 1968 Voters' Pamphlet reads:

"Measure No. 1 is a proposal that will authorize the State Land Board, with Legislative approval, to expend money from the Common School Fund for improvement of lands under its jurisdiction, and to manage its lands to obtain the greatest benefit for the people of this state consistent with the conservation of the resource. Under the present Constitution, the Common School Fund, which is derived from state land sales over the past century, is "irreducible." This language narrowly restricts what can be done with land income, interest income, and the principle of the fund itself… In managing these lands, the Board is now restricted to a single objective - to maximize its cash income. It cannot spend for fencing, seeding of rangeland or improvement of its lands generally, even though such improvements could enhance its income in the long run. The Board normally cannot set aside land for public recreation, parks or scenic purposes."

"The proposed amendment will remove this strict cash income objective, permitting land uses varying with the location, type of land and needs of the citizens of the state. In addition, it will permit the Board to spend moneys from the Common School Fund on worthwhile land improvements. All expenditures, however, must be reviewed and approved by the Legislature under usual budget procedure."

The opinion comments:

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"The explanation could be read to suggest that the voters intended to alter the permissible purposes of the Admission Act lands, by permitting the use of those lands for recreation or scenic purposes. Clearly, the pamphlet reflects an intent to alter the "strict cash income objective." But since the Opinion wants to adhere to its overall argument that the purpose of the lands has not been altered it reads the Amendment from that perspective: "The reference to other permissible uses, e.g., public recreation, can easily be explained as an express authorization for such uses where no good economic use of the lands for schools could presently be found…" (p. 478) And in concludes: "At most, we find the language of the Voters' Pamphlet explanatory statement ambiguous. Thus, we do not infer from it an intent to alter the fundamental purpose of the Admission Act lands."

There is a critical point in the Amendment that is not sufficiently focused upon by the opinion, and that is the realization that the Common School Forest Lands, once envisioned to be sold, were now to be under the long-term management of the State Land Board. The old legal mandate to maximize cash income, referred to the income generated by the sale of the land and the management of these funds and it cannot be carried without change into this new situation. This fundamental transition upon which everything hinges is also brought out by House Joint Resolution 7 of 1967, which gave rise to the Amendment. The recitals of that resolution read:

"Whereas the framers of the Oregon Constitution more than a century ago contemplated the ultimate sale of nearly all lands owned by this state, and the retention of the sale proceeds in the Common School fund; and

"Whereas vast areas of such lands have not been sold, and conditions prevailing in this century may require the State of Oregon to retain some or all of these lands for an indefinite period; and

"Whereas it is essential that the State of Oregon, through the State Land Board, manage such retained lands with the object of obtaining the highest returns for the people of this state, consistent with the conservation of this resource under sound techniques of land management developed from time to time; and

"Whereas it is essential that the State of Oregon use and invest the assets of the Common School Fund with the object of conferring maximum aid to education in this state, consistent with prudent investment practices prevailing from time to time; and

"Whereas it is essential that these management and investment activities be financed adequately ..."

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Part of what the legislature had in mind was giving the State Land Board the authority to use revenue generated from the Common School Lands to care for these lands, themselves. But what the Amendment does is make a distinction between a legal mandate conceived in terms of revenue generation, and the need to care for these lands over the long term. Here we arrive at the heart of the matter. The fiscal purpose of the Common School Forest Lands remains the same. And this is what the Opinion focuses on. The revenue generated from these lands cannot be used for other purposes. The State Land Board, for example, cannot sell or trade these lands for under their full value, and they need to safeguard the funds generated from these lands and held in trust for the schools, and therefore maximize the return on these funds over the long term, as is fitting with fiscal trust obligations.

But this standard of fiscal management cannot be read as a standard of land management. The original Admission Act never imagined the current situation of long-term management, and could not, therefore, speak to that issue. Fiscal management and forest conservation management are not two principles competing on the same level so that one must gain at the cost of the other. The Opinion of the Attorney General does not appear to give due weight to the importance of this shift taking place in the 1968 Amendment. The fiscal purpose of the Admission Act lands has not been altered, but the question of the management of these lands must now be addressed.

The failure to adequately distinguish between these two different kinds of management standards has introduced a certain amount of ambiguity both in the Attorney General's Opinion, and in subsequent statements by the Oregon Department of Forestry. The Oregon Department of Forestry, for example, leaves the impression that it is at once arguing that it has made ecologically adequate provisions for the forests under its management, and at the same time, that it is excused from truly examining these ecological issues because of its legal mandate.

