Canada: Administrative Remedies In The BC Forest Industry: Where Are We 20 Years After The Forest Practices Code?

The Ministry of Forests, Range and Natural Resource Operations (the "Ministry") enforces numerous environmental and financial obligations imposed upon the holders of Crown forestry tenures in BC. With the enactment of the former Forest Practices Code of British Columbia Act (the "Code") some 20 years ago, the Ministry began to acquire what has become a surprising array of administrative remedies to enforce compliance with these obligations. These remedies enable the Ministry to pursue compliance and enforcement action against those in the BC forest industry without the need to first resort to the courts – what was then a novel concept.

While the possibility of a traditional prosecution or civil law suit before a judge still remains, it has become more theoretical than real. The Ministry no longer needs to persuade the Ministry of Attorney General that evidence exists to establish beyond a reasonable doubt that someone committed an environmental offence, or that an alleged contravention is otherwise of sufficient importance to warrant a prosecution. The Ministry can simply act on its own and exercise any of a number of administrative remedies. And once the Ministry does act, the onus is placed on the person subject to the Ministry's authority to take positive steps to ensure the Ministry has exercised its authority appropriately.

Since the Code was largely repealed in 2004, forest practices in BC are now primarily regulated under the Forest and Range Practices Act ("FRPA") and, to a lesser extent, under the Wildfire Act. A relatively unique feature of this legislation (as well as the Code before it) compared with more traditional environmental legislation (such as the federal Fisheries Act), is the authority of the Ministry to act administratively, on its own, in response to perceived contraventions of environmental standards. On the 20th anniversary of the Code's enactment, in this bulletin we review notable administrative remedies – both statutory and financial – available to the Ministry to enforce the laws in BC forests.

Statutory Remedies for the Enforcement of Forest Practices

Administrative Penalties

The "Crown" jewel in the Ministry's collection of administrative remedies is the power to make findings of legislative "contraventions," and impose "administrative penalties" on account of a contravention.

The defining characteristic of this remedy is the Ministry's ability to impose a financial penalty "administratively" under its own authority without the burden of first justifying a case in terms of evidence and law before an independent tribunal, such as a court. The Ministry merely needs to satisfy itself that someone contravened the legislation, and that a penalty is warranted on account of the contravention. If the person subject to the administrative penalty objects, then it is up to that person to pursue an appeal to the Forest Appeals Commission (the "Commission") or, in limited circumstances, to the courts.

Administrative penalties are efficient from the Ministry's perspective:

  • The Ministry is able to impose potentially significant monetary penalties for perceived noncompliance without the involvement of Crown counsel or the courts.
  • If an administrative penalty is appealed to the Commission, the Ministry only has to prove its case on the civil standard of a "balance of probabilities" (more likely than not), rather than on the much more onerous standard of "proof beyond a reasonable doubt" that would generally apply to the prosecution of an offence in the courts.
  • Appeals are costly, and the Commission's policy is not to award costs to a successful appellant other than in the most rare of circumstances. The effect of this policy is to discourage appeals and, thereby, limit independent scrutiny of the Ministry's administrative penalty determinations.

Indeed, the use of administrative penalties is so efficient that traditional prosecutions of offences for contraventions of BC's forest practices legislation are now extremely rare.

Stop Work and Remediation Orders

If the Ministry determines that a person has contravened either FRPA or the Wildfire Act, it can order that person to undertake any work reasonably necessary to remediate the contravention, and to do so by a specific date. This is the equivalent of a mandatory injunction in the civil law – an order of a court that requires someone to take positive action to do something (rather than simply refrain from doing something, as is the case with a standard injunction). The difference is that the Ministry cannot on its own, without the assistance of the courts, directly compel a person subject to a remediation order to comply with it in the same way a court can compel compliance with an injunction through its ability to punish for contempt of court. That said, if a person subject to a remediation order does not perform the work as contemplated in the order, the Ministry can perform the work itself, and then bill the person for the Ministry's costs and realise on any security the Ministry holds in connection with the forest tenure at issue (or otherwise use financial remedies discussed further below to recover its costs).

The difficulty with a remediation order from the Ministry's perspective is that, like most other orders the Ministry may issue under FRPA, it is stayed until the person subject to the order has exhausted all rights of appeal unless the Minister specifically determines that a stay is not in the public interest.

Under FRPA, the Ministry may order a person to stop any activity if the Ministry has "reasonable grounds" to believe the activity is in contravention of BC's forestry legislation. In other words, the Ministry does not have to make a determination of contravention as is the case with a remediation order; it merely has to have reasonable grounds to believe that there is a contravention. Unlike most other orders, a stop work order is not stayed pending appeal, and remains in effect until the Ministry, itself, determines there were insufficient grounds to issue the order or that the order is no longer required or appropriate, or the order is successfully reviewed or appealed. As with remediation orders, the Ministry can only compel compliance with a stop work order through the courts.

