County of Linn v. State of Oregon ( 2022 )

288
Argued and submitted February 22; reversed and remanded on appeal, cross-
appeal dismissed as moot April 27; petition for review denied September 16,
2022 (370 Or 214)
COUNTY OF LINN,
on behalf of itself and
others similarly situated,
Plaintiff-Respondent
Cross-Appellant,
v.
STATE OF OREGON
and State Forestry Department,
an Oregon administrative agency,
Defendants-Appellants
Cross-Respondents.
Linn County Circuit Court
16CV07708; A173658
510 P3d 962
In this case involving a claim for breach of a purported statutory contract,
specifically ORS 530.050, defendants appeal a judgment entered in favor of plain-
tiffs. On appeal, defendants contend that the trial court erred when it denied
their motion to dismiss. In their motion to dismiss, defendants contended that
ORS 530.050 did not create a contractual obligation on the part of defendants
to manage certain forestlands so as to maximize revenue generated from those
forestlands. Held: The relevant language in ORS 530.050 was originally enacted
in 1941 by Oregon Laws 1941, chapter 236, section 5. The Court of Appeals con-
cluded that the standard of “clear and unmistakable intent” was not met with
regard to whether the 1941 Legislative Assembly intended defendants’ obligation
regarding forest management under Oregon Laws 1941, chapter 236, section 5, to
be a term in a statutory contract between plaintiffs and defendants.
Reversed and remanded on appeal; cross-appeal dismissed as moot.
Thomas McHill, Judge.
Benjamin Gutman, Solicitor General, argued the cause for
appellants-cross-respondents. Also on the briefs were Ellen
F. Rosenblum, Attorney General, Carson L. Whitehead,
Assistant Attorney General, and Christopher A. Perdue,
Assistant Attorney General.
John A. DiLorenzo, Jr., argued the cause for respondent-
cross-appellant. Also on the combined answering and
Cite as 319 Or App 288 (2022) 289
cross-opening brief were John F. McGrory, Jr., Gregory A.
Chaimov, Aaron K. Stuckey, Kevin H. Kono, Christopher
Swift, Alicia Leduc, Trinity Madrid, and David Wright
Tremaine LLP. Also on the reply brief were John F. McGrory,
Jr., Gregory A. Chaimov, Carol J. Bernick, Aaron K. Stuckey,
Kevin H. Kono, Chris Swift, Trinity Madrid, and Davis
Wright Tremaine LLP.
Ralph O. Bloemers and Crag Law Center filed the brief
amici curiae for Northwest Guides & Anglers, North Coast
Communities for Watershed Protection, Oregon Wild, Native
Fish Society, Wild Salmon Center, Cascadia Wildlands,
Center for Biological Diversity, Umpqua Watersheds and
Beyond Toxics.
Ryan P. Steen, Kirk B. Maag, Crystal S. Chase, and Stoel
Rives LLP filed the brief amicus curiae for Oregon Forest &
Industries Council.
Rob Bovett and Lauren Smith filed the brief amicus
curiae for Council of Forest Trust Land Counties.
Before Tookey, Presiding Judge, and Aoyagi, Judge, and
Kistler, Senior Judge.
TOOKEY, P. J.
Reversed and remanded on appeal; cross-appeal dismissed
as moot.
290 County of Linn v. State of Oregon
TOOKEY, P. J.
In 2016, plaintiff Linn County brought this class
action against defendants, the State of Oregon and the State
Forestry Department, alleging a single claim of breach of
contract and seeking over $1 billion in damages.
Linn County’s complaint alleged that it and other
Oregon counties had transferred forestlands to the state
pursuant to Oregon Laws 1939, chapter 478, amended by
Oregon Laws 1941, chapter 236, codified as amended at ORS
530.010 to 530.181 (the Act); that the Act required the state
to return to the counties a specified portion of the revenues
derived from defendants’ management of those forestlands;
that defendants had a contractual obligation under the Act
to manage the forestlands in a manner so as to “maximize
the potential revenue that should be generated” from the
forestlands; and that defendants breached that contractual
obligation by failing to manage the forestlands so as to max-
imize revenue.
Defendants moved to dismiss on the ground that
the Act did not create a contractual obligation on the part
of defendants to manage the forestlands so as to maximize
revenue. After denying the motion, the trial court certified
a plaintiff class comprising the fifteen Oregon counties that
transferred land to the state pursuant to the Act, as well
as certain governmental entities with whom those counties
share such revenue.
The case was tried to a jury, which found in favor of
plaintiffs, awarding them over $1 billion in damages for past
and future economic losses. Defendants appeal the resulting
judgment, raising 28 assignments of error.
Because it is dispositive, in this opinion we address
defendants’ seventh assignment of error, in which they assert
that the trial court erred in denying defendants’ motion to
dismiss. In their motion to dismiss, as noted, defendants
argued that they did not have a contractual obligation
under the Act to manage the forestlands to maximize reve-
nue. As addressed below, analyzing that assignment of error
requires that we consider the obligations owed by the state
to various Oregon counties with regard to lands acquired by
Cite as 319 Or App 288 (2022) 291
the state under the Act. Specifically, as explained below, we
must consider whether the provision in Oregon Laws 1941,
chapter 236, section 5, codified as amended at ORS 530.050,
requiring the Board of Forestry (the Board) to manage cer-
tain lands “so as to secure the greatest permanent value of
such lands to the state,” is a term in a statutory contract
between the state, on the one hand, and various Oregon
counties, on the other.
Considering the text, context, and legislative his-
tory of the provision of Oregon Laws 1941, chapter 236, sec-
tion 5, requiring the Board to manage lands transferred by
counties to the state under the Act “to secure the greatest
permanent value of such lands to the state,” we conclude that
that provision is not a term in a statutory contract between
the state, on the one hand, and various Oregon counties, on
the other. Accordingly, we reverse and remand.1
1
On appeal, defendants raise other potentially-dispositive issues. Two such
issues bear mentioning here.
First, defendants argue that Stovall v. State of Oregon, 324 Or 92, 922
P2d 646 (1996), “expressly forbids a county from suing the state for damages
for breach of a statutory contract.” Plaintiffs respond, among other points, that
Stovall “applies only to statutes relating to a ‘public object’ and does nothing
to limit rights counties hold as corporate bodies, including their rights to hold,
convey, and enter contracts regarding county property.” Thus, in plaintiffs’ view,
Stovall is inapposite.
Second, defendants argue that, because “Linn County’s suit is in essence
a rule challenge, only the Court of Appeals has jurisdiction over the matter.”
Defendants recognize that, under Hay v. Dept. of Transportation, 301 Or 129, 719
P2d 860 (1986), an administrative rule can be “at issue in a separate civil action,”
but they argue that that can occur only in “rare circumstances.” Plaintiffs
respond that they are not challenging the validity of the administrative rule, as
such; rather, they are contending that the Board’s application of that rule violates
their contractual rights. Additionally, plaintiffs argue that, under Hay, circuit
courts “may determine the validity of an administrative rule as part of a civil
claim over which it otherwise has jurisdiction, such as this breach of contract
claim.” Thus, in plaintiffs’ view, the circuit court had jurisdiction in this case.
This opinion addresses and resolves defendants’ seventh assignment of error,
which presents a dispositive legal question. We do not address—and our opinion
should not be read to answer—the other potentially dispositive issues in this
case, including the two mentioned in this footnote, because some of those other
assignments may fail on the merits and because our resolution of the seventh
assignment of error resolves those assignments that otherwise may have merit.
Additionally, in a cross-appeal, plaintiffs seek reversal of the trial court’s
ruling striking plaintiffs’ request for prejudgment interest and “entry of a judg-
ment adjusted to reflect the prejudgment interest that the State should pay at the
statutory rate.” In light of our disposition, we dismiss plaintiffs’ cross-appeal as
moot.
292 County of Linn v. State of Oregon
I. BACKGROUND
A. The State, the Counties, and Management of Oregon’s
Forestlands
Oregon counties and the state have a long history of
cooperation in the management of Oregon’s forestlands.
