Decision Date: April 11, 2007

Panel: R.A. (Al) Gorley

Keywords: stumpage rate; Forest Act – s. 105, s. 149(2); Interior Appraisal Manual; engineered cost estimate

Stuart Lake Lumber Co. Ltd. (“SLL”) appealed the stumpage rate determination for its cutting permit. The cutting permit pertained to a forest licence located in the Fort St. James Forest District, Northern Interior Forest Region. The determination was based in part on an engineered cost estimate of $143,746 made by the Regional Bridge Engineer for the construction of a bridge to access the cutting permit area. SLL submitted that the cost estimate used for the bridge should be higher (SLL’s estimate was $194,758.34), and that the stumpage for the cutting permit should be reduced to reflect this higher development cost.

SLL received four bids for a 30 metre bridge. Subsequent communications with the Ministry’s Regional Bridge Engineer led to a decision to proceed with a 24.4 meter bridge instead. SLL’s cost estimate was derived from taking the lowest of the tendered bids for the proposed 30 metre bridge and modifying it to reflect the lower cost of a 24.4 metre structure. The Ministry’s rough quote, on the other hand, was prepared in accordance with the policies and procedures contained in the Interior Appraisal Manual (the “IAM”), and gave more limited consideration to the actual costs incurred by the licensee and to the competitive bids for the project.

The Commission found detailed cost analysis to be the most instructive approach. In reviewing both parties’ detailed cost estimate submissions, the Commission found SLL’s rationale convincing for some phase cost estimates and the Ministry’s for others. Considering the applicable sections of the IAM and the evidence presented, the Commission assessed the total cost estimate at $146,646 and referred the stumpage determination back to the Timber Pricing Coordinator to be amended accordingly.