Sawmills want Weyerhaeuser excluded.

Byline: Joe Harwood The Register-Guard

COOS BAY - Small sawmill owners asked Gov. Ted Kulongoski and two other Oregon officials on Tuesday to block wood products giant Weyerhaeuser Co. from buying alder saw logs harvested off state forest land.

An attorney for the independent mills argued that Weyerhaeuser - through its dominant grip of the alder market - pays below-market rates for the alder saw logs, and that Oregon could increase revenue by excluding the company from purchasing state logs.

"Any seller of a resource should be concerned with a buyer that is in a monopoly position," said Michael Haglund, an attorney representing the small alder sawmills competing against Weyerhaeuser.

The State Land Board, made up of Kulongoski, state Treasurer Randall Edwards and Secretary of State Bill Bradbury, held a hearing Tuesday south of Coos Bay to consider revoking Weyerhaeuser's ability to buy state logs.

Seven independent alder mills in Oregon and Washington petitioned for the revocation last May, arguing that Weyerhaeuser gobbles up most of the alder saw logs in Oregon, leaving them without enough timber to run their mills. Weyerhaeuser's Northwest Hardwoods division operates sawmills in Eugene and Garibaldi.

Kulongoski made clear his primary interest revolved around maximizing the revenue the state earns from selling timber, and was less interested in Weyerhaeuser's estimated 65 percent share of the alder log and lumber market.

Both Kulongoski and Edwards questioned whether prices for state logs would go up, as Haglund claimed, if Weyerhaeuser was prevented from buying. Edwards said it seemed illogical to believe log prices would rise if the major buyer of those logs were excluded from the process.

The move to bar Weyerhaeuser from buying state alder follows a federal jury verdict in April that found Weyerhaeuser engaged in illegal and monopolistic behavior in the alder market, resulting in a $78.8 million antitrust award for a Longview, Wash., sawmill. Weyerhaeuser is appealing that verdict.

Other sawmills, including Westwood Lumber Co., with operations in Junction City, Saginaw and Reedsport, filed similar lawsuits after the antitrust verdict. Parallel with the lawsuits is the petition to prohibit Weyerhaeuser from buying state logs.

Haglund argued that evidence produced in the April trial shows Weyerhaeuser was paying less than independent mills for alder, and should therefore lose a special exemption that has allowed it to buy state logs since 2000.

Weyerhaeuser had to request the one-of-a-kind exemption in 1999, when it began exporting Douglas fir logs from its Oregon forest land. State law prohibits log exporters from buying timber harvested from state lands, aiming to keep domestic sawmills running and their workers employed.

Weyerhaeuser officials argued Tuesday that the state would lose money if Northwest Hardwoods is excluded.

The Oregon Department of Forestry sells a combination of conifer and alder timber from 780,000 acres of state forests. The revenue - alder sales brought in $1.48 million in 2002 - is used to support schools and county governments. The State Land Board is responsible for managing 133,000 acres of timberland, 85,000 acres of which is in the Elliot State Forest near Coos Bay.

The Land Board and state Department of Forestry officals are expected to make a final decision on the matter in December.