In 1911, the legislature created the Board, which
was responsible for appointing a State Forester. Or Laws
1911, ch 278, §§ 1, 2. The 1911 enactment provided that
the State Forester “shall execute all matters pertaining to
forestry within the jurisdiction of the State,” and required
the State Forester to, among other actions, “co-operate with
land owners, counties or others in forest protection.” Id. § 2.
In 1931, the legislature enacted legislation autho-
rizing the Board to acquire lands from Oregon counties.
Under that enactment, the Board was authorized to acquire
land via “gift” or “purchase,” or “transfer of title to the state
by any county,” as long as such lands were “suited chiefly” for
“[g]rowing forest crops, water conservation, watershed pro-
tection, [or] recreation.” Or Laws 1931, ch 93, §§ 1, 2. Lands
acquired under the 1931 enactment were to be “adminis-
tered and managed by the state board of forestry for any
or all of the following purposes: (a) Continuous forest pro-
duction and so far as practicable to promote sustained yield
forest management for the forest units of which such lands
are a part; (b) water conservation or watershed protection;
[or] (c) recreation.” Id. § 3.
With regard to land acquired by the state under the
1931 enactment, the 1931 enactment required the state to
pay to the counties “5 cents per acre annually and 12 1/2 per
cent of all revenues received from said lands.” Id. § 5.
A new scheme for acquiring forestlands—the Act—
was enacted in 1939, Oregon Laws 1939, chapter 478, and
the Act was amended by Oregon Laws 1941, chapter 236, in
1941.
Currently, the Act is codified at ORS 530.010 to
530.181. The Act authorizes counties to convey land to the
Board, and such land is then designated as state forest. ORS
530.010; see also Tillamook Co. v. State Board of Forestry,
Cite as 319 Or App 288 (2022) 293
302 Or 404, 407-09, 730 P2d 1214 (1986) (describing the
statutory scheme). As was the case under the 1931 enact-
ment, under the Act, the state bears certain management
responsibilities for that land, and the state and the county
that conveyed the land to the state divide revenues derived
from that land under a statutory distribution formula. ORS
530.050 (setting forth management responsibilities of the
State Forester); ORS 530.110 (setting forth distribution for-
mula for revenue derived from land acquired under the Act).
Because they are central to our analysis of defen-
dants’ seventh assignment of error, we next set forth the
relevant provisions of the 1941 Act.
B. The 1941 Act
Under section 1 of the 1941 Act, the Board was
authorized to “acquire, by purchase, donation, devise or
exchange” from any “public, quasi-public or private owner”
land that was “chiefly valuable for the production of forest
crops, watershed protection and development, erosion con-
trol, grazing, recreation or forest administrative purposes.”
Or Laws 1941, ch 236, § 1.2 The Board, however, was prohib-
ited from acquiring land without the approval of the county
in which such lands were situated. Id. Land acquired under
section 1 was designated as “state forests.” Id.
Section 3 of the 1941 Act authorized Oregon counties
“to convey to the state for state forests any lands heretofore
or hereafter acquired by such county * * * in consideration
Oregon Laws 1941, chapter 236, section 1, provided, in relevant part:
2
“The state board of forestry, hereinafter referred to as the board, hereby
is authorized and empowered in the name of the state of Oregon to acquire,
by purchase, donation, devise or exchange from any public, quasi-public or
private owner, lands which by reason of their location, topo-graphical, geo-
logical or physical characteristics are chiefly valuable for the production of
forest crops, watershed protection and development, erosion control, grazing,
recreation or forest administrative purposes; provided, that the board shall
not acquire any land without prior approval, duly made and entered, of the
county court or board of county commissioners of the county in which the
lands are situated. Lands so acquired under the provisions of this act shall
be designated as state forests; provided, that in counties where land classifi-
cation committees have been appointed, in accordance with chapter 4 of this
title, no lands shall be so acquired unless they have been classified for the
purposes above enumerated.”
Oregon Laws 1941, chapter 236, section 1 is codified as amended at ORS 530.010.
294 County of Linn v. State of Oregon
of the payment to such county of the percentage of revenue
derived from such lands as provided in section 9 of this act.”3
Section 9 of the 1941 Act, in turn, provided a distribution
formula for “all revenues derived from lands acquired from
counties pursuant to section 3.” 4 Under the formula set forth
in section 9, after five cents per acre was deducted, 75 per-
cent of all revenue derived from land acquired from counties
was to go to the counties, and 25 percent was to be retained
by the state. Id. § 9.
Section 5 of the 1941 Act directed how the Board
was to manage lands acquired under the Act, which, in this
opinion, we refer to as the “management standard.” That
3
Oregon Laws 1941, chapter 236, section 3, provided:
“The county court or board of county commissioners of any county hereby
is authorized and empowered, in its discretion, to convey to the state for state
forests any lands heretofore or hereafter acquired by such county through
foreclosure of tax liens, or otherwise, which are within the classification of
lands authorized to be acquired under the terms of this act, if the board
deems such lands necessary or desirable for acquisition, in consideration of
the payment to such county of the percentage of revenue derived from such
lands as provided in section 9 of this act. In connection with any such convey-
ance the board shall have authority to make equitable adjustments with any
county of accrued delinquent fire patrol liens on lands heretofore or hereafter
acquired by such county by foreclosure of tax liens.”
Oregon Laws 1941, chapter 236, section 3 is codified as amended at ORS 530.030.
4
Oregon Laws 1941, chapter 236, section 9, provided:
“All revenues derived from lands acquired from counties pursuant to sec-
tion 3 hereof shall be paid into the general fund of the state of Oregon and
shall be credited by the state treasurer as follows, and for which purposes
said funds hereby are appropriated:
“(a) A sum equal to five (5) cents per acre of said lands per annum from
the date of enactment of this act shall be credited to the forest patrol account.
“(b) Seventy-five per cent of the balance thereof shall be credited to the
county in which the lands are situated and shall be paid annually to said
county by warrant of the secretary of state, pursuant to claim therefor, duly
approved by the board, and shall be by said county prorated and apportioned
as the same would have been had the lands from which said revenues are
derived been sold by said county.
“(c) Twenty-five per cent of said balance shall be credited to the state
forest development fund.”
Oregon Laws 1941, chapter 236, section 9 is codified as amended at ORS 530.110.
Additionally, with respect to lands conveyed before the 1941 amendment—
such as those conveyed under the 1939 version of the Act—the legislature pro-
vided that the distribution formula as it existed at the time of the conveyance
would continue to apply unless the county approved the change in the distribu-
tion formula. Or Laws 1941, ch 236, § 12.
Cite as 319 Or App 288 (2022) 295
section of the 1941 Act provided that the Board “shall man-
age the lands acquired pursuant to this act so as to secure the
greatest permanent value of such lands to the state” and, to
that end, authorized and empowered the Board to engage in
certain acts. Id. § 5 (emphasis added).5 Among those acts, the
Board was authorized and empowered to “protect said lands
from fire, disease and insect pests”; “sell forest products
from said lands”; execute contracts for “mining and removal
of minerals and fossils”; “permit the use of said lands for
grazing, recreation and other purposes when, in the opinion
of the board, such use is not detrimental to the purposes of
this act”; and “do all things and to make all rules and reg-
ulations, not inconsistent with law, necessary or convenient
for the management, protection, utilization and conservation
of said lands.” Id. The management standard in section 5
of the 1941 Act governed management of all land acquired
under the Act, including land acquired from private parties
by “purchase, donation, devise or exchange,” id. §§ 1, 5, as
well as land conveyed to the state by Oregon counties.
5
Oregon Laws 1941, chapter 236, section 5 provided, in relevant part:
“1. The board shall manage the lands acquired pursuant to this act so as
to secure the greatest permanent value of such lands to the state, and to that
end is empowered and authorized:
“(a) To protect said lands from fire, disease and insect pests, to cooperate
with the several counties of the state and with persons, firms and corpora-
tions owning lands within the state in such protection and to enter into all
agreements necessary or convenient therefor.
“(b) To sell forest products from said lands; to make and execute con-
tracts, for periods in no case exceeding 10 years, for the mining and removal
of minerals and fossils in said lands.
