Forest Capital Partners LLC, through its subsidiary, has joined with two other large timber companies in suing the Minnesota government for what they say is a breach of contract by capping payments provided through a forest protection program.
The three companies say the state reneged on a contract it had with the companies that should have provided nearly $8 million in 2010 for enrollment of a half million acres in the state’s Sustainable Forest Incentive Act program.
“The state is not free to disregard its contractual obligations,” the companies argue in their lawsuit. “By proposing these amendments to the Sustainable Forest Incentive Act, the Legislature simultaneously seeks to avoid its own contractual obligations while forcing plaintiffs to abide by new restrictions for face significant penalties.”
Filed in January in Ramsey County District Court, the subsidiary Meriwether Minnesota Land and Timber along with Blandin Paper Co. and the Potlatch Corp., are seeking back payments, interest and guarantees that future payments won’t be affected.
The suit was filed in Ramsey County where the action by the Legislature to cap the payments at $100,000 annually took place.
Brian Kernohan, director of policy for Forest Capital Partners in Portland, Ore., said he could not comment on the suit because the litigation is active.
However, he said both parties presented their arguments to a judge about one month ago. He said the companies expect either a decision sometime this summer, or to hear a request from the judge for more information.
Meriwether says in court documents that it should have received $4.1 million for land enrolled in 2009. Instead, it only received $100,000, or 38-cents per acre, for its 262,884 acres because of the cap.
The state implemented the Sustainable Forest Incentive Act in 2002. The act is designed to encourage private landowners to be better stewards of the forestlands. The act restricts the land from residential or agriculture use and has penalties for violating the restrictions.
According to court documents, in 2009 the incentive to remain in the program was $15.67 per acre. Once enrolled, the land must remain in the program for at least eight years and there is a four-year waiting period for removal from the program.
The suit stems from 2009 when then-Gov. Tim Pawlenty attempted to use executive authority to cap the payments. A court struck down the cuts, but the Legislature in 2010 agreed to the cap on land enrolled in 2009.
Most landowners in the program didn’t have enough acres to exceed the $100,000 cap. The companies say they are being discriminated against because of their large land holdings, receiving less money per acre than the smaller land holders.
In January, Sen. Tom Saxhaug, DFL-Grand Rapids, who represents the areas owned by the companies, told The Journal he feared the cap would result in fragmentation of ownership and parcelization.
“It’s the wrong direction to move and will have a negative effect on the wood products industry, the fourth largest industry in our state,” he said.
Also in January, Craig Halla, region manager of Forest Capital Partners based in International Falls, said SFIA payments help keep the forest sector economically viable, while making it possible for forests to be managed sustainably and provide recreational and environmental benefits that many people believe are important to their quality of life.
“If our forests cannot be managed economically for wood production, fragmentation or conversion could result, and their economic, social and environmental benefits would be lost to the next generations of Minnesotans,” he told The Journal.
