Decision Date: April 11, 2007

Panel: David Ormerod

Keywords:  Forest Act – s. 105(1); stumpage rate; tributary cutting authority, road development costs.

James Wayne Dyck appealed a stumpage determination set out in a stumpage advisory notice issued by the Timber Pricing Coordinator, Central Cariboo Forest District, Southern Interior Forest Region.  The determination pertained to timber harvested under Cutting Permit D (“CP D”) of a woodlot licence held by Mr. Dyck.

In determining the stumpage rate for CP D, the Timber Pricing Coordinator disallowed the cost for 4.2 kilometres of road that was used previously to harvest another CP under the same woodlot licence, CP Y (a blanket salvage CP).  He allowed a further 200 metres of road that was not used to harvest CP Y.  In denying the costs, the Timber Pricing Coordinator relied on section 4.3 of the Interior Appraisal Manual (the “IAM”), which states that “The costs for development works may only be allocated to the first tributary cutting authority….”  Based on that clause, the Timber Pricing Coordinator concluded that CP Y was the first tributary cutting authority for the 4.2 kilometres of road, and therefore, the development costs of that road section were accounted for in the stumpage appraisals for CP Y, which were issued in 2004 and 2005.

Mr. Dyck argued that the Timber Pricing Coordinator improperly disallowed the road development costs.  He argued that, although the section of road had been used to harvest CP Y, the road development costs were not included in the appraisal of CP Y because it was appraised using the “base permit” method, whereby district average cost data for road development is applied in determining stumpage rates.  In contrast, CP D was appraised using the “full appraisal” approach, which allows the terrain of the area being harvested to be taken into account when determining the allowable road development costs.

The Commission held that the intent of section 4.3 of the IAM was to incrementally amortize a licensee’s road development costs along a system of road being developed to harvest the area covered by a licence.  The Commission found that the only way to apply the intent of section 4.3 when using the “base permit” method of appraisal is to deem a portion of the volume harvested under that CP (in this case, CP Y) as “first tributary” to a section of the new road system, such that the base permit data accounts for part of the overall road development costs.  Specifically, the combined per cubic metre cost for all CPs under the licence should reflect the reasonable cost of developing the road system serving the CP areas.

The Commission further found that the information before it was insufficient to determine the overall cost per cubic metre of the roads serving CPs Y and D, but the Timber Appraisal Coordinator would have sufficient information to do so.  The Commission referred the matter back to the Timber Appraisal Coordinator with directions to reconsider the stumpage appraisal for CP D by fully accounting for the road construction costs allocated between CP Y and CP D, consistent with the intent of section 4.3 of the IAM.

Accordingly, the appeal was allowed.