“(c) To permit the use of said lands for grazing, recreation and other pur-
poses when, in the opinion of the board, such use is not detrimental to the
purposes of this act.
“(d) To grant easements and rights of way over, through and across the
said lands.
“(e) To reforest said lands and to cooperate with the several counties of
the state, and with persons, firms and corporations owning timber lands
within the state in such reforestation, and to make all agreements necessary
or convenient therefor.
“(f) To require such undertakings as in the opinion of the board are
necessary or convenient to secure performance of any contract entered into
under the terms of this act.
“(g) To do all things and to make all rules and regulations, not incon-
sistent with law, necessary or convenient for the management, protection,
utilization and conservation of said lands.”
296 County of Linn v. State of Oregon
C. Counties Transfer Land to the State Under the Act, and
the State Shares Revenue with the Counties
Over the ensuing decades, 15 Oregon counties con-
veyed hundreds of thousands of acres of land to the state
pursuant to the Act, which then became state forests. The
Board has managed those lands in cooperation with the
counties and has shared revenue generated from manage-
ment of those lands with the counties pursuant to the dis-
tribution formula set forth in the Act. Although the Act has
been amended from time to time, the management standard
requiring that the Board “shall manage” land acquired
under the Act “so as to secure the greatest permanent value”
of such lands “to the state” has not changed since 1941, and
as noted, is currently codified at ORS 530.050.6
D. The Board Promulgates the Greatest Permanent Value
Rule
In 1998, the Board promulgated OAR 629-035-0020
(the GPV Rule). The GPV Rule defines “greatest perma-
nent value,” as that term is used in ORS 530.050, to mean
“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.” OAR 629-035-0020(1). It directs the State Forester
to maintain forestlands and “actively manage them in a
sound environmental manner to provide sustainable tim-
ber harvest and revenues to the state,” but also provides
that that focus is “not exclusive of other forest resources,”
and must be pursued “within a broader management con-
text,” which includes a variety of environmental goals. OAR
629-035-0020(2).
E. The Instant Litigation
In 2016, Linn County brought the instant action
against defendants. Linn County alleges that the legislature’s
6
The current version of ORS 530.050 directs the State Forester, under the
direction of the Board, to “manage the lands acquired pursuant to ORS 530.010
to 530.040 so as to secure the greatest permanent value of those lands to the
state.” ORS 530.050 (“Under the authority and direction of the State Board of
Forestry except as otherwise provided for the sale of forest products, the State
Forester shall manage the lands acquired pursuant to ORS 530.010 to 530.040 so
as to secure the greatest permanent value of those lands to the state * * *[.]”).
Cite as 319 Or App 288 (2022) 297
1939 and 1941 enactments constituted contractual offers;
that the counties’ subsequent conveyances of lands to the
state pursuant to the Act constituted acceptance of the con-
tractual offers; that from 1941 to the present, the Act has
mandated—and defendants were contractually obligated
to provide—management of the forestlands acquired under
the Act “so as to secure the greatest permanent value” of
that land; and that defendants breached that contractual
obligation by implementing “management plans in reliance
upon the GPV Rule that fail to maximize the potential reve-
nue that should be generated” from the land acquired under
the Act.7
Defendants moved to dismiss the complaint, argu-
ing, among other points, that “plaintiff has not pleaded a
clear and unmistakable term of a statutory contract that
required defendants to maximize revenue for the benefit
of plaintiff.” The trial court denied the motion to dismiss,
reasoning that “ORS 530.030 - 530.110 clearly sets out the
elements of contract including transfer of title in land by the
counties in consideration for certain promises to perform by
the state”; that “the meaning of the contract term ‘greatest
permanent value to the state’ is the gravamen of this case”;
that that term was “to some extent vague”; and that the
meaning of that term was a question for the trier of fact.
Subsequently, as noted above, the trial court then
certified a plaintiff class comprising 15 Oregon counties
that transferred land to the state under the Act, as well as
governmental entities with whom those counties share such
revenue. A jury found in favor of plaintiffs on their claim
for breach of contract and awarded plaintiffs over $1 billion
for past and future economic losses. Defendants now appeal
the resulting judgment, assigning error to, among other rul-
ings, the trial court’s denial of their motion to dismiss.
II. ANALYSIS
For the purposes of our analysis, the dispositive
issue presented by defendants’ seventh assignment of error
7
Linn County contends that, when “the contract was made,” the phrase
“greatest permanent value” was understood to require defendants to “maximize
the potential revenue” from the land that the state acquired from the counties.
298 County of Linn v. State of Oregon
is whether the Board’s obligation to manage certain forest-
lands “so as to secure the greatest permanent value of those
lands to the state,” presently codified at ORS 530.050, is a
term in a statutory contract between the state, on the one
hand, and various Oregon counties, on the other. Plaintiffs
say yes; defendants say no.
More specifically, on appeal, plaintiffs start from the
premise that the existence of a statutory contract under the
Act is “no longer in dispute.” They argue that the “ ‘greatest
permanent value’ mandate” in ORS 530.050, originally set
forth in Oregon Laws 1941, chapter 236, section 5, is a part
of that statutory contract because it is a “mandatory” term—
insofar as it uses the word “shall”—and that it is “remunera-
tive and essential to the purpose of the contract because it is
the sole source of the State’s obligation to actually generate
revenue from the lands.” As explained further below, they
also point to the Supreme Court’s decision in Tillamook Co.
v. State Board of Forestry, 302 Or 404, 730 P2d 1214 (1986),
as standing for the proposition that the “ ‘greatest perma-
nent value’ mandate” in ORS 530.050 “must be a term” in
the statutory contract that they contend exists.
Defendants, for their part, do not concede that the
Act contained a contractual offer to the counties. Defendants
contend that a statutory provision is not contractual unless
the legislature “clearly and unmistakably expresses its
intent to make it so,” and that “nothing in the text of ORS
530.050 suggests that” the obligation to manage lands so as
to “secure the greatest permanent value of those lands to the
state” is a “contractual term.” Additionally, they assert that
that latter contention is confirmed by the context of ORS
530.050. Defendants also disagree with plaintiffs’ reading
of the Supreme Court’s decision in Tillamook Co.8
8
On appeal, the parties’ legal arguments are supplemented and buttressed
by several amici curiae briefs. An amicus brief filed by the Council of Forest Trust
Land Counties takes the position that the counties that conveyed land to the state
under the Act have enforceable contract rights regarding management of those
lands. An amicus brief filed by the Oregon Forest & Industries Council presents
discussion of the requirements of the Endangered Species Act (“ESA”) and the
Clean Water Act (“CWA”). Finally, an amici brief filed by the Northwest Guides
and Anglers Association, North Coast Communities for Watershed Protection,
Oregon Wild, Native Fish Society, Cascadia Wildlands, Wild Salmon Center, the
Center for Biological Diversity, Umpqua Watersheds, and Beyond Toxics includes
Cite as 319 Or App 288 (2022) 299
As explained below, in conducting our analysis in
this case, we assume without deciding that the 1941 Act
created a statutory contract to at least some extent. The
question before us then is whether the 1941 Legislative
Assembly intended the “greatest permanent value” man-
agement standard, originally set forth in Oregon Laws
1941, chapter 236, section 5, and now codified at ORS
530.050, to be a term of that statutory contract. We con-
clude that the text, context, and legislative history regard-
ing the obligation of the Board to secure the “greatest
permanent value of such lands to the state” do not reflect
the clear and unmistakable intent necessary to conclude
that that obligation is a term in the statutory contract.
See Moro v. State of Oregon, 357 Or 167, 202, 351 P3d 1
(2015) (noting “the standard of clear and unmistakable con-
tractual intent applies to both the question of whether there
is an offer to form a contract and also to whether a particu-
lar provision is a term of that offer”).
