Originally published in BC Forest Professional
In Western Forest Products Ltd. v. Government of British
Columbia, Decision Nos. 2013-FA-001(a) and 2013-FA-002(a) (the
"Western Decision"), the Forest Appeals Commission has
elevated the importance of "accurate information" in the
appraisal of stumpage to something more than a legislative or
professional obligation. It has, effectively, become a principle of
interpretation applicable to BC's stumpage appraisal manuals
(the "Manual"). As with most stumpage disputes, the
Western Decision concerned a difference of opinion over some
obscure provision of the Manual. At issue was the ability of
licensees to account for the estimated costs of a road that would
service multiple cutting permits in the appraisals of more than one
of those cutting permits (rather than only in the appraisal of the
first cutting permit serviced by the road).
On account of the minimum stumpage rate applicable in BC, a
stumpage rate cannot "go negative" regardless of the
magnitude of the estimated costs included in the appraisal of a
cutting permit. To avoid any unfairness that could result if a
licensee could only use the estimated cost of a road intended to
service multiple cutting permits in the appraisal of a single
cutting permit, the Manual contemplates that government and a
licensee may enter into an "extended road amortization
agreement" (or "ERAA"). An ERAA permits a licensee
to divide the estimated cost of a road intended to serve multiple
cutting permits among the appraisals of those multiple cutting
permits. This ensures that all of the estimated costs that a
licensee will incur to harvest timber over a particular road are
recognized in the stumpage payable for that timber.
In the circumstances of the Western Decision, an ERAA was
developed in the appraisal of the first of multiple cutting permits
serviced by a particular road, and allocated the estimated
appraisal costs of the road between the first two cutting permits.
In the appraisal of the second cutting permit an issue arose as to
whether the actual dollar amounts that the ERAA attributed to the
appraisal of the second cutting permit remained static even though
the licensee now had more accurate "as-built" information
to estimate the costs subject to the ERAA.
Government took the position that the dollar amounts attributed
to each cutting permit in the ERAA remained static regardless of
new information. The licensee took the position that section
105.1(3) of the Forest Act required the licensee to submit
data that was accurate at the time of the appraisal of the second
cutting permit, and that its forest professionals had a
professional obligation to do the same. According to the licensee,
government was required to proportionately adjust the dollar
amounts that the ERAA initially attributed to the appraisal of the
second cutting authority to reflect more accurate information that
The Commission found that the Manual, the ERAA, and the past
practice among the parties were ambiguous as to whether the dollar
amounts specified in an ERAA remained static under the
circumstances. To resolve this ambiguity, the Commission turned to
the "dominant" factor in interpreting the Manual, and the
"paramount" obligation of a licensee and its forest
professionals: to ensure that "at the time the [appraisal]
information is submitted ... the information is complete and
accurate." The Commission held that "the Government's
interpretation would mean that less accurate information would be
applied to determine the stumpage rate ..." Accordingly, the
Commission directed that government proportionately adjust the
dollar amounts initially attributed to the second cutting authority
in the ERAA to reflect the more accurate information that had
subsequently become available.
Unlike some of the Commission's interpretations of the
Manual, the paramount importance that the Commission placed upon
accuracy of information in stumpage appraisals is not something
that government can simply do away with in a subsequent revision of
the Manual. This paramountcy is, primarily, a product of the
Forest Act and, to a lesser extent, the Foresters
Act. While government is free to rewrite the Manual within the
scope of the legislative authority given to it under the Forest
Act, government cannot rewrite the Forest Act (or the
Foresters Act) without the blessing of the Legislature,
something that is far more cumbersome.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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