The Oregon & California Railroad (O&C) lands consist of 2.6 million acres of timberland in western Oregon (see Figure 1 ). The majority of these lands (2.5 million acres) were originally granted to the Oregon & California Railroad Company in 1866 for constructing approximately 300 miles of the Oregon portion of a railroad from Portland, OR, to Sacramento, CA. The railroad received alternating sections of land for an average of 20 miles on each side of the proposed railroad, resulting in a checkerboard ownership pattern with private, state, local, and federal ownership. As part of the grant, Congress directed the Oregon & California Railroad Company to encourage settlement and development by selling parcels no larger than 160 acres at a maximum price of $2.50 per acre. However, the railroad violated the grant in part by selling larger tracts above the designated price, and also by temporarily halting sales to increase timber prices. In 1908, the United States sued the railroad company, and in 1915 the U.S. Supreme Court ruled that the railroad violated the terms of the grant. The disposition of these lands was eventually resolved when the Chamberlain-Ferris Act of 1916 revested all unsold tracts of land back to the federal government. Management concerns—such as how to compensate the counties for the loss of property tax revenue—persisted, and were addressed with the Oregon & California Railroad Lands Act of 1937 (O&C Act). This act directed that the Department of the Interior (DOI) would administer the lands "for permanent forest production" with the purpose of providing timber, protecting watersheds, providing recreational opportunities, and contributing to the economic stability of the local communities. The O&C Act also established a revenue sharing system for the counties. Initially the lands were managed by the DOI General Land Office, but in 1946, the General Land Office was merged with the U.S. Grazing Service to create the Bureau of Land Management (BLM), which continues to administer the O&C lands. In FY2014, BLM received $115 million in appropriations to manage the O&C lands. The O&C lands are also commonly considered to refer to approximately 472,000 acres of controverted lands managed by the Forest Service and 75,000 acres of the reconveyed Coos Bay Wagon Road (CBWR) lands. The controverted lands consisted of unselected and unpatented odd-numbered sections within the indemnity limits of the railroad, but also fell within the boundaries of a national forest established in the 1890s. The Forest Service claimed jurisdiction, despite opposition from the DOI. The issue was resolved in 1954 when Congress approved a bill affirming the administrative jurisdiction of the Forest Service but directing that the disposition of revenue follow the formula established by the O&C Act. The CBWR lands—also in western Oregon—were reconveyed to federal ownership in 1919 after the failure of the Southern Oregon Company to fulfill the terms of a grant to construct a military road. The CBWR lands are managed by BLM and have been included with the O&C lands for various legislative and management purposes. Unless otherwise noted, the term O&C lands will be used in this report to include the revested O&C lands and the reconveyed CBWR lands managed by BLM, and the controverted Forest Service O&C lands. This report provides background information about the O&C lands and discusses federal payments made to the 18 counties in Oregon to compensate for the tax-exempt status of these federal lands. This report then analyzes some of the major issues before Congress related to the management of the O&C lands. The O&C lands consist mostly of Douglas fir forests, which contain marketable softwood lumber commonly used for construction purposes. As part of the O&C Act of 1937, the lands were classified as timberlands to be managed for "permanent forest production." Timber was to be sold, cut, and removed in conformity with the principle of sustained yield to provide a permanent timber supply. The statute established a 500 million board feet annual allowable sale quantity (ASQ), which could be adjusted periodically. By 1972, the ASQ peaked at approximately 1.2 billion board feet, aided in part by a 1960s modification which included the intermixed public domain forestry lands in the calculation formula. From the 1960s to the 1980s, the average harvest level regularly exceeded 1 billion board feet per year. Harvest levels began to decline in the 1990s, reaching a low of 13 million board feet in 1994. Since 2000, BLM has offered an annual average of approximately 180 million board feet for harvest, including 239 million board feet in FY2014. See Figure 2 for timber harvest volume going back to FY1976 and Figure 3 for timber sale data back to FY1942 (reliable and accurate BLM harvest data prior to FY1976 are unavailable). The O&C Act also