In reaching that conclusion, we first consider the
Supreme Court’s decision in Tillamook Co. and explain
that, although that opinion reflects that the counties that
conveyed land to the state pursuant to the Act have a pro-
tected, recognizable interest that can be asserted against
the state, it does not does not hold that the “greatest perma-
nent value” management standard in ORS 530.050 is a term
in a statutory contract between the state and the Oregon
counties that transferred land to the state. We next set forth
our methodology for discerning whether a statute contains a
contractual promise and explain that we treat a statute as
a contractual promise only if the statute’s text, context, and
legislative history reflect the clear and unmistakable legis-
lative intent to create a contract. We then turn to consider-
ation of the text, context, and legislative history of Oregon
Laws 1941, chapter 236, section 5.
A. The Tillamook Co. Decision
As noted, before turning to our analysis of defen-
dants’ seventh assignment of error and setting forth our
methodology for discerning whether a particular statutory
arguments concerning the meaning of ORS 530.050, as well as discussion of the
requirements of the ESA and CWA.
300 County of Linn v. State of Oregon
provision is a term in a statutory contract, we first consider
the import of the Supreme Court’s decision in Tillamook Co.
The dispute in Tillamook Co. concerned a law that
directed the Board to cooperate with the Oregon State
Department of Transportation in exchanging certain land
owned by the state located in Linn County for a privately
owned tract of land called Crabtree Valley, which was also
located in Linn County. 302 Or at 409, 409 n 3. The state had
acquired the land in Linn County that it sought to exchange
for Crabtree Valley from Linn County pursuant to the Act.
Id. at 410. The legislature intended to preserve Crabtree
Valley, once acquired, as a state park. Id. Linn County had
been receiving timber revenue from the land that the state
sought to exchange for Crabtree Valley, and it would receive
no revenue from Crabtree Valley if the land was used as a
state park. Id.Twelve Oregon counties that had conveyed land to
the state pursuant to the Act brought a declaratory judg-
ment action against the state as well as other governmental
entities, seeking a declaration that the “counties’ convey-
ance of tax-foreclosed lands to the state pursuant to [the
Act] created a contract or trust relationship between the
parties and that the state cannot unilaterally transfer such
revenue-producing lands to third parties in exchange for
non revenue-producing lands * * * without being in breach of
this contract or trust.” Id. at 406, 411. During the course of
the litigation, the state admitted that it “actively promoted
the benefits of county participation in the program which
included assurances that the lands would be used to pro-
duce revenue, and that the revenue would be distributed to
the counties in a manner then provided by statute, unless
counties agreed to any changes in the distribution formula.”
Id. at 416.
The Supreme Court began its analysis by observing
that “Linn County deeded forest land to the state under a
statutory arrangement providing that a percentage of the
revenue derived from the sale of forest products from such
lands shall be paid to the county” and that “Linn County
stands to lose revenue if the transfer of the Crabtree Valley
tract is completed.” Id. at 413. It explained that the “statutory
Cite as 319 Or App 288 (2022) 301
land exchange and revenue distribution scheme”—i.e., the
Act—“gave Linn County the option of transferring for-
est lands to the state to manage,” and that that statutory
scheme “contemplates consensual dealings between the
counties and the state (through the Board of Forestry),
dealings that would create enforceable rights insofar as the
state’s management of formerly county owned forest land is
concerned.” Id. at 416. The court concluded:
“Under ORS chapter 530, Linn County has a protected,
recognizable interest that can be asserted against the
defendants. Linn County transferred forest land, land that
it could have kept and administered for its own benefit, to
the state, ‘in consideration of the payment to [Linn County]
of the percentage of revenue derived from such lands.’ ORS
530.030(1). It is entitled to enforce that claim for its per-
centage of revenue, and the state cannot avoid its obliga-
tion to Linn County by conveying the property to a third
person.”
Id. at 416-17 (brackets in original).
The court, however, deemed it “unnecessary to
describe the arrangement” under the Act between the state
and the counties in “contract or trust terms.” Id. at 416.
Instead, it looked “to the statutes to determine what flows
from them.” Id.
On appeal, as noted, plaintiffs argue that the court’s
decision in Tillamook Co. supports their position that the
“greatest permanent value” standard in ORS 530.050 is
part of a statutory contract between the state and the coun-
ties. Specifically, pointing to the court’s statement that the
counties have “enforceable rights insofar as the state’s man-
agement of formerly county owned forest land is concerned,”
plaintiffs argue that “[b]ecause the court in Tillamook * * *
recognized that the Counties’ enforceable rights included the
right to have the lands managed, the term governing that
management—the ‘greatest permanent value’ mandate—
must be a term of the contract.” Plaintiffs contend that if “the
Counties had no enforceable rights under ORS 530.050,” in
the Tillamook Co. litigation the state “would have been free
to complete the exchange and manage the new lands as a
non-revenue generating state park for recreation purposes.”
302 County of Linn v. State of Oregon
We disagree with plaintiffs’ reading of Tillamook Co.
And we do not think that the court’s reference to counties
having enforceable rights “insofar as the state’s manage-
ment of formerly county owned forest land is concerned”
indicates that the court held that the “greatest permanent
value” management standard in ORS 530.050 is a term of
a statutory contract between the state and the counties.
Rather, we understand the court’s reference to enforce-
able rights “insofar as the state’s management of formerly
county owned forest land is concerned” to refer to the partic-
ular management issue relevant to the Tillamook Co. deci-
sion—i.e., whether, consistent with the obligation owed by
the state to the counties under ORS 530.030(1), the state
can unilaterally exchange revenue-producing land for
non-revenue-producing land, thereby altogether avoiding its
obligation to share revenue with the counties, which is the
only “consideration” specified in ORS 530.030(1). The court
in Tillamook Co. held that the state could not do so and,
in so holding, said nothing about the “greatest permanent
value” management standard in ORS 530.050. In our view,
holding that the state cannot avoid the obligation to coun-
ties created under ORS 530.030(1) by unilaterally exchang-
ing revenue-producing land for non-revenue-producing land
says nothing about whether the statutory provision regard-
ing how the state is to manage forestlands, ORS 530.050, is
part of an enforceable contractual obligation.
Ultimately, in our view, Tillamook Co. tells us that
counties that transferred land to the state pursuant to the
Act have some “protected, recognizable interest” that can be
asserted against the state—be it one that arises from con-
tract, trust, or otherwise—as a result of transferring land
to the state “in consideration of the payment to such county
of the percentage of revenue derived from such lands,” as set
forth in ORS 530.030(1); that that interest entitles counties
to bring claims asserting their right to the percentage of
revenue as set forth in ORS 530.030(1); and that the state
cannot avoid its obligation to the counties under the Act by
unilaterally conveying revenue-producing land to a third
party in exchange for non-revenue-producing land.
It does not hold—nor does it indicate—that the
“greatest permanent value” management standard in ORS
Cite as 319 Or App 288 (2022) 303
530.050, originally set forth in Oregon Laws 1941, chapter
236, section 5, is a term in a statutory contract between the
state and Oregon counties that transferred land to the state.
We turn to that issue.
B. Analysis of Statutory Contracts
With that statutory and case law background in
mind, we set forth Oregon’s methodology for ascertaining
the existence and terms of statutory contracts.
Oregon law has long recognized that “legislative
enactments may contain provisions which, when accepted as
the basis of action by individuals, become contracts between
them and the state.” Campbell et al. v. Aldrich et al., 159 Or
208, 213, 79 P2d 257 (1938). However, when “the legislature
pursues a particular policy by passing legislation, it does not
usually intend to prevent future legislatures from chang-
ing course.” Moro, 357 Or at 195. Accordingly, we have “long
applied a canon of construction that disfavors interpreting
statutes as contractual promises.” Id.; see also Strunk v.
PERB, 338 Or 145, 171, 108 P3d 1058 (2005) (“The inten-
tion to surrender or suspend legislative control over matters
vitally affecting the public welfare cannot be established by
mere implication.” (Internal quotation marks omitted.)).
We treat a statute as a contractual promise “only if
the legislature has clearly and unmistakably expressed its
intent to create a contract.” Health Net, Inc. v. Dept. of Rev., 362
Or 700, 716, 415 P3d 1034 (2018) (internal quotation marks
omitted). And we have said that, where “doubt concerning the
formation of such an agreement exists, that rule eliminates
the state’s alleged contractual obligations.” FOPPO v. State of
Oregon, 144 Or App 535, 539, 928 P2d 335 (1996).
