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A Linn County jury ruled Wednesday that the state of Oregon breached its contract with timber counties west of the Cascades by failing to generate sufficient revenue through logging on state forests.

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The verdict was delivered the day after lawyers made their closing arguments to the jury in Linn County Circuit Court.

The jury awarded $1.06 billion to 13 counties, along with dozens of taxing districts that depend on state forest logging for revenue. That was a downward adjustment from the original $1.4 billion claim.

“The big idea behind the lawsuit is that normally, government and state agencies can just impose their will on local government but if there is a contract and if the state government violates it, it has to pay damages,” John DiLorenzo said. DiLorenzo is one of the lead attorneys representing the counties.

The state plans to appeal the jury verdict. But for now, it represents a huge win for historically timber-reliant counties and the logging industry. Timber companies provided initial financial backing to Linn County, which led the case against the Oregon Department of Forestry and the state.

The $1.06 billion represented damages incurred by counties and taxing districts for revenues from logging that never materialized. Logging was curtailed improperly, they argued — and jurors ruled — because it resulted in the breaching of an 80-year-old contractual obligation to manage the forestland for the “greatest permanent value."

DiLorenzo said it's possible for the state to pay the damages the jury awarded, while maintaining environmental values.

“To the people who say ‘oh this is going to require us now to make the forests into a giant tree farm’ that’s not true,” Di Lorenzo said. ‘The government is going to continue to manage the way they’ve been managing, they just have to buy it down and pay for it.”

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The state argued that it was not in breach of contract, but that it had continued to manage state forests for the greatest permanent value as it adopted more modern-era laws and practices protecting wildlife habitat, water quality, and recreational opportunities.

Oregon Gov. Kate Brown’s press secretary, Charles Boyle, responded to the ruling with an email, writing “the verdict was not an unexpected first step in what will be a lengthier legal process.”

Although the $1.06 billion award represents a significant hit on state resources, Boyle said “it would be premature at this point to make budget decisions based on the jury’s decision.”

Ralph Bloemers has been watching the case closely as a senior staff attorney at the Crag Law Center, which offers legal services aimed at environmental protection. He said he was surprised the jury sided with the counties.

"If anything, the state has been logging too much on these lands and not providing for salmon and trout and making sure that we have adequate drinking water coming from them," said Bloemers, who was not directly involved with the case. "There are many who have looked at these questions and said that this is actually unsustainable, the levels that have been logged."

The state is expected to file an appeal in the Oregon Court of Appeals, where the ruling will be made by a three-judge panel, rather than a jury of Oregon citizens.

Oregon Deputy Attorney General Fred Boss said in an emailed statement that the state Department of Justice is disappointed in the jury's verdict but believes there are strong arguments to be made on appeal and plans to appeal this decision.

Wednesday's verdict adds a new chapter to a story that began in the Great Depression. Back then, timberland owners in western Oregon logged their land and instead of paying taxes, they permitted the counties to foreclose on it. In the Tillamook area, there were also a couple of major forest fires around the time — and much of the land that burned ended up going to the counties as well.

Given the economic turmoil of the time, the counties lacked the resources to make the razed forestlands profitable. Eventually they transferred it to the state, guided by a legal mandate requiring the state to manage the forests to secure the “the greatest permanent value of those lands to the state” and then pass a chunk of the profits back to the counties.

"That’s why the rural counties deeded all the lands, but now the states says things have changed," DiLorenzo said. "So they’ve extended benefits for everybody but those benefits have been to our detriment. They’ve cost us the revenues that we’ve should have been paid. So if everybody is going to share in the benefits then everybody should share in the burdens."

OPB's Dirk VanderHart contributed to this report.