Forest Service contract suspended over ESA violations

By MATEUSZ PERKOWSKI

Capital Press

The U.S. Supreme Court has let stand a ruling that timber groups say will allow the U.S. Forest Service to ignore its contractual obligations.

Last year, a federal appeals court vacated a $3.3 million judgment won by Precision Pine & Timber, a company that had successfully sued the Forest Service for breach of contract.

In the 1990s, the Forest Service had suspended several Arizona timber contracts previously awarded to Precision after federal courts ruled that the agency's land management plans for the region violated the Endangered Species Act.

Precision sued the Forest Service for breach of contract and the litigation dragged on for about a decade. A federal judge eventually agreed the agency had a contractual duty to ensure its timber sale agreements complied with the ESA.

The $3.3 million was intended to compensate the timber company for replacement timber and lost sawmill efficiency.

The U.S. Court of Appeals for the Federal Circuit overturned that decision in May 2010, finding that Precision's contract with the Forest Service did not guarantee the agency had fulfilled all ESA requirements.

Precision appealed to the Supreme Court, arguing the appeals court had essentially disregarded its own precedent and imposed a higher new standard for timber companies trying to prove breach of contract.

Whereas timber firms previously needed to show the Forest Service had acted unreasonably, they now have to demonstrate "the government had subjectively intended to harm the contractor" by suspending operations, Precision said in its petition.

Several timber industry groups also urged the Supreme Court to review the case, claiming that the ruling "robs the timber contractors of the expectation of commercially reasonable conduct" by the Forest Service.

"This decision totally disregards both fundamental fairness and the realities of timber sale contracting," the timber groups said in a court filing.

The Forest Service asked the nation's highest court not to review the ruling, saying it did not conflict with its own precedent or that of any other appellate court.