SALEM — The Oregon Court of Appeals has struck down a $1 billion jury verdict that was intended to compensate county governments for insufficient logging on state forestlands.

A law that requires Oregon to manage the forestland for the greatest permanent value does not create an “immutable promise” to maximize revenue for the counties, the appeals court ruled in April.

The appeals court said that “historically, ‘value’ has myriad definitions, some of which could relate to revenue production and others that do not relate to revenue production.”

The statute also directs that forests be managed for the greatest permanent value to the state, rather than to the counties, which means the text falls short of the clear and unmistakable intent of making a contractual promise, the ruling said.

For that reason, a Circuit Court judge in Linn County wrongly refused to dismiss the class-action lawsuit against the state government, the ruling said.

“The Court of Appeals decision today is a victory for Oregon’s environment as well as for sound forest management,” state Attorney General Ellen Rosenblum said. “The court agreed with the state’s legal position in recognizing that Oregon’s forests serve a full range of environmental, recreational and economic uses that the Department of Forestry has authority to balance in order to secure the greatest value to all Oregonians.”

John DiLorenzo, an attorney for the counties, vowed to challenge the ruling before the Oregon Supreme Court because it “does not align with the law or the evidence we presented at trial.”

The ruling doesn’t take into account the economic and social damage that rural communities have suffered after the state government changed its logging policies without input from the counties, he said in an email.

Oregon’s leaders have decided the timber economy is inconsistent with their “urban values,” but the resulting problems must be addressed to bridge the urban-rural divide, DiLorenzo said.

“The lack of productive employment in these communities has led to substance abuse, violence, lack of educational opportunity and general hopelessness and despair,” he said.

A jury determined the state violated a contract requiring it to maximize revenue from forestlands donated by the counties in the 1930s and ‘40s after a monthlong trial in 2019.

State forests must be managed for the greatest permanent value by law, but more than a dozen counties claimed the Oregon Department of Forestry impermissibly expanded that definition beyond its original intent. In 2017, the Clatsop County Board of Commissioners voted 3 to 2 to opt out of the lawsuit, citing a need for more balanced forest management.

Under language adopted in the late 1990s, the greatest permanent value was changed to include environmental and recreational considerations that restricted timber harvests, shortchanging the counties and tax districts within them of revenues, the plaintiffs claimed.

Attorneys for Oregon appealed the jury verdict on the grounds that the counties didn’t have an enforceable contract that dictated how state forest officials must manage the nearly 700,000 acres of donated property.

The law governing state forestlands pertains to matters of statewide concern that cannot be challenged in court by the counties, state attorneys claimed. As political subdivisions of the state government, the counties cannot sue over such state policies.

Federal environmental laws enacted since the property was donated, such as the Endangered Species Act, also effectively limit how much timber can be extracted from state forestlands, according to state attorneys.

The counties claimed that Oregon forestry officials weren’t obligated to create habitat for federally-protected species that resulted in logging restrictions. In any case, the counties said the state government can alter forest management policies but must still pay them damages for breaching the contract.

Counties provide health care and other functions under contract with the state government, so they must be able to rely on such agreements being enforceable, the plaintiffs said. If the counties had known the state government could reinterpret the contract’s terms at will, they’d never have donated such huge amounts of forestlands.