Weyerhaeuser wins alder ruling.

Byline: Joe Harwood The Register-Guard

SALEM - A top Oregon forestry official ruled on Monday that Weyerhaeuser can continue buying alder sawlogs harvested off state forest lands even though the company exports softwood timber to overseas markets.

A group of independent alder sawmill owners last May petitioned the Oregon Department of Forestry and the Division of State Lands to repeal a special state provision that lets the wood products giant, based in Federal Way, Wash., buy the state logs.

The mill owners argued that Weyerhaeuser buys so much alder from third-party companies such as Portland-based Hampton Affiliates - which buys softwood timber such as fir off state land but sells any alder or other hardwood it comes across - that there is little alder left to feed the small mills.

Weyerhaeuser obtained the waiver in 2000, after the company resumed exporting softwood lumber off its Oregon timberland. State and federal rules generally bar an exporter from buying public logs.

The small sawmills in Oregon and Washington, including Westwood Lumber Co. with operations in Junction City, Saginaw and Reedsport, argued that Weyerhaeuser - through its dominant grip on the alder market and cozy relationships with companies such as Hampton - pays below-market rates for alder sawlogs.

Weyerhaeuser operates its Oregon alder mills in Eugene and Garibaldi. The company also has four alder mills in Washington state.

An attorney for the independent mills argued that the state could earn more money for its logs by excluding Weyerhaeuser.

But after considering hundreds of pages of documents submitted by both sides, and sitting through two public hearings, Deputy State Forester Roy Woo concluded otherwise.

"It was just counterintuitive that removing a competitor would raise prices for alder logs," Woo said Monday.

He added his agency could find no evidence that Weyerhaeuser somehow used its market power to push down alder prices.

Officials from Hampton and Roseburg Forest Products, which sell alder to Weyerhaeuser, testified that they do not give Weyerhaeuser any special breaks. Nor is there any conspiracy to cut out the small mills, they said.

Woo recommended that the Oregon State Land Board, made up of the governor, secretary of state and state treasurer, retain the exemption and let Weyerhaeuser receive state alder logs.

The Department of Forestry manages 657,000 acres of forests. Under a contract with the Division of State Lands, the agency manages another 124,000 acres of Common School forestlands. DSL officials, who act as the administrative arm of the land board, prepared a report parallel to Woo's arguing against excluding Weyerhaeuser from buying Alder logs.

Weyerhaeuser spokesman Bruce Amundson said the company was gratified by Woo's decision. "Maintaining this competitive process is the best way to make sure the state receives the highest value for this resource," Amundson said.

The battle over the state alder logs is one part of an ongoing war between Weyerhaeuser and small alder mills.

A now-closed alder sawmill last April won a $78.8 million antitrust award against Weyerhaeuser after a federal jury in Portland ruled that the company engaged in illegal and monopolistic behavior in the alder market. Weyerhaeuser is appealing the verdict.

Documents that surfaced during that trial showed that Weyerhaeuser, in applying to the state for the exemption to buy alder logs, vastly exaggerated the amount of state alder it needed to keep the Eugene and Garibaldi mills running. Weyerhaeuser maintains the discrepancy was a math error.

The same mill owners who requested that the state bar Weyerhaeuser from buying alder cut from state lands are suing Weyerhaeuser on antitrust grounds. That trial is set for March.

The state Land Board will rule on the issue next Tuesday. Though the three-member panel could defer a decision or overrule ODF and DSL, experts agree it is likely to follow the recommendations.