Decision Date: April 19, 2012

Panel: Alan Andison

Keywords: Forest Act – ss. 105(1); Coast Appraisal Manual – s. 5.3.2.1; stumpage rate; estimated road development cost; extended road amortization agreement; consent order

Western Forest Products Ltd. (“Western”) appealed a stumpage rate determination issued on December 12, 2011 by the Regional Appraisal Coordinator (the “Appraisal Coordinator”), Coast Area, Ministry of Forests, Lands and Natural Resource Operations (the “Ministry”). The stumpage rate applied to timber harvested under cutting permit (“CP”) 640 of a tree farm licence located on northern Vancouver Island.

In determining stumpage rates for timber in the Coast Region, the Ministry must apply the policies and procedures set out in the Coast Appraisal Manual (“CAM”). In this case, section 5.3.2.1 of the CAM provided that “where the total road development cost calculated in an appraisal or reappraisal is greater than $14.00/m3, the licensee and regional manager may agree that only a portion of an estimated road development cost will be used in the appraisal or reappraisal of the cutting authority area and that the balance of the estimated road development cost will be used in the appraisal or reappraisal of one or more tributary cutting authority areas.”

In determining the stumpage rate applicable to timber harvested under CP 640, the Appraisal Coordinator did not apportion Western’s total estimated road development costs of $1,104,725; rather, he applied it fully to CP 640.

Western appealed on the grounds that the Appraisal Coordinator erred by failing to apportion the total estimated road development costs associated with CP 640. Specifically, Western submitted that CP 640 qualified for an extended road amortization agreement pursuant to section 5.3.2.1 of the CAM because the total estimated road development costs were greater than $14.00/m3, and therefore, the costs should have been apportioned. Western requested that $224,358 of the costs be apportioned to CP 640, and $880,367 be apportioned to future tributary cutting authority areas.

On receipt of the appeal, the Commission held it in abeyance to allow the parties time to attempt to resolve the issues in the appeal. Subsequently, the parties reached an agreement to settle the appeal. The parties agreed that a total of $923,651.45 in estimated road development costs would be apportioned as follows: $5,801.60 to CP 640; and $917,849.85 to another cutting permit.

Accordingly, by consent of the parties, the Commission ordered that the stumpage rate determination was rescinded, and the matter was remitted back to the Appraisal Coordinator with directions to re-determine the stumpage rate by applying an apportioned cost of $5,801.60 to CP 640.