Decision Date: March 18, 2020

Panel: Susan Ross

Keywords: Forest Act – s. 105.2; stumpage rate; redetermination; log transport; appraisal transportation route; log dump

Stumpage is a fee paid to the government for harvesting Crown timber. In determining stumpage rates for timber harvested in the Interior Region of the Province, the Ministry must apply the policies and procedures set out in the Interior Appraisal Manual (“IAM”).

Canadian Forest Products Ltd. (“Canfor”) appealed eight stumpage rate re-determinations issued in 2017 by an employee of the Ministry of Forests, Lands and Natural Resource Operations (the “Ministry”). The stumpage rates applied to timber harvested by Canfor under cutting permits (“CPs”) issued under a forest licence located near Williston Lake in the Mackenzie Forest District.

The re-determinations were issued in 2017 after the Minister of Forests, Lands and Natural Resource Operations (the “Minister”) directed that the original stumpage rates for the CPs, which were determined in 2012 and 2013, be re-determined by taking into account water transportation (lake tow) of harvested logs for part of the distance from the CP areas (i.e., from a log dump on Williston Lake) to the point of appraisal (across Williston Lake from the CP areas), rather than truck haul for the entire distance. Water transportation is a lower cost transportation method than truck haul. Therefore, applying water transportation cost variables produced higher stumpage rates in the re-determinations than the original stumpage rates.

The re-determinations were preceded by a 2015 decision of the Commission on several stumpage appeals involving the issue of water transportation from the same log dump on Williston Lake (Canadian Forest Products Ltd. v. Government of British Columbia, Decision Nos. 2014-FA-001(a) to 009(a)). Those appeals arose from the District Manager’s determination that water transportation from the log dump was not an “unsuitable” transportation route pursuant to section 3.1(3) of the IAM. The Commission’s 2015 decision was confirmed by the BC Supreme Court (Canadian Forest Products Ltd. v. British Columbia, 2016 BCSC 2202).

Canfor appealed the 2017 re-determinations on the grounds that section 3.6.1 of the applicable 2012 and 2013 versions of the IAM says that stumpage appraisals should only use water transportation cost variables when other means of log transportation are impossible. Canfor maintained that roads connect the CP areas to the point of appraisal, and Canfor used those roads to transport its logs. Thus, truck haul was not impossible, and water transportation variables did not apply. However, Canfor conceded that water transportation was not “unsuitable” according to the Commission’s 2015 decision.

The Government made a preliminary application for an order summarily dismissing the appeals of the re-determinations. The Government argued that the appeals sought to challenge the Minister’s direction to conduct the re-determinations, which cannot be appealed, and the appeals raised issues that were already addressed in the Commission’s 2015 decision. The Commission denied the application for summary dismissal (Decision Nos. 2017-FA-001(a) to 008(a), June 22, 2017). The Government unsuccessfully appealed the Commission’s decision to the BC Supreme Court (Canadian Forest Products Ltd. v. British Columbia (Forests, Lands and Natural Resource Operations), 2018 BCSC 771).

Turning to the merits of 2017 re-determinations, the Commission rejected Canfor’s interpretation of section 3.6.1 of the IAM. The Commission found that section 3.1 of the IAM requires stumpage rates to be determined in a manner that produces the highest stumpage rate for the CP area. This requirement governs the use of water transportation variables in section 3.6.1, regardless of whether truck haul is possible, or how a licensee actually transports logs from a CP area. The re-determinations correctly determined the stumpage rates for these CPs based on water transportation from the log dump to the point of appraisal. This transportation route was not unsuitable and it produced the highest stumpage rate, regardless of the fact that truck haul was possible and was actually used.

The appeals were dismissed.