The Opinion of the Attorney General goes on to try to stay within the old perspective of fiscal management, and yet deal with issues that have little to do with it. We have now arrived at the opinion's second question which finally addresses directly the question of the maximization of revenue. The question and answer read:

"Second Question Presented: Does the Oregon Admission Act or the Oregon Constitution require the board to maximize revenue, consistent with the prudent investor rule, from management of Admission Act lands?

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Answer Given: Yes, to the extent the Admission Act lands are retained and not directly used for schools, e.g., for siting school facilities. However, the board is not required to maximize present income from the Admission Act lands without regard to other considerations. Rather, the board's duty is to manage the lands for the long-term benefit of the schools. Thus, the board may sacrifice present income to preserve the property, if it determines this will enhance income for the future. Non-economic factors may be considered only if they do not adversely affect the potential financial contribution to the Common School Fund over the long-term."

We can see that the principle that governs the answer is that same carry-over of fiscal considerations into the realm of ecological forest management. The opinion's explanation will limit itself, therefore, to whether the costs of timber management activities such as road-building can be taken out of the fund, or whether present income can be reduced in order to maximize income over the long-term. But even with the opinion's analysis, cast in a narrow fiscal mode, the other ecological perspective keeps breaking in:

"Promoting the long-term health of revenue-producing resources may require conservation measures aimed at non-commercial resources such as water or soils. Above all, the board's management directive requires it to remain flexible. No land board can predict with certainty what revenue-generating opportunities or resource conservation and management concerns may develop in the future." (p. 483)

But having said this, the opinion goes back to its usual perspective. "However, the management standard in section 5 (2) calls on the board to seek methods for accomodating the broader public interest, if that can be done while still maximizing revenue for the Common School Fund. Letter of Advice dated June 22, 1990, supra, at 26. For example, the board is free to explore innovative mechanisms for securing the environmental and social benefits of preserving habitat for endangered or threatened species. Id. However, the board may use Admission Act lands to pursue these and other non-economic benefits only so long as doing so would not diminish prudent long-term economic return." (p. 483)

This passage comes close to enunciating the dilemma that the Oregon Department of Forestry finds itself in in relationship to places like the Children's Forest. If it makes provisions for the northern goshawk, it is reducing revenue to the Fund. If it fails to do so, it is neglecting sound science and is open to the charge of ecologically mismanaging the forest. So it finds the goshawk nest and makes a token gesture in the direction of ecology. When this is questioned, it 10/19

decides that it might consider expanding the area to be preserved around the nest. But at the same time, since it is always keeping an eye on its fiscal obligations, it really doesn't allow itself to look at the ecological problem by itself. Rather, it sees sound science as a competitive strategy with maximization of revenue.

Let's conclude our analysis of the opinion. The final three questions read:

"Third Question Presented: Does the Oregon Admission Act or the Oregon Constitution exempt the board from complying with the federal or state Endangered Species Acts (ESAs) on Admission Act lands?

Answer Given: No. Neither the Oregon Admission Act nor the Oregon Constitution exempts the board from complying with the federal or state Endangered Species Acts. By virtue of the Supremacy Clause of the United States Constitution, the federal ESA lawfully may limit the state's use of the Admission Act lands, subject to the possibility of a compensable "taking."

The state ESA may not unduly restrict the constitutional powers of the board. The Act does not, on its face, appear to do so. Thus, a conflict would arise only if the Act is applied in a manner which unduly restricts the board's constitutional powers. This would be a fact-specific determination.

Fourth Question Presented: Is the Common School Fund entitled to compensation from the federal government for asset or revenue reductions caused by compliance with the federal ESA?

Answer Given: Probably not. While it is conceivable that the fund might be entitled to compensation for an unconstitutional taking of property without compensation, evaluation of such a claim is fact intensive and must be conducted on a case-by-case basis. Even assuming the benefit of an adequate factual record, in our opinion it is unlikely that a takings claim could succeed. Courts are disinclined to award compensation for regulatory takings unless the regulation deprives the property owner of all or virtually all use of the land. Moreover, recent court decisions indicate that damage to property as a result of endangered species regulation will not be considered a basis for compensation.

Fifth Question Presented: Is the Common School Fund entitled to compensation from the state General Fund for asset or revenue reductions caused by compliance with the state ESA?