provided for protecting watersheds, regulating stream flow, contributing to the economic stability of local communities and industries, and providing recreational opportunities. While some see the inclusion of these other management goals as requiring the O&C lands to be managed for multiple-use, others—including some judicial opinions—interpret the O&C Act as a dominant-use statute that elevates timber production over other listed values. In 1998, Congress established a "No Net Loss" policy for lands administered by BLM in western Oregon. The act requires BLM to ensure—on a 10-year basis—that the total acres of O&C and CBWR land remain consistent. The act further requires BLM to ensure the total acres of O&C, CBWR, and public domain land available for timber harvest remain stable. The O&C lands are included in the Northwest Forest Plan (NWFP). The NWFP is a compilation of federal policies adopted by the Clinton Administration in the 1990s in part as a result of litigation related to the northern spotted owl, which became listed as a federally threatened species under the Endangered Species Act (ESA). The NWFP covers 24 million acres of public land, including 19 national forests managed by the Forest Service and 7 BLM districts in California, Oregon, and Washington. The O&C lands make up 11% of the NWFP management area by acreage, and 37% of Oregon's NWFP management area. The NWFP designates different land allocations within the plan area, each with specific management prescriptions, as well as various mitigation requirements. Much of the land is allocated as late-successional reserves, consisting of trees older than 80 years that are to be managed to protect and enhance old-growth characteristics and where timber harvests are restricted. Harvests are also restricted in allocated riparian reserve areas. However, harvests are allowed on land allocated as matrix or adaptive management areas. The NWFP also set forth various mitigation requirements, including landscape-level "survey and manage" measures for 400 specified rare species and an aquatic conservation strategy, which calls for the completion of a watershed analysis prior to implementing certain projects. The long-term annual timber target, or the ASQ, of the NWFP for western Oregon is approximately 203 million board feet annually. The NWFP, and the management of the O&C lands under the NWFP, has withstood several administrative and judicial challenges and remains largely intact. Although some—including BLM at times, see below—argue the dominant-use mandate of the O&C Act should guide the management of the O&C lands, the management prescriptions within the NWFP apply to the O&C lands. NWFP management of the O&C lands has been affected by litigation, however. A 2003 settlement directs BLM to produce the full ASQ of 203 million board feet and to revise the resource management plans for the O&C lands, discussed below. BLM is required to develop, maintain, and revise land use plans, called resource management plans (RMPs), for all of the lands it administers. The NWFP includes the six RMPs covering the O&C lands. In 2014, BLM initiated the process for updating the RMPs, after a previous effort was invalidated by the courts in 2012. Updating the RMPs will likely result in changes to how the O&C lands are managed under the NWFP. The agency expects to release the draft RMPs for public comment in 2015. The BLM's previous effort to update the RMPS for the O&C lands was unsuccessful. In 2008, BLM issued six Records of Decision (RODs) for the RMPs to guide the management of BLM lands in western Oregon (called the Western Oregon Plan revisions, or WOPR). The WOPR proposed to increase timber harvests on six BLM districts, based in part on the justification that BLM was not achieving the harvest levels prescribed by the 1937 O&C Act. As part of the planning process, BLM did not conduct any consultations under the ESA and was sued for failing to do so. In 2009, the DOI withdrew the WOPR. In 2011, a federal court held the withdrawal failed to provide public notice and comment, but in 2012, a different federal court vacated the WOPR. BLM western Oregon districts continue to be managed under the 1994 NWFP. BLM interprets protecting wilderness characteristics on O&C lands as inconsistent with the O&C Act. BLM did not evaluate any of the O&C lands as Wilderness Study Areas (WSAs) under Section 603 or Section 202 of the Federal Land Policy and Management Act of 1976 (FLPMA). However, Congress has designated at least two wilderness areas within the O&C lands and has designated several wild and scenic rivers within the O&C land areas. The counties containing the O&C lands had a financial stake in the O&C lands because they received tax payments from the railroad until 1911, when the railroad stopped paying in anticipation of the land being returned to federal ownership.