Appeals from the Forest Act - 2008
2005-FA-113(b),
2005-FA-128(a) & 2005-FA-129(a) Weyerhauser Company
Limited v. Government of British Columbia
Decision Date:
November 28, 2008
Panel:
Alan
Andison
Keywords:
consent order; stumpage rate; appraisal
log dump
Weyerhaeuser Company
Limited (“Weyerhaeuser”) appealed three stumpage
determinations issued by the Timber Pricing Coordinator,
Southern Interior Forest Region, Ministry of Forests and
Range, for three cutting permits in the Kamloops Forest
District. The appeals concerned the cost allowances for
various roads that Weyerhaeuser planned to build in
order to harvest the cutting permit areas. Weyerhaeuser
had submitted data to the Ministry indicating the
lengths of the new roads that Weyerhaeuser estimated
needed to be built. The Timber Pricing Coordinator had
not accepted all of those road lengths, and had
substituted other lengths for the purposes of
determining the stumpage rates applicable to timber
harvested under the cutting permits.
On April 11, 2006, the
Commission issued a preliminary decision on one of the
appeals. The Commission found that
the Timber Pricing
Co-ordinator had the discretion to reject the road
lengths submitted by Weyerhaeuser, and to substitute
road lengths that were reasonable, if, based on the
relevant information available to her, the length of
road proposed by Weyerhaeuser was unnecessary, taking
into account regulatory requirements and the least cost
principle (Appeal
No. 2005-FA-113(a)). However, that decision was not
conclusive of the appeals, because the factual merits of
the stumpage determinations had not been addressed.
Before the Commission
held a hearing on the factual merits of the appeals, the
parties negotiated a settlement. By consent of the
parties, the Commission ordered that the stumpage
determinations be varied by applying road length data
that was agreed upon by the parties.
Accordingly, the appeals
were allowed.
2008-FA-007(a)
& 2008-FA-010(a) Tahtsa Timber Ltd. v. Government of British Columbia
Decision Date:
August 14, 2008
Panel:
David Ormerod
Keywords:
Forest Act - s. 105(1); Interior
Appraisal Manual – ss. 4.3.1.1.4; stumpage rate; road
construction; estimated development cost; agreement to
apportion development cost estimates
Tahtsa Timber Ltd. (the
“Appellant”) appealed two stumpage determinations issued
by the Timber Pricing Officer, Northern Interior Forest
Region, Ministry of Forests and Range (the “Ministry”).
The determinations applied to timber harvested under
cutting permits 104 and 108 issued under a
non-replaceable forest licence (“NRFL”) held by the
Appellant. The Appellant asked the Commission to direct
the Timber Pricing Officer to include an additional
$126,000 in estimated road development costs in
determining the stumpage rates for cutting permits 104
and 108.
In 2003, the Ministry had
asked the Appellant to construct a forest service road.
In exchange, the Ministry offered to allow the Appellant
to allocate the total estimated development cost of the
road among several of the Appellant’s cutting permits
under the NRFL that were, or would in the future be,
tributary to the road. The parties signed an
apportionment agreement which identified the estimated
total cost of the road and outlined how those estimated
costs would be apportioned to existing and future
cutting permits. Six of those cutting permits were
never harvested and no stumpage was billed to them.
Under the apportionment agreement, $126,000 in estimated
development costs had been attributed to them.
The Appellant submitted
that the cutting permits which were not harvested were
“surrendered” to the Crown with no outstanding “take or
pay” obligations, and therefore, those cutting permits
effectively did not exist. The Appellant argued that
the $126,000 in estimated development costs that could
have been applied to the stumpage appraisals for those
cutting permits should be applied to cutting permits 104
and 108.
The Government
submitted that the total estimated road development
costs covered by the apportionment agreement had already
been amortized against cutting permits that were issued
under the Appellant’s NRFL.