Answer Given: No. As stated in our answer to your third question, the board is 11/19

not required to comply with the state ESA if compliance would unduly burden or restrict the board's exercise of its constitutional powers to dispose of and manage Admission Act lands. Accordingly, there is no issue concerning taking of trust property without just compensation, since the state ESA could not lawfully prevent the board from maximizing revenue from Admission Act lands over the long term." (p. 469-470)

The same kind of ambiguity that we have been seeing runs through the answers. The opinion has answered all three questions in the negative, but at the same time, it continues to insist that the over-riding principle still remains the maximization of income. It admits that neither the law governing trusts nor that governing contracts can exempt the Common School Forest Lands from the federal Endangered Species Act. Further, under the heading of how special legislation takes precedence over general legislation, the opinion actually comes close to a legal enunciation of the basic principle of the difference between fiscal and ecological considerations that we see emerging. It does not feel that an appeal to this principle will allow Admission Act lands to take precedence over the federal Endangered Species Act: "… the canon favoring a "special" statute over a "general" one applies only when there is a conflict between two statutes dealing with the same subject matter… We find no such conflict between Oregon's Admission Act and the federal ESA. The Admission Act is a land grant, while the federal ESA addresses wildlife conservation. Because the two acts concern different subjects, this canon of statutory construction does not seem to apply." (p. 489)

The opinion does not find that the state Endangered Species Act goes against the Admission Act, either. Contract law must "accommodate the legitimate exercise of other state powers." (p. 490) And state powers to enact laws to protect fish and wildlife are well established. (p. 491)

The upshot of these answers is to make room for the new kind of ecological awareness embodied in the federal and state Endangered Species Acts, and the realization that these acts cannot be set aside in regard to Common School Forest Lands. But the opinion advances more or less unconsciously into unchartered territory, and it is working out of the old framework of fiscal obligations, and so it does not come to grips with the fact that two distinct kinds of management are being talked about here.

Antecedents to Opinion 8223

A thorough analysis of the Attorney General's opinion of 1992 would demand that we look at its antecedents. Here we will only briefly examine some of them. 12/19

Part of the previous opinions of the Attorney General dealing with the Common School Forest Lands fall under the heading of the need of the State Land Board to maximize revenue from these lands. It cannot, for example, accept less than the total amount due it for a loan from the Common School Fund. 17 Op Atty Gen 59 (1934). Nor can it without return cede Common School Fund land back to the federal government. 18 Op Atty Gen 238 (1937). These kinds of opinions arise from the basis trust-like obligation of the board to safeguard the revenue generated for the Common School Fund. See also: 37 Op Atty Gen 569 (1975); 38 Op Atty Gen 850 (1977).

More interesting is 32 Op Atty Gen 307 (1965) which deals with the power of the State Land Board to take money from the Common School Fund to reseed burnt-out Common School Fund grazing lands. The opinion borrows heavily from an interpretation about Common School Forest Lands in regard to the constitution of the state of Wisconsin. The Oregon State Land Board had been taking money for its own basic administration, but this opinion will not let it go further. In this way it seems to set the stage for House resolution 7 in 1967 that will alter the state constitution to allow money to come from the Common School Fund for land management purposes. It also raises the question of whether other legal interpretations of the uses of Common School Forest Lands in other states would throw light on the questions we are dealing with here.

42 Op Atty Gen 260 (1982)

But 42 Op Atty Gen 260 (1982) which addresses a question of the director of the Division of State Lands is rather fascinating. The question and answer read:

"Question Presented: Does the State Land Board or the State Board of Forestry have final authority to establish policy for the management of Common School forest lands owned by the State of Oregon?

Answer Given: The State Land Board has final authority to establish policy governing the management of Common School forest lands."

The opinion addresses the relationship of the 1968 Constitutional Amendment to Oregon Revised Statute 530.490. We saw that this statute places the Common School Fund forest lands under the direction of the State Forester and the Board of Forestry, and commented that this makes a good argument against the assertion of the Oregon Department of Forestry that Common School Forest Lands do not fall under the direction of the Board of Forestry. But the opinion claims that the statute and the Constitution are in "flat conflict," and that the 1968 Amendment "impliedly repeals ORS 530.490 and related statutes so far as they 13/19

apply to the Common School Fund forest lands." (p. 262) Further, while the State Land Board may contract with the Department of Forestry and the State Board of Forestry for managing these lands, it need not do so. It may, in fact, "choose to contract with a private entity." This is, no doubt, the rationale behind the contract between the Oregon Department of Forestry and the State Land Board, as well as the foundation on which the Oregon Department of Forestry has decided that Common School Forest Lands need not follow the guidance of the Board of

Forestry.

We have already seen how the language of the 1968 Voters' Pamphlet has been given a narrow interpretation in the 1992 opinion in terms of the management of these lands. Now we are told that this very Amendment, which was too "ambiguous" to supply clear direction in terms of the management of these lands, had the effect, apparently without anybody realizing it, of nullifying the more progressive language of 530.490. The Oregon Department of Forestry can therefore claim today that it need not follow the guidance set by the Board of Forestry for new directions in state forestry in its Northwest and Southwest Forest Plans. However, it is interesting to note that there is one aspect of this Amendment which has been implemented with gusto.

