JOHN DAY — A coalition of Grant County timber interests is attempting to thwart a possible sale of the struggling Malheur Lumber mill to a John Day-based logging company, arguing it would create a powerful and unfair monopoly.

An attorney for the Malheur Forest Fairness Coalition sent a letter Tuesday, Nov. 5, to legal counsel for Ochoco Lumber, Malheur’s parent company, demanding that it halt any discussions about selling the John Day sawmill to Iron Triangle LLC. The same group filed a federal antitrust suit against Malheur Lumber and Iron Triangle that was dismissed in September. 

Lawyers for Ochoco Lumber and Iron Triangle quickly fired back, contending that coalition member Prairie Wood Products is using a discredited legal strategy to try and block the sale for its own financial benefit.

It’s the latest skirmish in a running legal battle between Grant County’s only two sawmills and their allies in the area’s timber industry, which has been under pressure for decades from federal logging restrictions and other forces.

The background

In late October, Iron Triangle announced it had signed a letter of intent to explore buying Malheur Lumber, which is in the process of shutting down, provided it can obtain a sufficient amount of government assistance to make the deal economically viable. 

An Oregon Employment Department analysis projects that the shutdown of Malheur Lumber would lead to the loss of 207 jobs and cost the Grant County economy $58 million. The Grant School District has said closing the mill would cause it to lose at least 60 students and more than $700,000 a year in state support.

A government-backed deal helped keep Malheur Lumber afloat in 2012, when it was on the verge of going under due to a shrinking timber supply. 

A pair of stakeholder groups that included representatives of both conservation and timber industry interests worked with the Forest Service to hammer out a deal that would improve forest health while ensuring a steady stream of logs for Malheur Lumber, which at the time was the last sawmill still operating in Grant County.

Part of what made the arrangement work, according to many observers, was a long-term stewardship contract that was awarded to Iron Triangle through a bidding process. That contract, which has been criticized by some of Iron Triangle’s competitors, expired in March 2023.

Meanwhile, Prairie Wood Products reopened in 2022 after a 15-year hiatus, giving the county a second sawmill. But in March of this year, the Prairie City mill laid off most of its staff and halted operations, citing a dispute with the Forest Service over a grant to pay for transporting logs.

Later that month, Iron Triangle sued Prairie Wood in Grant County Circuit Court, seeking more than $650,000 for sawlogs delivered under contract to Prairie Wood that had not been paid for. 

Prairie Wood filed counterclaims with the court, alleging that Iron Triangle had interfered with its grant from the Forest Service.

Judge Robert Raschio rejected those claims and awarded Iron Triangle $682,000 in principal and interest.

Dueling lawyers

In his letter to Ochoco Lumber, Malheur Forest Fairness Coalition lawyer Michael Haglund asserts that a sale of Malheur Lumber to Iron Triangle would be “a blatant violation of the antitrust laws” and demands that the deal be called off by Nov. 12.

“In the event we do not receive confirmation by that deadline that the deal has been terminated and will not be reinstated … we will have no choice but to file suit in federal court to enjoin the transaction,” he wrote.

The coalition — which includes Prairie Wood Products and some Grant County timberland owners and logging outfits — made similar claims in a $117 million lawsuit filed in U.S. District Court in Pendleton, arguing that Malheur Lumber and Iron Triangle had created a monopoly over softwood sawlogs in the region and were colluding to stifle competition.

That suit was dismissed in September, but now the coalition is challenging the judge’s decision before the U.S. 9th Circuit Court of Appeals.

In their responses to Haglund’s letter, attorneys for Ochoco Lumber and Iron Triangle pushed back against the coalition’s antitrust claims, contending that Prairie Wood is the one trying to create a monopoly for its own benefit.

“It seems that PWP (Prairie Wood Products) prefers to be the only sawmill in town, so landowners, loggers and employees have nowhere else to go,” Timothy Snider of Stoel Rives LLP, representing Iron Triangle, wrote in a response to Haglund. “That may be good for PWP’s bottom line, but it is harmful to competition, the industry and the community.”

Daniel Peterson of Cosgrave Vergeer Kester LLP responded on behalf of Ochoco Lumber, contending that the coalition’s claims were “unnecessary and unsupported posturing” that would never hold up in court.

“Ochoco is doing everything in its power to identify a buyer with the financial wherewithal and industry knowledge to remain a going concern for the benefit of families, businesses, and government in Grant County,” he wrote. “Unfortunately, Prairie Wood seems intent on pursuing its petty grievances and unsupported conspiracy theories … to the detriment not only of Malheur Lumber, but also the community as a whole.”

Shots across the bow

In a news release sent out the same day as Haglund’s letter, members of the coalition attacked the idea of letting Iron Triangle purchase Malheur Lumber.

“Iron Triangle already has monopolies in the stewardship services and log markets in the Malheur National Forest market area,” Prairie Wood CEO Jodi Westbrooks said. “We’re all for finding a way to keep Malheur Lumber in business, but a sale to a buyer other than Iron Triangle should be the only option. It would be a disaster for the government to fund Iron Triangle’s purchase of Malheur Lumber because there is no question that Iron Triangle would immediately take steps to drive our company out of business so that it would become the area’s only sawmill.”

Tim Rude of Rude Logging, which is also a member of the Forest Fairness Coalition, seconded those remarks.

“For the last 15 years, Iron Triangle has virtually eliminated its competition for local timber sales and logging jobs,” Rude said in the news release. “Our company used to have significant operations in Grant and Harney counties. But for the last five years, over 80% of my company’s logging work has been outside the area, where my crew and I must live hundreds of miles from our homes.”

Snider, the attorney for Iron Triangle, took issue with Westbrooks’ comments, noting that the federal court had rejected the coalition’s antitrust arguments.

“It is disappointing that Prairie Wood continues to make baseless claims and threats of lawsuits,” he said.

“Iron Triangle bent over backwards to support Prairie Wood by selling it sawlogs which Prairie Wood accepted but then refused to pay for until the court ordered it to do so. Prairie Wood appears more interested in eliminating a competitor sawmill than in finding a way to keep Malheur Lumber in business.”

Bruce Daucsavage, a general director with Ochoco Lumber, said the company has been in discussions with multiple potential purchasers and investors about ways to keep its John Day sawmill running, but Iron Triangle’s proposal is the most promising it has seen so far.

“What we now realize is that to optimize the sustainable success of the mill for the betterment of the community, Iron Triangle has shown us that they have the most preferred business plan through their letter of interest,” Daucsavage said.

“They have shown with their investment the past 15 years they are committed to the wood products industry and forest health, and their families are committed to the community.”