Decision Date: June 16, 2011

Panel: Gabriella Lang, Bruce Devitt, O’Brian Blackall

Keywords: Forest Act – ss. 105(1), 148.6; Coast Appraisal Manual – ss. 3.2, 3.3, 3.3.1, 3.3.1.1, 3.3.1.2, 4.1; changed circumstance; reappraisal; cable yarding

International Forest Products Ltd. (“Interfor”) appealed a stumpage rate determination issued by the Regional Business Analyst for the Coast Forest Region, Ministry of Forests and Range (the “Ministry”).  The appeal concerned whether a stumpage rate reappraisal had been triggered by a “changed circumstance” with respect to Interfor’s harvesting methods in the area of cutting permit (“CP”) 136, forest licence A19232, on northern Vancouver Island.

The process for determining stumpage rates begins with the licensee preparing an appraisal data submission and sending it to the Ministry.  In April 2007, Interfor sent its appraisal data submission for CP 136 to the Ministry.  The appraisal data submission estimated that 34 percent of the timber volume would be harvested by cable yarding, and the remainder would be harvested by ground-based methods.  Cable yarding is generally more expensive than ground-based harvesting methods, and it generally causes less disturbance of moist soils.  The Ministry accepted the appraisal data submission and used it to determine a stumpage rate for CP 136.

In May 2007, the Ministry notified Interfor that a stumpage rate of $17.59 per cubic metre applied to sawlogs harvested under CP 136, effective on April 30, 2007.

In June and July 2007, Ministry staff inspected the CP 136 area, and observed that there had been less harvesting by cable yarding than indicated in the original appraisal data submission.  The Ministry determined that there had been a changed circumstance within the meaning of section 3.3.1(1)(a) of the Coast Appraisal Manual (“CAM”), which requires a reappraisal where:

The Ministry requested that Interfor provide a reappraisal data submission reflecting the change in the volume harvested by cable yarding.  However, Interfor disputed that a “changed circumstance” had occurred.  For the reappraisal, Interfor re-sent its original appraisal data submission to the Ministry.

In May 2009, the Ministry issued the reappraisal with a stumpage rate of $19.96 per cubic metre for sawlogs harvested under CP 136, effective May 1, 2007.  The Ministry based the reappraisal on its estimate of that four percent of the volume had been harvested by cable yarding.

Interfor appealed the reappraisal to the Commission.  It requested that the original stumpage rate be restored on the basis that: (1) there had been no “changed circumstance” within the meaning of section 3.3.1(1)(a); and (2) even if there was a changed circumstance, section 3.3.1.2 of the CAM specified that the effective date of the reappraisal was May 1, 2007, and the original appraisal data submission should be used in a reappraisal because there was no change in the site conditions of CP 136 between April 30, 2007 (the effective date of the original stumpage determination) and May 1, 2007 (the effective date of the reappraisal).

The Government submitted that a changed circumstance had occurred because Interfor harvested at least 15 percent more volume by ground-based methods than was indicated in the original appraisal data submission.  The Government argued that the change in the actual volume harvested by cable yarding, compared to the volume indicated in the original appraisal data submission, was evidence of a changed circumstance.

The Commission considered the words in section 3.3.1(1)(a) of the CAM, based on their ordinary meaning in the context of the CAM.  The Commission found that the words “plans” and “is planned” indicate an intention to do something, and are prospective or forward looking.  The Commission then considered whether there was evidence of Interfor’s original plan or intentions for harvesting the CP 136 area, and whether there was evidence that Interfor’s plan or intentions with respect to harvesting methods changed after it submitted the original data appraisal submission.  The Commission held that Interfor’s original appraisal data submission showed the original plan or intentions for harvesting CP 136.  Interfor’s staff who prepared the original data submission used professional judgement to estimate the percentage of harvesting by cable yarding, based on their knowledge of the site and the typical weather conditions during the time of year when harvesting would occur.  However, the Commission found that there was no evidence that, sometime after submitting the original data submission, Interfor planned or intended to use a method to harvest at least fifteen percent of the volume that was different from the method that Interfor planned to use when the original data submission was prepared.  Although there was a change in the actual percentages harvested by the two methods, there was no evidence that Interfor or its contractor had planned that change.  The site conditions when the CP 136 area was harvested were unusually dry for that time of year, so the contractor was able to do more ground-based harvesting than originally planned.  The Commission held that, if the Minister had intended for evidence of the actual volumes harvested by different methods to trigger a changed circumstance reappraisal, the Minister should have clearly said so in the CAM.

In addition, the Commission found that there would have been no changes in the conditions of the CP 136 area between April 30 and May 1, 2007, and therefore, the original appraisal data submission should be used if a reappraisal was required.

Accordingly, the appeal was allowed.