The State Land Board, which could not get reseeding money from the Common School Fund prior to the Amendment, can now give very large sums of money from the Common School Fund to the Oregon Department of Forestry for the management of these lands. In the case of the Children's Forest, for example, the anticipated revenue for the sale is $1.6 million dollars, out of which the Oregon Department of Forestry will take $68,000 off the top for its expenses, and then pay itself around $400,000 more. This is a far cry from grass seed money. So we are left with the 1968 Amendment being clear enough to allow the Oregon Department of Forestry to take a significant percentage of the revenues generated by the Common School Forest Lands, but having the unintended effect by the legislature and the voters to exempt these lands from the guidance of the Board of Forestry by nullifying 530.490. Further, even though the Governor is a member of the State Land Board, and the board can replace the Oregon Department of Forestry in its role as manager of these lands, the guidance of the Governor on forest affairs is deemed irrelevant. The only thing that changes with the 1968 Amendment is that the Common School Fund money can be expended on land management, and what is left standing and unexamined is the old maximization of revenue language. This is something that deserves careful scrutiny.

What we are really faced with in this opinion is the same conflict that we saw before between fiscal and ecological management. The State Land Board has the 14/19

duty to manage the funds derived from the Common School Fund Lands, but that duty, itself, does not create an ecological management standard, or excuse the State Land Board or the Oregon Department of Forestry from creating such an ecological standard.

46 Op Atty Gen 208 (1989)

What we took as a technical point, that is, the distinction that could be made between Admission Act lands that came under the original treaty provisions, and other Common School lands, is taken up by 46 Op Atty Gen 208 (1989) and is made an integral part of that opinion. According to the opinion, there are different kinds of Common School lands with different management standards. They are summed up in the following table given as an appendix to the opinion.

Now in the case of The Children's Forest, what standard should be applied? Is it Admission Act land? It does not fall within either sections of 16 or 36. Is it lieu land, or is it something else? Does, in fact, the Oregon Department of Forestry actually distinguish between these different kinds of Common School Forest Lands and apply different management standards to them? To answer these kinds of questions we need to get behind them to the fundamental distinction we have been seeing. Fiscal purposes can differ, but ecological management standards should not.

Opinion Request OP-6383

This letter of June 22, 1990 is addressed to the State Forester and the directors of the State Land Board and the Oregon Department of Fish and Wildlife, and it 15/19

deals with the legal effects that the listing of the northern spotted owl as a threatened or endangered species would have on state lands. It provides the proximate background for the opinion of 1992. It also sets up an interesting parallelism between the Board of Forestry land and Admission Act land. "… we conclude that the Board of Forestry may not set aside portions of lands acquired from counties under ORS 530.030(1) and prohibit timber harvest from them in order to conserve the owl, unless such action is necessary to avoid a violation of the federal ESA." (p. 23) In regard to Common School Forest Lands it states: "The State Land Board may promote non-income producing uses of Admission Act lands, but only so long as those uses coexist with and do not diminish income-producing characteristics of those lands." (p. 25)

The Letter of July 17, 1991

Yet, in a letter written to the Governor's assistant for Natural Resources and Environment, the tact is different. It takes the statement of OP 6383 that reads: "(W)here activities, such as a timber harvest, would not constitute an unlawful taking or other violation of the federal ESA, the Board of Forestry may not voluntarily prohibit timber harvest on (county forest) land in order to conserve the owl, if by doing so the board would reduce revenues to the counties." (OP-6383, at 10), and comments:

"…it does not follow that the board may not make reasonable forest management decisions consistent with its authority under ORS 530.050 even though those decisions may result in some reduction of revenues to counties. We believe the board may manage county forest lands and harvests from them in a manner that protects, conserves, or enhances wildlife habitat without breaching the state's statutory obligation to counties under ORS 530.030." (p. 2)

Later it will say: "…a review of the relevant statutes in ORS chapter 530 shows that counties have neither a guarantee that any particular level of harvest or revenue will be maintained nor an expectation that the lands will be exclusively managed for timber harvest." (p. 4)

And finally: "Although it is clear from the Tillamook County case and our June 22, 1990, opinion that the county forest lands may not be managed under ORS 530.050 in such a manner so as to deny all output from the lands, the board still retains discretion to manage the lands, balancing a variety of needs against timber production to the end that the "greatest permanent value" of the lands be secured to the state. ORS 530.050." (p. 5-6)

This raises the question, of course, of whether the same line of reasoning should 16/19

be applied to the Common School Forest Lands. While the fiscal standards differ, the ecological standards should be the same. Maximization of revenue does not dictate what ecological standards should be used in the management of the Common School Forest Lands. The arguments developed here in regard to Board of Forestry Lands should be applied, as well, to Common School Forest Lands.

