Decision Date: September 29, 2005

Panel: David Ormerod

Keywords: Forest Act – ss. 14(b) and (e), 115(1)(a)(i) and (ii), (b), (2), and 116; Coast Appraisal Manual – definitions of “cutting authority” and “billing history record”, ss. 4.2.2.2(1)-(4), 4.2.2.3.2(1)-(7).

Echa-Peh Forest Resources Ltd. (“Echa-Peh”) appealed 7 Stumpage Advisory Notices (the “SANs”) issued by a Regional Appraisal Coordinator with the Ministry of Forests (the “Ministry”) for Cutting Permits 3 to 9 (the “CPs”) of Forest Licence A71504 (the “Forest Licence”).

The Billing History Record (“BHR”) is a historical grade distribution used in determining log selling prices.  In addition to harvesting timber under CPs issued under the Forest Licence, Echa-Peh harvested timber from road right of ways in the vicinity of the Forest Licence under Road Permit R14117 (the “Road Permit”).  In determining the stumpage rates for the CPs, the Regional Appraisal Coordinator used the BHR for timber previously harvested under other CPs in the Forest Licence.  He did not include in the BHR the timber harvested under the Road Permit.  He advised Echa-Peh that the log scale data from the Road Permit cannot be included with the BHR because the Coast Appraisal Manual (the “CAM”) defines a “cutting authority” as “a cutting permit issued under a forest licence,” and the cutting authority or authorities must have been issued under the same licence as the cutting authority being appraised in order to be included in the BHR.  Thus, he asserted that the Road Permit is a separate cutting authority from the Forest Licence for the purposes of the billing history used to determine the stumpage rates for the CPs.

Echa-Peh sought an order rescinding the SANs and directing the Ministry to reappraise the stumpage rates for the CPs on the basis that the timber harvested under the Road Permit, in fact, forms part of the BHR for the Forest Licence pursuant to section 1.1 of the forest licence document.

Echa-Peh submitted that the CAM should be interpreted such that the volume harvested from access road right of ways can be included in the BHR.

The Government submitted that road permits are issued under a provision of the Forest Act that is outside of the provision dealing with forest licences.  Thus, road permits are not cutting authorities issued under a forest licence.

The Commission reviewed the scaled log summaries that the Regional Appraisal Coordinator relied on for the BHR, as well as the summaries for logs scaled under the Road Permit.  The Commission noted that those figures showed that the average log size for Western Red Cedar that was harvested from the Forest Licence is 1.19 m³, and from the Road Permit is 0.51 m³.  It further noted that this difference was bound to have a significant decreasing effect on the Western Red Cedar log selling price used to calculate the stumpage rates in the SANs.

The Commission found that the definition of  “cutting authority” in section 1.1 of the CAM is consistent with the creation of separate forms of tenure by sections 14 and 115 of the Forest Act.  Section 14 sets out the content requirements for forest licences, and section 115 sets out the process whereby holders of forest licences apply for road permits in order to access CPs authorized under a licence.  A forest licence does not have a defined area.  It is only a right to harvest under cutting permits, as and when issued.  The cutting permits define the “cutting authority area” for which an appraisal is required.  A road permit “cutting authority area” is not part of a cutting permit, and is a harvesting right given to allow the holder to develop road access to other, separately held, harvesting rights.  Only if there is insufficient data to develop a billing history at the licence level, should an appraiser use log scale data from cutting authorities that were not issued under the licence but are located within the same geographic area, such as the Road Permit in this case.  The Commission concluded that there was sufficient log scale data from timber previously harvested under CPs issued under the Forest Licence to develop a BHR for the purposes of determining stumpage rates for the CPs, and that the Regional Appraisal Coordinator correctly applied the CAM regarding the BHRs used to determine the rates in the SAN.

Accordingly, the Commission dismissed the appeals.