Decision Date: November 15, 2011

Panel: James Hackett

Keywords: Forest Act – s. 105(1); Interior Appraisal Manual – ss. 2.2.1(1)(b), 4.3.2.2(2); stumpage rate; changed circumstance reappraisal; temporary road; development cost estimate; additional stabilizing material

Lowell A. Johnson Consultants Ltd. (the “Appellant”) appealed a stumpage rate determination issued in December 2010 by the Timber Pricing Officer, Nadina Forest District, Ministry of Forests, Lands and Natural Resource Operations (the “Ministry”).  The determination resulted from a reappraisal of a previous determination issued in November 2009, for a cutting permit issued under a forest licence.

During an inspection of the cutting permit area, the Ministry discovered that additional stabilizing material had not been placed on all of the temporary roads claimed in the licensee’s original appraisal data submissions.  The Ministry considered this to be a “changed circumstance” within the meaning of section 2.2.1(1)(b) of the Interior Appraisal Manual (“IAM”), requiring a reappraisal.  In the reappraisal, the Ministry deleted the cost estimate for additional stabilizing material for all of the temporary roads in the cutting permit area.  This resulted in a reduction of more than 15 percent in the total estimated development costs, and an increase in the stumpage rate from $7.54 per cubic metre to $9.42 per cubic metre on sawlogs scaled between September 5 and September 30, 2009.

The Appellant appealed the reappraised stumpage rate on three grounds: (1) there had been no “changed circumstance” as defined in the IAM, because although additional stabilizing material was not actually added to the roads, contrary to the original appraisal data submissions, there had been no change in the licensee’s plans in that regard between the effective date of the original determination (September 4, 2009) and the effective date of the reappraisal (September 5, 2009); (2) the cost estimate for additional stabilizing material was improperly removed for all of the roads; and (3) the roads should have been designated as “short term” instead of “temporary,” as defined in section 4.3.2.2(2) of the IAM.  The Appellant also requested an order of costs against the Government.

The Government submitted that the reappraised stumpage rate should be confirmed, because a changed circumstance had occurred and the roads were properly classified as “temporary”.  The Government argued that the appeal should be dismissed, and the application for costs should be denied.

The Commission found that the language in section 2.2.1(1)(b) of the IAM indicates that a changed circumstance occurs when there is a difference of 15 percent or more between the total development cost estimate in the appraisal data submission for the most recent appraisal or reappraisal, and the total development cost estimate that corresponds to the actual activities undertaken in the cutting permit area.  The Commission noted that the per kilometre allowances for road costs, set out in tables in the IAM, are average costs derived from data for roads in the Forest District, and Ministry staff multiply those costs to the applicable road lengths to estimate the road cost for appraisal purposes.  In this case, the difference was greater than 15 percent, and therefore, a changed circumstance reappraisal was required.  The Commission also distinguished this appeal from a previous appeal (International Forest Products Limited v. Government of British Columbia, Decision No. 2009-FA-007, June 16, 2011), on the basis that the two appeals involved differently worded sections of different Appraisal Manuals.  For those reasons, the Commission rejected the Appellant’s first and second grounds for appeal.

On the third ground for appeal, the Commission considered the definitions of “temporary road” and “short term road” found in section 4.3.2.2(2) of the IAM.  That section defines “temporary road” as “a road that is planned to be used for harvesting and/or hauling for less than one year.”  The Commission noted that the cutting permit in this case was valid for less than one year, and the forest licence expired at the same time.  Consequently, no further cutting permits would be issued under the forest licence.  Moreover, the Appellant provided no evidence demonstrating that biomass fibre from the cutting permit area was harvested and removed from the area before the cutting permit expired.  For those reasons, the Commission concluded that the roads in were properly classified as “temporary”, and the reappraised stumpage rate was confirmed.

Finally, the Commission found that there were no special circumstances that warranted an order for costs.

Accordingly, the appeal was dismissed, and the Appellant’s application for costs was denied.