The Commission
reviewed the language in section 4.3.1.14 of the
Interior Appraisal Manual (“IAM”) and the apportionment
agreement. Based on the language in the IAM and the
agreement, the Commission found that the estimated
development costs could not be reallocated from the
unharvested cutting permits that had been surrendered to
other cutting permits. The Commission also found that
the agreement apportioned the estimated development
costs for stumpage appraisal purposes only. The
agreement expressly stated that it did not constitute an
obligation to ensure that estimated costs would equal
actual construction costs or that estimated costs would
be “written off” in stumpage appraisals.
Accordingly, the
Commission confirmed the stumpage determinations under
appeal.
The appeals were
dismissed.
2008-FA-001(a),
002(a), 003(a), 004(a), 005(a) Pristine Log and Timber
Ltd. v. Government of British Columbia
Decision Date:
July 14, 2008
Panel:
Alan Andison
Keywords:
Forest Act - ss. 103(1), 105(1);
Interior Appraisal Manual – ss. 2.4, 5.6.6; stumpage
rate; bonus bid; void decision; conflict between
subordinate legislation and Act
Pristine Log and Timber
Ltd. (the “Appellant”) appealed the total stumpage rate
set out in five notices issued by the Timber Pricing
Coordinator, Southern Interior Forest Region, Ministry
of Forests and Range (the “Ministry”). The stumpage
rate pertained to timber harvested under a
non-replaceable forest licence held by the Appellant.
The notices under appeal were issued after the Ministry
discovered an omission in previously issued notices.
The original notices had set the total stumpage rate for sawlogs harvested under the licence at $0.25 per m3.
That total stumpage rate omitted the bonus bid of $5.43
per m3, which the Appellant had submitted in
its application and tender for the licence, and which
was a term of the licence agreement. In September 2007,
the Timber Pricing Coordinator issued the new notices
which set the total stumpage rate at $5.68 per m3,
retroactive to the periods covered by the original
notices.
The Appellant argued that
the revised total stumpage rate should apply as of
September 1, 2007, rather than retroactively to the
periods covered by the original notices. The Appellant
submitted that omitting the bonus bid was “an error… in
performing the calculations specified in the manual”
under section 2.4(1)(c) of the Interior Appraisal Manual
(the “IAM”), and therefore, it was a correctable error.
Under section 2.4(5) of the IAM, if a correctable error
is made, then the effective date of the reappraisal is
the first day of the month following the date on which
notice of the error is received by the regional manager,
which would be September 1, 2007, in this case.
The Government
submitted that the omission was not “an error… in
performing the calculations specified in the manual”
under section 2.4(1)(c) of the IAM. The Government
argued that section 5.6.6 of the IAM sets out, as a
matter of law, the “total stumpage rate” under the IAM.
Section 5.6.6 states that “The total stumpage rate is
the upset stumpage rate plus any bonus bid.” The
Government submitted that the Appellant had harvested
and scaled all of the timber under the licence before
September 1, 2007, and therefore, applying section 2.4
of the IAM would result in the Appellant paying no bonus
bid at all. The Government argued that
failing to pay the bonus bid would conflict with the
Appellant’s legal obligation under the licence agreement
and section 103(1) of the Forest Act to pay the
bonus bid. The Government submitted that
interpretations of the IAM that do not conflict with the
Forest Act are preferred under the rules of
statutory interpretation.
The Commission
considered the meaning of sections 2.4 and 5.6.6 of the
IAM, as well as the language in sections 103(1) and
105(1) of the Forest Act. The Commission found
that, although section 103(1) uses the word “stumpage”
broadly, subsections (c) and (d) distinguish between the
bonus bid and “the rate of stumpage applicable to the
timber under section 105” as separate components of the
amount payable under section 103. This provides that
the bonus bid is distinct
from “the rate of
stumpage applicable to the timber under section 105.”
The Commission held that this indicates that the
addition of the bonus bid to the upset stumpage rate
under section 5.6.6 of the IAM is not a calculation that
is “specified in the manual”. The Commission also found
that section 5.6.6 reflects the provisions in section
103(1) of the Forest Act; namely, that the total
amount payable to the government on a per cubic metre
basis, otherwise known as the total stumpage rate, is
the sum of the bonus bid and the rate of stumpage
applicable to the timber under section 105, otherwise
known as the upset stumpage rate. Also, section
105(1)(c) of the Forest Act directs that the
policies and procedures in the IAM are to be used for
the determination of stumpage rates. The
Commission found that the bonus bid is not a stumpage
rate; rather, it is a distinct financial obligation
under the Forest Act that is added to the
stumpage rate to create the “total stumpage rate”.