The “standard of clear and unmistakable contrac-
tual intent applies to both the question of whether there is
an offer to form a contract and also to whether a particular
provision is a term of that offer.” Moro, 357 Or at 202. When
it has been determined that a particular statutory scheme
contains a contractual promise, the “standard of clear and
unmistakable intent * * * focuses only on whether the legis-
lature intended a particular * * * provision to be part of that
promise.” Id. at 203.
304 County of Linn v. State of Oregon
In examining legislative intent, we can “infer the
intent to create a contract from the text, context, and legis-
lative history, as long as those sources, considered together,
demonstrate a clear and unmistakable intent to impose con-
tractual obligations on the state.” Health Net, Inc., 362 Or
at 716. But “we have not required a statute to use language
referring directly to contracts, promises, or guarantees.” Id.C. Text, Context, and Legislative History
We now turn to an analysis of the text, context, and
legislative history of Oregon Laws 1941, chapter 236, sec-
tion 5, and the provision presently codified at ORS 530.050,
which requires the Board to manage lands conveyed under
the Act “so as to secure the greatest permanent value of
those lands to the state.” In so doing, our aim is to deter-
mine whether the legislature intended that provision to be a
term in a statutory contract that, as asserted by plaintiffs,
requires the state to maximize revenue from the lands.
But, before conducting our analysis, we must
“ensure that we are ascertaining the intent of the correct
legislature—an inquiry that is critical when analyzing stat-
utory contracts.” Strunk, 338 Or at 189. “That is so because
the fundamental purpose behind such contracts is to bind
future legislative action.” Id. Our understanding of plain-
tiffs’ claim is that it was the 1941 Legislative Assembly
that promised that, if counties conveyed lands to the state,
in exchange, the state would manage such lands “so as to
secure the greatest permanent value of such lands to the
state,” which, in plaintiffs’ view, requires maximization of
revenue. Consequently, the 1941 enactment provides the
version of the Act to which we will look in ascertaining the
legislature’s promissory intent (or lack thereof) with respect
to that provision.
Additionally, we are mindful that, as discussed
above, Tillamook Co. held that counties that transferred
land to the state pursuant to the Act have a protected,
recognizable interest—be it one that arises from contract,
trust, or otherwise—which entitles them to a percentage of
revenue as set forth in the Act. In conducting our analysis
in this case, we assume without deciding that the 1941 Act
created a statutory contract to at least some extent. The
Cite as 319 Or App 288 (2022) 305
question before us then is whether the 1941 Legislative
Assembly intended the “greatest permanent value” manage-
ment standard set forth in Oregon Laws 1941, chapter 236,
section 5, to be a term of that statutory contract.9
1. The text
We begin with the text: “ ‘[T]he text of the statutory
provision itself is the starting point for interpretation and is
the best evidence of the legislature’s intent.’ ”
State v. Swenson, 317 Or App 546, 549, 506 P3d 489 (2022)
(quoting PGE v. Bureau of Labor and Industries, 317 Or 606,
610, 859 P2d 1143 (1993)).
Oregon Laws 1941, chapter 236, section 5 provided,
in pertinent part:
“1. The board shall manage the lands acquired pursu-
ant to this act so as to secure the greatest permanent value
of such lands to the state, and to that end is empowered and
authorized:
9
We note that, on appeal and in the trial court, plaintiffs have pointed to
a circuit court decision, Tillamook County v. State of Oregon, Tillamook County
Circuit Court No. 04-2118 (July 5, 2005) (Tillamook II). At issue in Tillamook II
was a dispute concerning the legislature’s enactment of 2003 House Bill (HB)
2148, and specifically section 4(5) of that bill, which transferred $10 million from
the State Forestry Department Account to the General Fund. According to the
circuit court, the plaintiffs’ complaint in Tillamook II alleged, “in essence, that
the transfer by the State was a unilateral one that could not be made without
the consent of the Counties in light of the history of the legislation now embodied
in ORS 530.010 to 530.280.” The circuit court invalidated HB 2148, section 4(5),
holding that “it is clear and unambiguous that the revenues going to the State
under ORS 530.110(1)(c) cannot be transferred to the General Fund by the state
without the consent of the counties.”
On appeal, plaintiffs assert that, in Tillamook II, the circuit court held that
“the parties’ contract [under the Act] barred the legislature from diverting the
State’s share of revenue [derived from forestlands acquired under the Act] from
the statutorily dedicated uses of that revenue.” Plaintiffs contend that, given the
court’s holding in Tillamook II, “issue preclusion bars the State from relitigating
the established law that the Counties can enforce their rights under the parties’
contract against the State.”
For the purposes of our analysis, we assume—but do not decide—that
Tillamook II precludes the state from relitigating the issue of the existence of
a statutory contract. We do not, however, understand Tillamook II to have any
preclusive effect with regard to the issue in this case as framed above: assum-
ing that the 1941 Act did create certain obligations on the part of the state that
are contractual in nature, whether the 1941 Legislative Assembly intended the
“greatest permanent value” management standard set forth in Oregon Laws
1941, chapter 236, section 5, to be a term of that statutory contract.
306 County of Linn v. State of Oregon
“(a) To protect said lands from fire, disease and insect
pests, to cooperate with the several counties of the state
and with persons, firms and corporations owning lands
within the state in such protection and to enter into all
agreements necessary or convenient therefor.
“(b) To sell forest products from said lands; to make
and execute contracts, for periods in no case exceeding 10
years, for the mining and removal of minerals and fossils
in said lands.
“(c) To permit the use of said lands for grazing, recre-
ation and other purposes when, in the opinion of the board,
such use is not detrimental to the purposes of this act.
“(d) To grant easements and rights of way over,
through and across the said lands.
“(e) To reforest said lands and to cooperate with the
several counties of the state, and with persons, firms and
corporations owning timber lands within the state in such
reforestation, and to make all agreements necessary or
convenient therefor.
“(f) To require such undertakings as in the opinion
of the board are necessary or convenient to secure perfor-
mance of any contract entered into under the terms of this
act.
“(g) To do all things and to make all rules and regula-
tions, not inconsistent with law, necessary or convenient for
the management, protection, utilization and conservation
of said lands.”
(Emphasis added.)
Initially, we observe that Oregon Laws 1941, chap-
ter 236, section 5, directs the Board to secure the “great-
est permanent value of such lands to the state.” (Emphasis
added.) In our view, the reference to “the state”—as opposed
to the counties—as the entity that the Board is directed
to look to in securing the “greatest permanent value” is
noteworthy. It suggests that the legislature intended that,
in discerning what constitutes “value,” the Board consid-
ered “value” to the state, as a whole, not solely “value” to
the counties. That intent may have followed from the fact
that, as noted above, the management standard in Oregon
Laws 1941, chapter 236, section 5, governed the Board’s
Cite as 319 Or App 288 (2022) 307
obligations in the management of all land acquired under
the Act, not only land conveyed by Oregon counties. That
the legislature directed the Board to look to the state as
the reference point for “value” suggests to us that it was the
state, as a whole, and not the counties, that was intended to
be the beneficiary of the management standard set forth in
Oregon Laws 1941, chapter 236, section 5. In our view, that
militates against concluding that the “greatest permanent
value” management standard was intended to be part of the
contractual offer to the counties.
Relatedly, although a term of a statutory contract
can be established without language referring directly to
“contracts, promises, or guarantees,” Moro, 357 Or at 203,
the directive in Oregon Laws 1941, chapter 236, section 5,
that the Board “shall manage the lands acquired pursuant
to this act so as to secure the greatest permanent value of
such lands to the state” does not contain a promise to the
counties. That language is not “unambiguously promissory”
with regard to the counties. Cf. Strunk, 338 Or at 184, 186
(statute was “unambiguously promissory” where it provided
that, “[u]pon retiring from service at normal retirement age
or thereafter, a member of the system shall receive a service
retirement allowance which shall consist of the following
annuity and pensions” (emphases added)).
