Decision Date: November 2, 2017

Panel: Gregory J. Tucker, Q.C., John M. Orr, Q.C., Howard Saunders

Keywords: Wildfire Act – s. 25; Wildfire Regulation – s. 30; Forest Act – s. 103(3); wildfire; order; compensation; damages; Crown timber; other forest land resources, grass land resources

Canadian National Railway Company (“CNR”) appealed an order issued by the Deputy Fire Centre Manager (the “Manager”), Coastal Fire Centre, Ministry of Forests, Lands and Natural Resource Operations (the “Ministry”). In 2014, one CNR’s railway trains ignited a wildfire that burned 171 hectares of Crown land near Williams Lake, BC. The burnt area was designated as winter habitat for mule deer pursuant to the Forest and Range Practices Act, and as an old growth management area under the Land Act. The Manager ordered CNR to pay compensation totalling $321,929.23 under section 25 of the Wildfire Act and section 30 of the Wildfire Regulation, for the value of mature Crown timber ($141,929.23), and other forest land resources and grass land resources ($180,000), that were damaged or destroyed as a result of the fire.

Specifically, the value of the mature Crown timber was determined pursuant to section 30(a) of the Wildfire Regulation, which points to the timber’s stumpage value under the Forest Act. Section 103(3) of the Forest Act states that the timber value is calculated by multiplying the volume of damaged or destroyed Crown timber by the stumpage rate that “would likely have applied to the timber … if rights to the timber had been granted under an agreement entered into under” the Forest Act. The Manager assessed the timber value based on the stumpage rate that would have applied if the burnt area was subject to a BC Timber Sales harvesting licence. The rest of the compensation was determined pursuant to sections 30(c) and (d) of the Wildfire Regulation, which specify that “other forest land resources” are valued at $5,000 per hectare for protected areas and $1,000 per hectare for areas that are not protected, and the value of “grass land resources” is $500 per hectare. The burnt area was mapped and assessed based on GPS coordinates taken from a helicopter, and GIS (geographic information system) data about the timber species and volume. Field assessments were carried out to determine the impact of the fire on habitat values, but not to measure the volume of Crown timber or other resources that were damaged or destroyed.

CNR appealed the determination. CNR requested that the Commission reduce the quantity of compensation it was ordered to pay. The issues on appeal were the size of the area in which Crown timber, other forest land resources, and grass land resources were “damaged” (rather than destroyed), the appropriate stumpage rate and type of harvesting agreement for calculating the value of the damaged or destroyed Crown timber, and whether an area may be treated as both “other forest land resources” and “grass land resources” for the purposes of calculating compensation.

The Commission considered the meaning of “damage” in the context of section 25(1) of the Wildfire Act. The Commission found that trees without visible signs of fire damage could have suffered damage from a fire, as a fire may weaken trees and make them more susceptible to insects or disease. However, invisible damage to a tree would need to be assessed by an arborist or botanist, and in this case, there was no such evidence. Consequently, based on the available evidence, the Commission concluded that the “damaged” timber in this case consisted of timber with visible damage from the fire. The Commission also held that, under the legislation, economic loss to the Crown is not a prerequisite for establishing “damage” to Crown resources. In addition, the Commission found that it may be difficult to assess visible damage to standing trees based on an aerial view alone, and that ground-based observations would be helpful in cases such as this. Although the purpose of the habitat assessment was not to assess the volume of damaged timber, it contained information about the burn intensity in different areas which supported a finding that not all of the mature Crown timber within the burnt area was damaged or destroyed. Based on the evidence, the Commission estimated that 96% of the mature Crown timber within the burnt area was damaged or destroyed.

Turning to the appropriate stumpage rate and type of harvesting agreement for the purpose of calculating the value of the damaged or destroyed Crown timber, the Commission found that the appropriate agreement type depends on the circumstances. Recent harvesting agreements in the area near the fire were BC Timber Sales licences, and the characteristics of the burnt area would not have supported a major tenure agreement. Consequently, the Commission concluded that a BC Timber Sales licence was the appropriate type of agreement for the purposes of determining the applicable stumpage rate in this case. In calculating the applicable stumpage rate, the Commission found that the Manager already applied a cost adjustment for cable yarding in some areas, but the Manager should have taken into account additional road construction costs. Consequently, the Commission reduced the stumpage rate that applied for the purpose of calculating the timber value. Applying that stumpage rate to 96% of the timber volume in the burnt area resulted in a value of $90,047.04 for the damaged or destroyed mature Crown timber.

Finally, based on the language in the legislation, the Commission concluded that “other forest land resources” and “grass land resources” are separate categories. Although “forest land” can contain areas of grass, the tree cover must drop below a particular threshold for the land to be categorized as “grass land”. Therefore, the burnt Crown land should be valued as either forest land or grass land, but not both. Based on the evidence, the Commission determined that compensation of $107,500 was due for “other forest land resources” and $6,050 was due for “grass land resources”.

Consequently, the total compensation owing was reduced to $203,597.04, and the appeal was allowed.