Therefore, the addition of the bonus bid to the
previously calculated stumpage rate is not a calculation
specified in the manual, and consequently, it is not a
correctable error under section 2.4(1)(c) of the IAM.
Additionally, the Commission held that section 2.4 of
the IAM does not contemplate correcting the omission
that occurred in this case. Here, the Timber Pricing
Coordinator completely omitted the bonus bid from the
total stumpage rate. If section 2.4 applied, the
Appellant would pay no bonus bid on any of the timber
harvested. This omission, and the result that would
occur if section 2.4 applied, is contrary to the
Appellant’s mandatory legal obligation to pay the bonus
bid, as set out in section 103(1) of the Forest Act
as well as the licence agreement. Applying a
procedure in the IAM, a form of legislation subordinate
to the Forest Act that produces a result which
goes against the clear and express language of the
Forest Act cannot be what the Minister intended.
The rules of statutory interpretation require that, if
there is a plausible interpretation of section 2.4 that
avoids conflict with the Forest Act, that
interpretation is to be preferred. Consequently, the
Commission found that the types of “errors” contemplated
in section 2.4(1) of the IAM do not include a complete
failure to include the bonus bid in the total stumpage
rate such that the licensee avoids paying any bonus bid
whatsoever.
The
Commission
concluded that the total stumpage rate set out in the
original notices was void and the total stumpage rate
had to be calculated anew, which is what the Timber
Pricing Coordinator did. The Timber Pricing Coordinator
properly included the bonus bid in the new total
stumpage rate, and properly set the effective dates of
the new notices to be the same as the original notices.
Accordingly, the
Commission confirmed the stumpage determinations under
appeal.
The appeals were
dismissed.
2005-FA-123(a)
Teal Cedar Products Ltd. v. Government of British Columbia
Decision Date:
July 2, 2008
Panel:
Alan Andison
Keywords:
consent order; stumpage rate; appraisal
log dump
Teal Cedar Products Ltd.
(“Teal”) appealed a stumpage determination issued by the
Regional Appraisal Coordinator, Coast Forest Region,
Ministry of Forests, for a cutting permit held by Teal.
By consent of the
parties, the Commission ordered that the stumpage
determination be rescinded and remitted back to the
Regional Appraisal Coordinator for re-determination,
using Shoal Island as the appraisal log dump for the
purposes of calculating the estimated wining bid and the
tenure obligation adjustment under the Coast Appraisal
Manual.
Accordingly, the appeal
was allowed.
2007-FA-056(a),
2007-FA-057(a) Western Forest Products Inc. v. Government of British Columbia
Decision Date:
June 17, 2008
Panel:
Alan Andison
Keywords:
Forest Act - s. 105(1); Coast
Appraisal Manual; stumpage rate; tenure obligation
adjustment; consent order
Western Forest Products
Inc. (the “Appellant”) appealed two separate stumpage
determinations set out in stumpage advisory notices
issued by the Regional Appraisal Coordinator, Coast
Forest Region, Ministry of Forests and Range. The
determinations applied to timber harvested under two
cutting permits held by the Appellant under tree farm
licence 39.
By consent of the
parties, the Commission referred the matter back to the
Regional Appraisal Coordinator with directions to
re-determine the stumpage rates for the cutting permits,
utilizing a specified methodology for calculating the
tenure obligation adjustment under chapter 5 of the
Coast Appraisal Manual.
Accordingly, the appeal
was allowed.
2007-FA-053(a)
Iron Mountain Ranch Ltd. v. Government of British Columbia
Decision Date:
June 5, 2008
Panel:
David Ormerod
Keywords:
Forest Act - s. 105(1); Interior
Appraisal Manual – s. 6.3.1; stumpage rate; blanket
salvage woodlot licence; log grade
Iron Mountain Ranch Ltd.