The absence of promissory language in section 5 is
notable, because, as discussed further below, another sec-
tion of the 1941 enactment—section 3—contains language
that seemingly does sound in contract, is unambiguously
promissory, and, per the holding in Tillamook Co., does cre-
ate rights that counties are entitled to enforce against the
state. See Or Laws 1941, ch 236, § 3 (“The county court * * *
is authorized * * * to convey to the state for state forests any
lands heretofore or hereafter acquired * * * in consideration
of the payment to such county of the percentage of revenue
derived from such lands as provided in section 9 of this act.”
(Emphasis added.)). Indeed, if the legislature had intended
the “greatest permanent value” management standard in
Or Laws 1941, chapter 236, section 5, to be part of the offer
to the counties embodied in Or Laws 1941, chapter 236, sec-
tion 3, the legislature likely would have used such unam-
biguous promissory language. Cf. James v. State of Oregon,
308 County of Linn v. State of Oregon
366 Or 732, 759, 471 P3d 93 (2020) (“If the legislature had
intended a different result in this case, it would have writ-
ten the jurisdictional provision differently.”).
We also observe that nothing in the text of Oregon
Laws 1941, chapter 236, section 5, indicates an intent to
prevent future legislatures from amending the manage-
ment standard, at least so long as the generation of revenue
remains one of the uses of state forests. As we have previ-
ously stated, “where the legislation ‘contains nothing indic-
ative of a legislative commitment not to repeal or amend the
statute in the future,’ a statutory contract probably cannot
be found.” Smejkal v. DAS, 239 Or App 553, 560, 246 P3d
1140 (2010), rev den, 351 Or 541 (2012) (quoting FOPPO, 144
Or App at 539-40; brackets omitted); see also Eckles v. State
of Oregon, 306 Or 380, 391, 760 P2d 846 (1988) (“[I]f the
Legislative Assembly had simply provided in ORS 656.634
that the [Industrial Accident Fund] was to be used for the
purposes stated in ORS 656.001 to 656.794, a contractual
obligation probably could not have been inferred from the
provision because it would have contained nothing indica-
tive of a legislative commitment not to repeal or amend the
statute in the future.”).
To be sure, Oregon Laws 1941, chapter 236, section 5,
directs what the Board “shall” do, and use of the word
“shall” is a “factor that can weigh in favor of finding a stat-
utory contract offer,” Moro, 357 Or at 225-26, but that word
alone does not “suffice to create contractual obligations on
behalf of the state,” FOPPO, 144 Or App at 541 (so noting
with respect to the phrase “shall be”). Not “every statutory
usage of the words ‘shall’ or ‘will’ means that an enacting
legislature meant to forever bind future legislatures.” Moro,
357 Or at 238 n 2 (Brewer, J., concurring). And, in view of
the specific acts the Board “may” take, as specified in para-
graphs (a) through (g) of section 5 of the 1941 enactment,
we understand the “shall” directive in section 5 as directing
administrative acts by the Board, not reflecting a contrac-
tual promise to the counties. See id. (Brewer, J., concurring)
(“Sometimes, the use of [shall or will] can be meant merely
to direct an administrative act by an executive agency.”).
That is because paragraphs (a) through (g) specify a range of
administrative acts the Board is empowered and authorized
Cite as 319 Or App 288 (2022) 309
to take to fulfill its obligation to manage lands acquired
under the Act “so as to secure the greatest permanent value
of such lands to the state,” including doing “all things and
[making] all rules and regulations, not inconsistent with
law, necessary or convenient for the management, protec-
tion, utilization and conservation of said lands.”
Put another way, notwithstanding the use of “shall,”
nothing in the text of Oregon Laws 1941, chapter 236, section 5,
suggests that the legislature intended the “greatest per-
manent value” management standard to be an immutable
promise. See Strunk, 338 Or at 178, 192 (“Nothing in the
text of ORS 238.200(1)(a) (2001)”—which provided that “[a]n
active member of the [PERS] system shall contribute to the
fund and there shall be withheld from salary of the member
six percent of that salary”—supported “petitioners’ argu-
ment that the legislature intended that contribution to be
immutable.” (Emphases added.)).
We also note that, perhaps, bound up with the ques-
tion of whether the provision requiring that the Board “shall
manage the lands acquired pursuant to this act so as to
secure the greatest permanent value of such lands to the
state” is a term in a contractual offer as the counties assert,
there is a question regarding whether that phrase is ambig-
uous. For the purposes of our analysis in this opinion, we
do not need to conclusively construe the phrase “greatest
permanent value,” but we do observe that that language as
used in Oregon Laws 1941, chapter 236, section 5, is, in our
view, ambiguous.10 That is because, among other reasons,
10
The trial court determined that the meaning of the statutory phrase
“greatest permanent value” was a question of fact for the jury to decide. And, on
appeal, plaintiffs contend that if the “ ‘greatest permanent value’ mandate” is a
term in a statutory contract between plaintiffs and the state, and that term is
ambiguous, the meaning of that term is a question of fact for a jury to decide.
We disagree with the trial court and plaintiffs. As the Supreme Court has
stated, “determining the meaning of a statute is a question of law, ultimately
for the court.” Bergerson v. Salem-Keizer School District, 341 Or 401, 411, 144
P3d 918 (2006) (internal quotation marks omitted). And as we explained in
Karjalainen v. Curtis Johnston & Pennywise, Inc., 208 Or App 674, 681, 146 P3d
336 (2006), rev den, 342 Or 473 (2007), in “no event is the meaning of a statutory
term determined as a question of fact.” (Emphasis in original.). See also ORS
174.020(1)(a) (“In the construction of a statute, a court shall pursue the intention
of the legislature if possible.”). In fact, “the ad hoc, case-by-case interpretation of
statutes—possibly resulting in the same statutory term being construed to mean
310 County of Linn v. State of Oregon
historically, “value” has myriad definitions, some of which
could relate to revenue production and others that do not
relate to revenue production. Webster’s New Int’l Dictionary
2814 (unabridged 2d ed 1934) (defining value, among other
ways, as “[a] fair return in money, food services, etc., for some-
thing exchanged”; “[t]he quality or fact of being worth while,
excellent, useful, or desirable”; “relative worth, importance,
or utility”). We think that the ambiguous nature—or, as the
trial court framed it, the “to some extent vague” nature—of
the phrase “greatest permanent value” as used in Oregon
Laws 1941, chapter 236, section 5, militates against the con-
clusion that the 1941 Legislative Assembly intended what-
ever offer may have been extended by the state in the 1941
Act as including a contractual promise to the counties to
“secure the greatest permanent value of such lands to the
state.” See Moro, 357 Or at 237 n 1 (Brewer, J., concurring)
(noting the “lack of ambiguity” requirement “applies not
only to the existence of a contract, but also to the ‘extent
of the obligation created’ by the contract, that is, whether
its terms encompass a particular promise.” (Quoting Eckles,
306 Or at 397.)).11
Additionally, it appears to us that the management
standard set forth in Oregon Laws 1941, chapter 236, section 5,
different things in different cases—would run afoul of constitutional obligations
of equal treatment.” Karjalainen, 208 Or App at 681 (emphasis in original).
In any event, as we explain later in this opinion, we understand the ambig-
uous nature of the meaning of the management standard and another aspect of
the text of Oregon Laws 1941, chapter 236, section 5 to indicate that section 5
reflects an intent to delegate authority to the Board, rather than extend a con-
tractual offer to the counties.
11
The ambiguity is borne out by other aspects of the 1941 Act. For example,
under the 1941 Act, the state was authorized to acquire lands that were “chiefly
valuable” for the production of revenue (i.e., the production of forest crops) and
land that was not necessarily “chiefly valuable” for the production of revenue
(i.e., watershed production and development, and recreation). See Or Laws 1941,
ch 236, § 1 (“The state board of forestry, * * * hereby is authorized and empow-
ered * * * to acquire * * * lands which * * * are chiefly valuable for the production
of forest crops, watershed protection and development, erosion control, grazing,
recreation or forest administrative purposes.”).