Forest Act Remedies

The Forest Act also makes certain tools available to the Ministry to enforce standards of forest practices. Specifically, if a person fails to comply with FRPA or the Wildfire Act then,

  • under section 81 of the Forest Act, the Ministry may refuse to issue a cutting permit to that person, or reject an application from that person for another forest tenure or other permit, and
  • under section 76 of the Forest Act, the Ministry may suspend a person's rights under its forest tenure and, ultimately, cancel that person's forest tenure under section 7.

Finally, under section 70 of the Forest Act, the Ministry's Chief Forester is authorised to reduce the allowable annual cut of a forest tenure if:

  • its holder failed to establish a free growing stand as required under FRPA, or
  • caused or allowed soil disturbance to occur in excess of that allowed in an operational plan.

In either case, the amount of the reduction may equal the volume of timber the Chief Forester determines was on the affected area.

Violation Tickets

Though not a statutory remedy under BC's forestry legislation, forest officers with the Ministry are authorised to issue "violation tickets" under the Offence Act for noncompliance with BC's forestry legislation. A familiar example of a violation ticket is a "speeding ticket". A speeding ticket is simply a violation ticket issued for noncompliance with the Motor Vehicle Act. Like a speeding ticket, once a violation ticket is issued the onus is on the person who receives the ticket to dispute it in provincial court. If the person does not file a notice of dispute within the requisite time period (30 days), then the person is presumed to have plead guilty to the offence.

Violation tickets are not uncommon in the forest industry, and they are sometimes not treated as seriously as other statutory remedies available to the Ministry. They typically involve a relatively trivial fine and, unlike the process associated with other statutory remedies, there is little, if any, follow-up from the Ministry once the forest officer issues the ticket. The notice of dispute period may simply lapse without a second thought. The problem with ignoring a violation ticket is that it will form part of recipient's compliance and enforcement record with the Ministry. If the Ministry subsequently makes a finding of contravention against a person in order to assess an administrative penalty (as discussed earlier), one significant factor the Ministry will look at to determine the amount of the penalty is whether there are "previous contraventions of a similar nature". For the purposes of administrative penalties, a violation ticket for a similar contravention is a "contravention of a similar nature". So while the initial violation ticket fine is relatively trivial, it may result in a larger administrative penalty assessment down the road for a subsequent contravention of a similar nature.

Financial Remedies

While the use of administrative remedies in the BC forest industry was pioneered in the context of forest practices enforcement, their use over the past decade has become a central component of the Ministry's authority to assert the Crown's financial interest in the public's forest resources.

Third Party Remedies

Before we consider the "new", we should review the "old". The Ministry has long had the lawful right to pursue third parties for monies another person owes to the Crown. These rights can work together with some of the more recently developed remedies discussed below to produce potentially unanticipated problems for third parties.

Section 131 of the Forest Act provides that any party who "acquires or deals in timber on which" stumpage is outstanding, must pay the outstanding stumpage to government. The courts have interpreted the words "deals in" to apply anyone who exercises a "measure of control" over the progress of the felled log from the stump to the point of manufacture. Clearly this would capture a purchaser of timber, though the courts have also applied section 131 broadly enough to capture log brokers. This is not to say that all log brokerage arrangements are subject to section 131, but the courts will look at the details of the specific arrangement to determine if the broker (or other third party) exercised the requisite "measure of control".

Lien Rights

Section 130 of the Forest Act creates a lien in favour of government on the forest products and other personal property of any person who, essentially, owes money to government, whether on account of stumpage, or other financial liabilities that may arise under the Forest Act, FRPA, or the Wildfire Act. A section 130 lien would also apply to any third party who became liable for stumpage under section 131 of the Forest Act. Section 130 also allows government to file a "certificate" with a court registry in relation to any such lien. The certificate, effectively, becomes a judgement of the court, and government is then entitled to use the court's processes to collect the amount claimed in the lien as though the certificate were a court order, and without the need to go to trial.

Suspension of Rights/Withholding of Approvals

As it can with the enforcement of forest practices, the Ministry can withhold various approvals, permits and authorisations if an applicant has outstanding financial liabilities owed to the Crown. If government claims that stumpage remains outstanding from a licensee, or from any person "not at arm's length" from that licensee then, under section 81 of the Forest Act, government may refuse to issue a forest tenure, road permit, cutting permit or a scale site authorization to the licensee. Effectively, this allows government to shut-down a licensee's business so long as the government claims the licensee owes stumpage. Similarly, under section 54 of the Forest Act, the holder of a Crown forest tenure cannot dispose of the forest tenure so long as the tenure holder owes any money to the government.