(the “Appellant”) appealed a stumpage determination set
out in a stumpage advisory notice issued by the
Appraisal Administrator, Central Cascades Forest
District, Southern Interior Forest Region. The
determination pertained to timber harvested under
cutting permit W (“CP W”) of a blanket salvage woodlot
licence held by the Appellant.
In determining the
stumpage rate for CP W, the Appraisal Administrator
applied section 6.3.1(2)(b) of the of the Interior
Appraisal Manual (the “IAM”), rather than section
6.3.1(2)(a), resulting in a higher stumpage rate for CP
W. In doing so, the Appraisal Administrator relied on
the language in a formula in section 6.3.1(4)(a) of the
IAM, which only refers to “grade 1” and “grade 2” sawlog
volumes and values billed. Based on those words, the
Appraisal Administrator only counted logs that had been
recorded as grades 1 and 2 in the billing records for
the licence during the relevant time period. She did
not include logs that had been recorded as “ungraded” in
the billing records for the licence during that time
period. The total volume of grades 1 and 2 sawlogs that
were billed to the licence during that time period was
less than the 500 m3 minimum required for
section 6.3.1(2)(a) to apply in determining the stumpage
rate. Therefore, the stumpage rate was determined based
on data from other licences, and not the weighted
average sawlog stumpage rate for the licence.
The Appellant argued that
the Appraisal Administrator erred in not counting the
“ungraded” logs towards the 500 m3 minimum
required for section 6.3.1(2)(a) to apply. It argued
that, although the those logs were not recorded as
grades 1 and 2, the logs were, in fact, sawlogs that had
been billed to the licence during the relevant time
period, but they were called “ungraded” instead of
grades 1 or 2 because those logs were scaled before the
Scaling Regulation was amended by repealing the
former grades that were designated for sawlogs (i.e.,
grade “blank” and grade 3), and replacing them with
grades 1 and 2 for sawlogs. Essentially, the Appellant
argued that the intention of section 6.3.1(4) of the IAM
was to use sawlog data pertaining to the licence to
determine the weighted average sawlog stumpage rate for
the licence, and that a change in the grades used for
scaling sawlogs should not result in sawlogs that had
been graded under the former scheme from being excluded
when calculating the stumpage rate for CP W.
Based on the evidence,
the Commission found that the reference in the billing
records to “ungraded” logs was a reference to grade
“blank” sawlogs under the former provisions of the
Scaling Regulation. The Commission further found
that, if the ungraded sawlogs had been counted in the
formula in section 6.3.1(4)(a), which had previously
included grade blank sawlogs but was amended to include
only grades 1 and 2 sawlogs, then the volume billed to
the licence during the relevant time period would have
exceeded the 500m3 threshold, and the
stumpage rate would have been determined at the lower
rate. The Commission held that, if the reference to
grades 1 and 2 in section 6.3.1(4)(a) of the IAM was
interpreted based on its plain and ordinary meaning, it
conflicts with sections 6.3.1(2) and 6.3.1(4)(b) of the
IAM, which indicate an intention to count “sawlogs”.
Further, the Commission found that applying the formula
in section 6.3.1(4)(a) based on its plain and ordinary
meaning, which is what the Appraisal Administrator did,
led to an absurd result, because some sawlogs that had
been billed to the licence during the relevant time
period were counted (i.e., grades 1 and 2), and others
were not (i.e., ungraded or grade blank). The
Commission found that the principles of statutory
interpretation require that words must be interpreted in
their entire context, and interpretations that lead to
internal conflicts and absurd results are to be avoided
if possible. Accordingly, the Commission found that the
intent of section 6.3.1(4)(a) of the IAM, when
considered in the context of the language in other parts
of section 6.3.1, was to count all sawlogs billed to the
licence during the relevant time period, and therefore,
the Appraisal Administrator should have counted the
ungraded sawlogs in determining the stumpage rate for
the licence.
The Commission referred
the matter back to the Appraisal Administrator with
directions to re-determine the stumpage appraisal for CP
W by including the ungraded sawlog volumes that were
billed to the licence during the relevant time period.
Accordingly, the appeal
was allowed.
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