OAG 92-4.

• Case Date: July 24, 1992
• Court: Oregon

Oregon Attorney General Opinions 1992. OAG 92-4. 468OPINION NO. 92-4[46 Or. Op. Atty. Gen. 468]No. 8223July 24, 1992State Land BoardINTRODUCTION This opinion relates to certain lands granted by the United States to the state upon admission into the Union "for the use of schools" (hereinafter "Admission Act lands"(fn1)). In general, these questions deal with the lawful uses of these lands and the effect of federal or state regulations on such uses.(fn2) Below, we state the questions and our brief answers, then discuss the reasons for those answers.FIRST QUESTION PRESENTEDDoes the Oregon Admission Act limit the State Land Board (board) in applying the standard in Article VIII, section 5(2), of the Oregon Constitution, for management of Admission Act lands?ANSWER GIVENThe Oregon Admission Act does impose an obligation upon the board to manage Admission Act lands "for the use of schools." This objective is consistent with the duty imposed by Article VIII of the Oregon Constitution for management of those lands. The management standard in Article VIII, section 5(2), to obtain the "greatest benefit" for the people, presumes an objective that is found elsewhere in Article VIII. In that sense, therefore, the Admission Act does not limit the board in applying the management standard in Article VIII, section 5(2).SECOND QUESTION PRESENTEDDoes the Oregon Admission Act or the Oregon Constitution require the board to maximize revenue, consistent with the prudent investor rule,(fn3) from management of Admission Act lands?469 ANSWER GIVENYes, to the extent the Admission Act lands are retained and not directly used for schools, e.g., for siting school facilities. However, the board is not required to maximize present income from the Admission Act lands without regard to other considerations. Rather, the board's duty is to manage the lands for the long-term benefit of the schools. Thus, the board may sacrifice present income to preserve the property, if it determines this will enhance income for the future. Non-economic factors may be considered only if they do not adversely affect the potential financial contribution to the Common School Fund over the long-term.THIRD QUESTION PRESENTEDDoes the Oregon Admission Act or the Oregon Constitution exempt the board from complying with the federal or state Endangered Species Acts (ESAs) on Admission Act lands?ANSWER GIVENNo. Neither the Oregon Admission Act nor the Oregon Constitution exempts the board from complying with the federal or state Endangered Species Acts. By virtue of the Supremacy Clause of the United States Constitution, the federal ESA lawfully may limit the state's use of the Admission Act lands, subject to the possibility of a compensable "taking."The state ESA may not unduly restrict the constitutional powers of the board. The Act does not, on its face, appear to do so. Thus, a conflict would arise only if the Act is applied in a manner which unduly restricts the board's constitutional powers. This would be a fact-specific determination.FOURTH QUESTION PRESENTEDIs the Common School Fund entitled to compensation from the federal government for asset or revenue reductions caused by compliance with the federal ESA?ANSWER GIVENProbably not. While it is conceivable that the fund might be entitled to compensation for an unconstitutional taking of property without compensation, evaluation of such a claim is fact intensive and must be conducted on a case-by-case basis. Even assuming the benefit of an adequate factual record, in our opinion it is unlikely that a takings claim could succeed. Courts are disinclined to award compensation for regulatory takings unless the regulation deprives the property owner of all or virtually all use of the470 land. Moreover, recent court decisions indicate that damage to property as a result of endangered species regulation will not be considered a basis for compensation.FIFTH QUESTION PRESENTEDIs the Common School Fund entitled to compensation from the state General Fund for asset or revenue reductions caused by compliance with the state ESA?ANSWER GIVENNo. As stated in our answer to your third question, the board is not required to comply with the state ESA if compliance would unduly burden or restrict the board's exercise of its constitutional powers to dispose of and manage Admission Act lands. Accordingly, there is no issue concerning taking of trust property without just compensation, since the state ESA could not lawfully prevent the board from maximizing revenue from Admission Act lands over the long term.DISCUSSIONI. Use and Management of Admission Act Lands

