CANYON CITY — The John Day-based logging firm Iron Triangle, already involved in a legal tussle with Prairie Wood Products, is now suing the Prairie City sawmill, claiming about $650,000 in unpaid bills for delivered timber.

The two companies entered into a log purchase agreement in May of last year in which Iron Triangle was to sell sawlogs to Prairie Wood Products, according to the lawsuit, filed March 21 in Grant County Circuit Court.

Iron Triangle said it delivered 1.68 million board feet to Prairie Wood Products over the first two months this year and claims the mill has failed to pay for the sawlogs, valued at a total cost of $652,107.

“Iron Triangle has been damaged by (Prairie Wood Products’) breach of the Log Purchase Agreement in an amount to be proven at trial, but not less than $652,107, together with pre-judgement interest in all outstanding amounts at 9% per annum under (Oregon statute),” the lawsuit states.

Iron Triangle is also asking for recovery of attorney fees and costs as provided by the log purchase agreement. An official for Iron Triangle declined to comment on this story.

Grant County Circuit Court is waiting for both parties to file documents prior to scheduling further hearings on the matter.

Prairie Wood Products suspended operations and laid off the majority of its employees on March 1, with company officials saying a sudden change in the Forest Service’s interpretation of a grant subsidizing transportation costs has put the mill’s future at risk.

Prairie Wood Products officials say they are pursuing expedited negotiations with the Forest Service to resolve the dispute.

In February, after submitting reimbursement paperwork, mill officials said they learned that the Washington office of the Forest Service had decided that costs on their existing timber sales were ineligible for reimbursement under the grant.

Mill officials said the situation was “completely inconsistent with our discussions with Forest Service personnel at the local level, both in John Day and at the regional office in Portland.”

Without the grant’s matching funds, company officials say they’ve been forced to suspend a previously approved pilot transportation program shipping pine logs — which Prairie Wood Products, as a white fir/Douglas fir specialist, does not mill into lumber — to a sawmill in Central Oregon.

Prairie Wood Products had also intended to use the federal grant money to pay for the “lion’s share” of its $650,000 billing from Iron Triangle, said Prairie Wood Products counsel Mike Haglund.

“Given the way the grant was supposed to be administered … we believed we were going to have the money to pay these bills,” Haglund said in an interview on Wednesday, March 27. “But Iron Triangle, the seller, has interfered with the administration of the grant, and we’re going to raise that issue as part of our defense.”

According to Malheur National Forest Supervisor Ann Niesen, the Forest Service is working with Prairie Wood Products to address the application of the $3 million grant, awarded to the mill in 2023.

Separately, Malheur National Forest spokesperson Amy Franklin told the Blue Mountain Eagle that the agency had determined that the wood purchased by Prairie Wood Products from Iron Triangle met the qualifications of the grant.

When asked if there was anything holding up the use of the grant toward Prairie Wood’s payment to Iron Triangle, Franklin said the agency could not comment on any internal fiscal decisions made at Prairie Wood Products.

“Additionally, the Forest Service undertook a comprehensive review of which timber sales could be appropriately included within the grant process to ensure alignment with the program’s objectives,” according to Franklin. “This review was conducted solely by the Forest Service without external influence or participation from other parties.”

In a separate lawsuit, filed in September 2022 in U.S. District Court in Pendleton, a group of plaintiffs that includes Prairie Wood Products claims that Iron Triangle colluded with Malheur Lumber in John Day to reduce the number of competitors providing logging services in the region by 75%.