We also observe that the legislature included less ambiguous language
regarding forest management for the purpose of revenue production in prior
enactments. See Or Laws 1913, ch 124, § 3 (“[P]rovided, that in any disposal of
products or privileges the first consideration shall be the care, maintenance and
perpetuation of the tract’s forest productivity as a source of maximum permanent
revenue * * *.”).
Cite as 319 Or App 288 (2022) 311
was intended to be a statutory delegation of authority to
the Board, rather than a term in a contractual offer to the
counties. That is not only because of its ambiguous nature,
but also because in Oregon Laws 1941, chapter 236, sec-
tion 5, the legislature expressly entrusted to the “opinion
of the board” decisions regarding when use of forestland for
“grazing, recreation, and other purposes” would not be “det-
rimental to the purposes” of the Act. Or Laws 1941, ch 236,
§ 5 (empowering and authorizing the Board to “permit the
use of said lands for grazing, recreation and other purposes
when, in the opinion of the board, such use is not detrimen-
tal to the purposes of this act”).
Plaintiffs view the text of Oregon Laws 1941, chap-
ter 236, section 5, differently than we do. In arguing their
appeal, plaintiffs contend that, because “revenue secured to
the State through the State Forester’s management” must
be “shared in fixed proportion among parties,” securing
the “greatest permanent value” to the state—as the Act
requires that the Board do—also secures the greatest per-
manent value to the counties in terms of revenue. As plain-
tiffs see it, the state and the counties have a “mutual inter-
est” in receiving revenue from the lands, and “[m]aximizing
the revenue obtained by the State necessarily maximizes
the revenue obtained by the Counties under the terms of
the parties’ contract.” We understand plaintiffs’ position to
be that we should not put undue weight on the fact that the
“greatest permanent value” standard uses “the state,” not
the counties, as a point of reference with regard to “value.”
The difficulty with plaintiffs’ position is twofold.
First, it is premised on the notion that the “value” the state
must obtain under the “greatest permanent value” manage-
ment standard is maximization of revenue at the expense
of other kinds of value (either economic or noneconomic).
But, as noted, the “greatest permanent value” management
standard is, at the very least, ambiguous as to whether it
requires maximization of revenue.
More importantly, even assuming plaintiffs are
correct that the state and the counties’ interests are nec-
essarily (and perfectly) aligned, such that securing the
“greatest permanent value” to the state is also securing the
312 County of Linn v. State of Oregon
“greatest permanent value” to the counties that transferred
land to the state under the Act, the text falls short of the
clear and unambiguous standard plaintiffs are required to
meet to turn a statutory obligation into a contractual prom-
ise because the legislature chose “value to the state” as the
point of reference, rather than “value to the counties.” See
Strunk, 338 Or at 192 (concluding a statute was not a part
of the statutory PERS contract where the text and “stat-
utory context do not establish clearly and unambiguously
that the legislature intended” the statute to be a promise
to PERS members); Health Net, Inc., 362 Or at 719 (“Given
those competing considerations, we cannot say that the text
of Articles III and IV clearly and unmistakably creates con-
tractual obligations, which is the standard that taxpayer
must meet to convert a statute into a contract.”). That is,
the text of Oregon Laws 1941, chapter 236, section 5, does
not clearly and unambiguously indicate that the 1941
Legislative Assembly intended the “greatest permanent
value” management standard to be a term in the statutory
contract.
2. The context
Having considered the text of Oregon Laws 1941,
chapter 236, section 5, we turn to context. Context is essen-
tial to our analysis of statutory contracts; we cannot view a
provision “in isolation and evaluate whether [the provision],
standing alone, demonstrates the requisite unambiguous
legislative intent to create a contractual obligation.” Hughes
v. State of Oregon, 314 Or 1, 23, 838 P2d 1018 (1992).
In this case, essential context includes Oregon Laws
1941, chapter 236, section 3, which as noted above, does cre-
ate enforceable rights and includes specific reference to the
“consideration” that counties were to receive in exchange
for conveying land to the state: “The county court * * * is
authorized * * * to convey to the state for state forests any
lands heretofore or hereafter acquired * * * in consideration
of the payment to such county of the percentage of revenue
derived from such lands as provided in section 9 of this act.”
(Emphasis added.) As the court explained in Moro, 357 Or at196 n 18, “ ‘[c]onsideration’ is that which one party provides
to the other in exchange for entering into the contract.”
Cite as 319 Or App 288 (2022) 313
In our view, Oregon Laws 1941, chapter 236, sec-
tion 3, may have contained an offer by the 1941 Legislative
Assembly to form a unilateral contract, which the counties
accepted when they conveyed land to the state under the
Act. Moro, 357 Or at 198 (“An offer for a unilateral contract
invites the other party to accept with performance—that is,
by actually doing the performance that the offering party
seeks.” (Emphasis added.)). Assuming but not deciding that
Oregon Laws 1941, chapter 236, section 3 did contain a con-
tractual offer by the state to the counties, we think it note-
worthy that absent from the “consideration” that the state
offered to provide to the counties in section 3 in exchange for
the conveyance of land to the state is any reference to sec-
tion 5 of the 1941 Act or to the “greatest permanent value”
standard. To the contrary, the only consideration specified
in Oregon Laws 1941, chapter 236, section 3, is the “pay-
ment to such county of the percentage of revenue derived
from such lands as provided in section 9,” and, section 9, in
turn, sets forth the scheme for distribution of revenue gener-
ated by lands acquired under the Act. Or Laws 1941, ch 236,
§§ 3, 9. Reading into Oregon Laws 1941, chapter 236, sec-
tion 3, consideration in addition to the consideration speci-
fied by the 1941 Legislative Assembly in section 3 related
to revenue sharing—i.e. reading in a contractual obligation
to maximize revenue by “securing the greatest permanent
value”—would be counter to the legislature’s direction that
in “the construction of a statute, the office of the judge is
simply to ascertain and declare what is, in terms or in sub-
stance, contained therein, not to insert what has been omit-
ted.” ORS 174.010.
In seeking a different result, plaintiffs argue that,
as a matter of context, the “greatest permanent value” stan-
dard now codified at ORS 530.050 must be a term of the
statutory contract between the state and the counties. As
plaintiffs see it, the “greatest permanent value” standard is
“remunerative and essential to the purpose of the contract
because it is the sole source of the State’s obligation to actu-
ally generate revenue from the lands.”
We are not persuaded by plaintiffs’ argument. In
Strunk, the Supreme Court considered whether 2003 legislation
314 County of Linn v. State of Oregon
that amended ORS 238.200(1)(a) and diverted contributions
from PERS members’ “regular accounts” to “IAP accounts”
breached the statutory promise embodied in ORS 238.300
that, “at retirement, the member would be entitled to receive
a service retirement allowance calculated under the for-
mula that yielded the highest pension amount.” 338 Or at
179, 192. As a result of the 2003 legislation, most mid-career
employees who were PERS members would effectively lose
the option of retiring under the “Money Match” formula for
calculating retirement benefits and would instead have to
retire under the less generous “full formula.” Id. at 183-84.
Prior to the 2003 legislation, ORS 238.200(1)(a)
(2001) had provided, “An active member of the system shall
contribute to the fund and there shall be withheld from
salary of the member six percent of that salary,” and ORS
238.200(2) (2001) had provided that “[t]he contributions of
each member as provided in subsection (1) of this section
shall be deducted by the employer from each payroll and
transmitted by the employer to [PERB], which shall cause
them to be credited to the member account of the member.”
Id. at 178-79. The 2003 legislation amended ORS 238.200
to discontinue such contributions, which had been required
under ORS 238.200 (2001). Id. at 179.
After considering the text, context, and legislative
history, the court concluded that the legislature did not alter
or eliminate the promise in ORS 238.300 (2001) that “each
eligible member * * *, at retirement, * * * would be entitled
to receive a service retirement allowance calculated under
the formula that yielded the highest pension amount” when
it enacted the 2003 legislation, even though the 2003 legis-
lation prohibited PERS members from contributing to their
regular accounts, deprived many PERS members of the
option of retiring under the “Money Match” formula and, as
a result, caused many PERS member to receive less money in
retirement than they would otherwise have received absent
the 2003 amendments. Id. at 183-84, 191. Put simply, the
2003 amendments did not eliminate employees’ entitlement
to a retirement benefit calculated under the formula that
yielded the highest pension amount, despite those amend-
ments effectively eliminating one of the previously available
Cite as 319 Or App 288 (2022) 315
formulas for calculating that retirement benefits for many
PERS members.