A. Oregon Admission Act

To address whether the grant of Admission Act lands to Oregon imposes legal restrictions on the use of those lands, it is appropriate to consider the nature and history of this and similar grants.(fn4) The history of land grants to newly admitted states is nearly as old as that of the United States itself. The original thirteen states had sovereign authority over all of the lands within their borders. This land provided a tax base for the support of education and other governmental functions. See Andrus v. Utah, 446 US 500, 522, 100 S Ct 1803, 64 L Ed2d 458 (1980). In contrast, the federal government owned vast areas of the territories that later became states. This land was immune from taxation, and the federal government was disinclined to waive its immunity. As a result, states created from these public lands would not have been on an "equal471footing" with those of the original thirteen. Congress, therefore, made land grants to the newly admitted states in order to equalize their tax base status with that of the original thirteen.(fn5) See generally Utah v. Kleppe, 586 F2d 756, 758 (10th Cir 1978), rev'd, 446 US 500 (1980). To ensure that land would be available for the school land grants to the new states, Congress established a practice of reserving certain sections in every township within the territories for the support of the schools. Thus, the first enactment for the sale of the public lands in the "western territory," the Land Ordinance of 1785, provided for setting apart section sixteen of every township for the maintenance of the public schools. 1 Laws of the United States 565 (1815). Andrus v. Utah, supra, at 523 n 2. See generally United States v. Morrison, 240 US 192, 36 S Ct 326, 60 L Ed 599 (1916). And, when Ohio was admitted into the Union by the Act of April 30, 1802, it was granted section sixteen in every township "for the use of schools."(fn6) 2 Stat 175, ch 40, § 7 (1802). This was the basic pattern followed for subsequent states, although the specific terms of the school land reservations and grants have differed over time. In virtually every case, the school land grants are found in the states' admission or enabling acts. The grants have varied in terms of the number of sections granted per township, in the wording of the purpose of the grant (e.g., "for the use of schools," "for the support of common schools") and in the extent of explicit restrictions placed upon the state. See Papasan v. Allain, 478 US 265, 270, 106 S Ct 2932, 92 L Ed2d 209 (1986); Andrus v. Utah, supra, 446 US at 506--07; United States v. Morrison, supra, 240 US at 198.472In Oregon's case, Congress first passed the Act of August 14, 1848, 9 Stat 323, ch 177 (1848), reserving certain lands of the Oregon Territory for the schools. It provided:

That when the lands in the said Territory shall be surveyed under the direction of the government of the United States, preparatory to bringing the same into market, sections numbered sixteen and thirty-six in each township in said Territory shall be, and the same is hereby, reserved for the purpose of being applied to schools in said Territory, and in the States and Territories hereafter to be erected out of the same.

Id. at § 20 (emphasis added). Five years later, Congress passed the Act of January 7, 1853, 10 Stat 150, ch 6, §§ 1, 2 (1853), authorizing the territory to select "lieu" lands when the original granted sections sixteen or thirty-six were "taken" or "occupied" before title could vest in the territory.(fn7) Section 2 of this Act provided:

And be it further enacted, That when selections are made * * * said lands so selected, and their proceeds, shall be forever inviolably set apart for the benefit of common schools.

Id. (emphasis added). Finally, in 1859, Congress passed the Admission Act, which proposed a grant of sections sixteen and thirty-six "for the use of schools." Section 4 of the Act, which includes the grant of land for the use of schools, is in the form of six propositions offered to the people of Oregon for their acceptance or rejection. It provides in part:

That the following propositions be, and the same are hereby, offered to the said people of Oregon for their free acceptance or rejection, which, if accepted, shall be obligatory on the United States and upon the said State of Oregon, to wit: First, That sections numbered sixteen and thirty-six in every township of public lands in said State, * * * shall be granted to said State for the use of schools. * * * Provided that the foregoing propositions, hereinbefore offered, are on the condition that the people of Oregon shall provide by an ordinance, irrevocable without the consent of the United States, that said State shall never [inter alia, tax federal lands].

11 Stat 383, § 4 (1859)(emphasis added).473The...