Decision Date: December 31, 2004

Panel: Alan Andison

Keywords: Forest Act – ss. 105(1); Coast Appraisal Manual; Comparative Value Pricing System; Coast Appraisal Data Sheets; Market Pricing System; stumpage rate determination; stumpage reappraisal; road maintenance costs.

Western Forest Products Limited (“Western”) appealed four stumpage advisory notices (“SANs”) that were issued on June 10, 2004 by the Regional Appraisal Coordinator, Coast Forest Region, Ministry of Forests, for four cutting permits (“CPs”) held by Western issued under Tree Farm Licence 25 and Timber Licence T0412. The CPs were reappraised pursuant to a new system, called the Market Pricing System (“MPS”), which replaced the Comparative Value Pricing System effective on February 29, 2004 in the Coast Region. A new Coast Appraisal Manual came into effect on that date (the “2004 CAM”), which applied to the MPS conversion reappraisals.

Western appealed the SANs on the grounds that the Regional Appraisal Coordinator failed to apply the policies and procedures set out in the 2004 CAM when he reappraised the stumpage rates for the four CPs. In particular, Western submitted that he erred by failing to account for adjusted road maintenance costs when he calculated the reappraisal stumpage rates by using a road maintenance value of zero.

The Commission found that the Regional Appraisal Coordinator erred when he used a road maintenance value of zero to determine the MPS conversion reappraisals for the CPs. The Minister of Forests issued a Directive on February 26, 2004 that indicated that the sources of data for the MPS conversion reappraisals would be: (1) the “data” from the most recent appraisal or reappraisal in effect on February 28, 2004; and (2) the data from the MPS Conversion Appraisal Data Submissions. The Commission found that the “data” from the most recent appraisal or reappraisal in this case included information that Western had provided to the Ministry regarding the road maintenance costs that applied to the CPs.

Furthermore, sections 5.1 and 5.4 of the 2004 CAM clearly direct the Regional Appraisal Coordinator to take into account road maintenance costs when calculating the tenure obligation adjustment for MPS stumpage rates if there are parts of a cutting authority area where the logs will be transported over a road by truck. Due to the undisputed fact that Western’s CPs involve road maintenance, the Commission found the Regional Appraisal Coordinator’s use of a road maintenance value of zero was inconsistent with the 2004 CAM. In addition, the Commission found that the stumpage rates in the SANs, which were in effect on February 28, 2004, were not actually based on a road maintenance value of zero. Those stumpage rates into account pro-rated road maintenance costs, even if the SANs labelled those costs under a different heading.

The Commission referred the matter back to the Regional Appraisal Coordinator and directed him to reappraise the stumpage rates for the CPs in order to account for road maintenance costs, by applying the provisions of the 2004 CAM to the data in the Coast Appraisal Data Sheets that Western submitted for the SANS in effect on February 28, 2004. The appeals were allowed.