The Letter of Feb. 22, 2001

A final letter from the Department of Justice addressed to the Oregon Department of Forestry brings us back to the present. It deals with the question of whether there are any legal impediments to the Board of Forestry considering third party certification for the State owned lands it manages. The answer is no, and what interests us about this answer is the way that the differences between Board of Forestry Lands and Common School Forest Lands are described.

The general management standard for Board of Forestry Lands is, we are told, to "secure the greatest permanent value of such lands to the State." ORS 530.050. This letter also draws on the letter of July 17^th, 1991, which we have already seen and which stated that the Board of Forestry need not maximize immediate revenue. The Board of Forestry, itself, in 1998 in OAR 629-035-0020 defines greatest permanent value as "healthy, productive, and sustainable forest ecosystems that over time and across the landscape provide a full range of social, economic, and environmental benefits to the people of Oregon." The letter comments, "The benefits mentioned include a wide variety of benefits such as State, County and local tax revenues, fish and wildlife habitat, productive soil, clean air and water, and recreation." OAR 629-035-0020(1)(a)-(f). The letter concludes, "Thus, the greatest permanent value conception of land management does not require immediate revenue maximization."

The letter's analysis of Common School Forest Lands, touches on the Oregon Constitution and the opinion of 1992. And it concludes: " Thus, it appears that the proper standard for management of Common School Forest Lands is the "greatest benefit" standard identified in Article VIII (5) of the Oregon Constitution." But it goes on and illustrates the kind of ambiguity we have been seeing: "Although the revenue maximization focus of the "greatest benefit" standard (Article VIII, (5) is greater than it is under the "greatest permanent value" standard (ORS 530.050, OAR 629-035-0020), and this is also confirmed by the Agreement, (that is, the contract between the Oregon Department of Forestry and the State Land Board) the fact still remains that under both the Agreement and Article VIII, (5) the Board may consider certification." Footnote 2, which begins: "This analysis proceeds on the assumption that the greatest benefit standard is applicable. This conclusion not unassailable," underscores the difficulty in reconciling all these different opinions. The whole matter needs to be 17/19

looked at afresh.

The underlying problem that we have been seeing all along has not been resolved. In actual fact, there appears to be no reason why the Board of Forestry's

"greatest permanent value" defined as "healthy, productive, and sustainable forest ecosystems that over time and across the landscape provide a full range of social, economic, and environmental benefits to the people of Oregon," cannot be applied to Common School Forest Lands, as well. Just because there is a different fiscal purpose for each kind of land does not mean that each must be subjected to a different ecological standard.

Conclusion

We finally return to our original questions:

1. Does the legal mandate of the Oregon Department of Forestry to maximize revenue from the Common School Forest Lands actually excuse it from making adequate provisions for the preservation of old growth habitat and the creatures dependent on it? No. It should not confuse fiscal management with ecologically sound management standards. The question of old growth habitat and the creatures dependent upon it needs to be resolved on the basis of the best science available.
2. Does this legal mandate actually excuse the Oregon Department of Forestry from the direction of the Board of Forestry and other guidance like that from the Governor's Office in regard to the Common School Forest Lands? No. The State Land Board has fiscal responsibility for the revenues derived from the Common School Fund Lands, but that fiscal responsibility doesn't speak to the biological standards by which the land should be managed.

Neither the Oregon Department of Forestry, nor the State Land Board, nor the Board of Forestry can afford to confuse their fiscal mandates with their ecological ones. To do so is to thwart the ongoing ecological analysis of what to do to restore the health of our state forests. Once this ecological analysis is made on the basis of the best available science, then it can enter into dialogue with other considerations in order to produce the greatest permanent value. What is at stake here is not just the management of the Common School Forest Lands, but the kind of attitudes that are brought to bear on all our state forest lands.

Proposal

The state agencies involved in forest management, i.e., the Board of Forestry, the 18/19

Governor's Office, the Oregon Department of Forestry, the State Land Board, as well as non-governmental ecological organizations, should seek legal clarification about the misunderstandings that have resulted from confusing fiscal and ecological standards. This kind of clarification would create a better atmosphere in which to deal with the ecological challenges faced by Oregon's State Forests.

James Arraj

The Children's Forest, LLC

E-Mail Address: arraj@innerexplorations.com