[3] In 1869, Congress changed how the grants were to be distributed, requiring the railroads to sell land along the line to settlers in 160-acre (65 ha) parcels at $2.50 per acre.

Construction efforts were sporadic, finally reaching completion in 1887 after the financially troubled O&C Railroad was acquired by the Southern Pacific.

The company was accused of rounding up individuals from saloons in Portland's waterfront district, and paying them to sign applications to purchase 160-acre (0.6 km2) parcels of O&C lands as "settlers," then selling these fraudulent instruments in large blocks to corporate interests through corrupt middlemen.

When the scandal broke in 1904 through an investigation by The Oregonian it had grown to such a magnitude that the paper reported that more than 75% of the land sales had violated federal law.

[4] Newly elected President Theodore Roosevelt, as part of his plan of progressive reforms, vowed in 1903 to "clean up the O&C land fraud mess, once and for all!"

This law put the O&C lands back in U.S. federal government control, and compensated the company at an amount equivalent to what it would have received had it abided by the $2.50 per acre limit.