Moreover, in considering the requirements of ORS
238.200(1)(a) (2001), the court determined that “[n]othing in
the text of ORS 238.200(1)(a) (2001), which required PERS
members to contribute six percent of their salaries to the
fund, supports petitioners’ argument that the legislature
intended that contribution to be immutable,” and noted that
“the text of ORS 238.200(1)(a) (2001) and its statutory con-
text do not establish clearly and unambiguously that the leg-
islature intended to promise members that they could con-
tribute six percent of their salaries to their regular accounts
throughout their PERS membership so as to maximize their
pension component calculation under the Money Match.” Id.
at 192-93.
We believe Strunk to be instructive here. In this
case, assuming the Act contained a statutory promise to the
counties, it would be found in Oregon Laws 1941, chapter
236, section 3, codified as amended at ORS 530.030; similarly,
the statutory promise in Strunk was found in ORS 238.300
(2001). That the Board’s management of land under the
“greatest permanent value” management standard, as orig-
inally set forth in Oregon Laws 1941, chapter 236, section 5,
affects the amount of revenue that the counties receive pur-
suant to Oregon Laws 1941, chapter 236, section 3, codified
as amended at ORS 530.030, does not necessitate that the
“greatest permanent value” management standard in sec-
tion 5 is a part of the statutory contract created by section 3;
just as in Strunk, the ability of PERS members to contribute
to their regular member account under ORS 238.200(1)(a)
(2001) was not a part of the statutory contract set forth in
ORS 238.300 (2001), notwithstanding that, for many PERS
members, amending ORS 238.200 (2001) affected their
retirement income and would, effectively, force them to
retire under a different and less generous formula for calcu-
lating their retirement benefits.
Further, we do not foreclose that the state may have
some obligation to generate revenue from the forestlands it
acquired from the counties that is attendant to, or implicit
316 County of Linn v. State of Oregon
in, the obligation that the state undertook when it offered,
in consideration for the land conveyed by the counties, to
distribute to the counties a “percentage of revenue derived
from [land conveyed by the counties under the Act] as pro-
vided in section 9.” Or Laws 1941, ch 236, § 3. Certainly,
under Tillamook Co., the state cannot altogether avoid that
obligation by conveying revenue producing land to a third-
party in exchange for non-revenue producing land. 302 Or
at 416-17.
For the purposes of our analysis, however, we need
not reach that legal issue: Plaintiffs’ contention is that the
“greatest permanent value” management standard set forth
in Oregon Laws 1941, chapter 236, section 5, was part of
the state’s offer to the counties. For the reasons explained
above, and particularly that Oregon Laws 1941, chapter
236, section 3, specified the consideration that was offered
to counties in exchange for the conveyance of land and that
consideration did not expressly include the “greatest perma-
nent value” management standard, the context of the “great-
est permanent value of such lands to the state” as used in
Oregon Laws 1941, chapter 236, section 5, does not reflect
the “clear and unmistakable intent” for that provision to be
term in a statutory contract.
3. The absence of useful legislative history
On appeal, in advancing their arguments concern-
ing whether the obligation of the Board to manage lands
conveyed to the state by the counties “so as to secure the
greatest permanent value of such lands to the state” is a
term in a statutory contract, neither party cites legisla-
tive history relevant to whether that phrase, as originally
set forth in Oregon Laws 1941, chapter 236, section 5,
was intended by the 1941 Legislative Assembly to consti-
tute a contractual promise. Nor—perhaps due to the age
of the enactment—have we been able to find any legisla-
tive history that bears on the question of whether the 1941
Legislative Assembly intended the “greatest permanent
value” management standard in Oregon Laws 1941, chap-
ter 236, section 5, to be a contractual promise to Oregon
counties.
Cite as 319 Or App 288 (2022) 317
4. The text and context regarding the phrase “greatest
permanent value of such lands to the state,” as set
forth in Oregon Laws 1941, chapter 236, section 5,
does not clearly and unmistakably create a contrac-
tual obligation.
In view of the foregoing text, context, and absence
of useful legislative history, we conclude that the standard
of “clear and unmistakable intent” is not met with regard to
whether the 1941 Legislative Assembly intended the Board’s
obligation to manage forestlands conveyed by the counties
so as to “secure the greatest permanent value of such lands
to the state” is a term in the statutory contract between the
state and the counties.12
III. CONCLUSION
The state and Oregon counties have long cooperated
in the management of Oregon’s forests. And, particularly in
view of Tillamook Co., there can be no doubt that the stat-
utory scheme attendant to that cooperation, ORS 530.010
to 530.181, creates certain enforceable rights insofar as the
state’s management of formerly county-owned forestland is
concerned. However, the text, context, and absence of useful
legislative history regarding the obligation of the Board to
secure the “greatest permanent value of such lands to the
state,” as originally set forth in Oregon Laws 1941, chapter
236, section 5, and now codified as amended at ORS 530.050,
12
We note that, in arguing that the phrase “greatest permanent value of
such lands to the state” is a term in a statutory contract requiring the state to
maximize revenue, plaintiffs also point to what they term “the historical context
of the 1941 Act.” In their view, that “historical context” shows that the “ ‘greatest
permanent value’ term and the revenue obligation it created were essential to
inducing the Counties to convey their lands to the State under the 1941 Act.”
Plaintiffs further posit that, “[w]here the Counties chose to accept the State’s
offer under the terms negotiated in 1941, it was because they understood the
State would manage those lands to produce revenue under the ‘greatest perma-
nent value’ management mandate.”
We appreciate the significance of the historical context to which plaintiffs’
point. In our view, however, given our methodology for discerning legislative
intent, that historical context does not alter our conclusion that the standard
of “clear and unmistakable intent” is not met with regard to whether the 1941
Legislative Assembly intended the Board’s obligation to manage forestlands
conveyed by the counties so as to “secure the greatest permanent value of such
lands to the state” to be a term in a statutory contract between the state and the
counties.
318 County of Linn v. State of Oregon
do not reflect the clear and unmistakable intent necessary
to conclude that that obligation is a term in a statutory con-
tract. Consequently, we conclude that the trial court erred
in denying defendants’ motion to dismiss. We reverse and
remand.13
Reversed and remanded on appeal; cross-appeal
dismissed as moot.
13
In this opinion, in conducting our analysis, we have looked to the 1941
version of the Act. As noted above, the Act has been amended since 1941. Those
amendments have not changed the language in the Act requiring that the Board
“shall manage” land acquired under the Act “so as to secure the greatest perma-
nent value” of such lands “to the state,” but they have altered the options that the
Board is authorized to take in pursuit of that end.
We note specifically that, although the 1941 Act permitted the Board to use
the lands acquired under the Act “for grazing, recreation and other purposes
when, in the opinion of the board, such use is not detrimental to the purposes of
this act,” Or Laws 1941, ch 236, § 5 (emphasis added), in 1967, the legislature
amended the Act to allow the Board to:
“[p]ermit the use of the lands for other purposes, including but not limited
to forage and browse for domestic livestock, fish and wildlife environment,
landscape effect, protection against floods and erosion, recreation, and pro-
tection of water supplies when, in the opinion of the board, such use is not
detrimental to the best interest of the state.”
Or Laws 1967, ch 396, § 3 (emphasis added).
On appeal, plaintiffs assert that the counties consented to the amendments
to the Act and that those amendments should be understood to have been “con-
sensual modifications to the parties’ contract.”
In this opinion, as set forth above, we hold that the management standard
in Oregon Laws 1941, chapter 236, section 5, was not part of a contractual offer
to the counties. In our view, it follows from that holding that subsequent amend-
ments to section 5 of the 1941 Act, which altered the options that the Board is
authorized to take in pursuit of that end, did not turn that management standard
into a contractual promise.