Ultimately, a failure to pay stumpage for timber harvested under a Crown forest tenure constitutes a failure to perform an obligation under the tenure. This would authorise the Ministry to proceed with suspension and potentially cancellation of the forest tenure pursuant to sections 76 and 77 of the Forest Act.

Re-opening Stumpage Rates

Over the past decade government has gone to some lengths to allow itself to reopen stumpage rates long after timber is harvested, sold and manufactured. Section 105.2 of the Forest Act allows a government official to re-determine a stumpage rate if, in the official's opinion, the original stumpage rate was based upon inaccurate information. The re-determined rate takes effect as of the effective date of the original stumpage rate, and the collection remedies discussed above will apply to any new stumpage charges. Third parties who may have acquired or dealt in the timber at issue as contemplated in section 131 of the Forest Act are not immune.

Similarly, the policies and procedures used to determine stumpage rates under section 105(1) of the Forest Act, and found in appraisal manuals published for each of the coast and interior of BC, require a "changed circumstances" reappraisal of a stumpage rate if the circumstances encountered at the time of harvesting or the methods used to harvest timber are sufficiently different from that contemplated in the original appraisal. The reappraised stumpage rate becomes effective the day after the most recent appraisal before the changed circumstances reappraisal, and the government can use any remedies otherwise available to it to collect any additional stumpage owed on account of a changed circumstances reappraisal. Again, third parties who may have acquired or dealt in the timber as contemplated in section 131 of the Forest Act are not immune to any additional stumpage liability that may arise on account of a changed circumstances reappraisal.

Administrative Penalties

The government can also impose administrative penalties to assert the public's financial interest in its forest resources. For example, section 105.1 of the Forest Act requires a licensee to submit "accurate" information for use in stumpage appraisals. Section 105(5.2) requires a licensee to submit a "changed circumstances" reappraisal if required under the appraisal manuals. A failure to comply with either provision may result in the imposition of an administrative penalty of up to $500,000.00.

Vicarious Liability

The vicarious liability provisions of FRPA are of concern to a corporate licensee's officers and directors, including potential vicarious liability for administrative penalties related to the determination of stumpage as discussed above. Section 72(4) of FRPA provides that if a corporate licensee contravenes a provision of "the Acts", then so does any officer or director of that corporate licensee who "authorized, permitted or acquiesced" in the contravention. In addition to FRPA, the Wildfire Act, and the Code, "the Acts" also include the Forest Act and, more particularly, sections 105.1 and 105(5.2) of the Forest Act. What is meant by "authorized, permitted or acquiesced" is not entirely clear but, to date, the Commission has suggested that it means a failure to prevent an occurrence that the officer or director ought to have foreseen. So, in the case of stumpage, a director or officer of a corporate tenure holder is exposed to liability for an administrative penalty if that officer or director "authorized, permitted or acquiesced" in the use of inaccurate information in a stumpage appraisal, or in a failure to submit a changed circumstances reappraisal.

The Forest Revenue Audit Program ("FRAP")

Finally, a recent and controversial addition to the government's arsenal of administrative remedies under the Forest Act is Part 11.1, the statutory authority for FRAP. The Minister of Finance is authorised under Part 11.1 to appoint an official called "the commissioner". In turn, the commissioner may appoint forest revenue officials who are given broad powers under Part 11.1 to enter a premises to inspect records, or demand production of records. If, based upon these records, the commissioner determines that stumpage was underpaid, the commissioner may estimate the outstanding stumpage and make an assessment against a person for that amount. Experience to date suggests that the standards employed to "estimate" underpaid stumpage are not overly rigorous. The difficulty is that once an assessment is made on the basis of this estimate, the amount owing is immediately payable and, in the meanwhile, the burden is on the person subject to the assessment to prove that the estimate is wrong.

If the commissioner determines that an underpayment of stumpage was willful, the commissioner may also impose a penalty against the person of up to 100% of the assessment. Even if the underpayment was not wilful, the commission can still impose a penalty of up to 25% of the assessment. Once the assessment is made, the remedies otherwise discussed above become available to the government to collect the assessment and any penalty, including the ability to register a certificate as a judgement pursuant to section 130 of the Forest Act and pursue any creditors' remedies otherwise available at law to collect on the assessment.

Experience to date has also shown that government can be very aggressive in its application of Part 11.1, and that defending against an assessment under the Part 11.1 is time consuming and expensive.

With the number of remedies available to the Ministry to enforce forestry practices in BC, it will be interesting to see how they will evolve over the next 20 years.

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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