What to Do If Your Woodlot is to Be Cancelled by Government
(By Gord Chipman, Mike Larock, Ed Hughes)
Overview
For the past several years Woodlot Licensees have experienced a high degree of uncertainty with respect to their livelihoods, their family businesses, and tenures. The pressures have come from several sources including administrative delays, legislative and regulatory change, climate impacts on growth and changing standards to build adaptation, and catastrophic loss. The anxiety is enormous for many Woodlots. Unfortunately, there is not an easy path forward to answer the question, “What to do about the recent legislative changes?”, regarding potential cancellation or suspension of rights and regulatory compensation.
There are currently 8 woodlots in the province that have been notified informally that their woodlot tenure will likely end. There are no formal Designated or Special Purpose Areas on these 8 woodlots.
There are 2 woodlots in the Peace River region that have formally received Part 13 (section 169) Declared Area notifications under the Forest Act. There are 3 other woodlots in the Peace that have been informed that their tenure will be taken back, however these other 3 have not had Designated areas formalised. These 5 licence holders are negotiating compensation with the District Manager of the Ministry of Forests.
There is confusion out there since there are multiple branches of Ministry involved in the discussions. On Vancouver Island, there are 5 woodlots at risk and they have been in contact with negotiators from the Ministry of Indigenous Relations and Reconciliation. They have been informed that any Woodlot licence plans or Cutting Permits will take considerable time for approval. There are also First Nation Government representatives that have expressed that all tenures including woodlots are within their Traditional Territories and do not consent to timber harvesting (this even affects FN owned Woodlots by FN territory overlaps).
On November 25, 2021, the Forest Amendment Act, 2021 (otherwise known as 2021 Bill 28) passed through the BC Legislature and received Royal Assent. While it also includes other miscellaneous changes to the Forest Act (the Act), the primary focus of 2021 Bill 28 is on the expropriation and redistribution of existing harvesting rights. As a government news release announced when Bill 28 was introduced into the Legislature, “government will be able to reduce the timber harvesting rights of existing forest tenure holders, compensate them and then redistribute the timber harvesting rights to First Nations, Communities, and BC Timber Sales.
This past summer, this Act was followed by regulations enacted July 15, 2023, Special Purpose Areas Regulation B.C Reg. 153/2023 and Designated Areas Compensation Regulation B.C. Reg. 154/2023.
On July 10, 2023, the Federation of BC Woodlot Associations sent a detailed list of questions to the MOF Tenures Branch regarding the new regulations. This request was never answered, and the verbal response was it is summertime and we will respond in the fall. To date, a response has never been received. The following is based on research conducted by and on behalf of the Federation of the laws created from the 2021 Bill 28.
The Issues in Front of Us
Under the Act Designated Areas (DAs) and Special Purpose Areas (SPAs) that overlap area-based tenures such as a woodlot licence are more problematic than they are for volume-based tenures. In the case of the latter, the consequences of a DA or SPA are shared among all forest licences in the TSA that includes the DA or SPA – the forest licence holder still has the right to harvest timber, though the AAC for the TSA is potentially subject to a reduction that will get distributed pro-rata among all forest licence holders. All forest licence holders in the TSA with volumes over the statutory minimum (10,001m3) may experience some reduction of harvesting rights, though the reduction is not entirely visited upon a single licensee. In the case of an area-based tenure, if a DA or SPA is declared over the area of the area-based tenure, then that licensee suffers the entire loss of harvesting rights for that area – the loss of harvesting rights associated with a DA or SPA is not diluted among other licensees.
Without a negotiated resolution, the only statutory tool currently available to allow the government to permanently expropriate a woodlot licence is declaration of a SPA over the woodlot licence area. There is no mechanism under Part 13 of the Forest Act with respect to DAs that would allow the government to permanently terminate the rights of a woodlot licensee – DAs have a maximum duration of 10-years and can only “pause” a licensee’s activities under a woodlot.
If a SPA is declared over a woodlot licence area (and the area is deleted from the woodlot), compensation is contemplated under the Forest Act and the regulations (Special Purpose Areas Regulation, First Nations Purpose or BCTS Licence Purpose Regulation). The Forest Act contemplates compensation potentially with respect to loss of AAC and losses due to overlaps with or reduction in value of cutting permits and road and timber production improvements. For a woodlot licence, AAC compensation under the Act is determined based on the “net income that would be earned on the sale of harvested timber during each year of the remaining term of the licence” (Section 233(2)). The net income is determined in accordance with criteria and formulas included in the Forest Act and regulations. The Minister (or delegate) determines the amount of compensation applicable, and the legislation leaves much to the discretion of the Minister. Note that compensation for AAC appears based upon net income that “would be” earned during each year of the “remaining term” (defined under Section 229 as the period that commences on the date that Crown land is deleted from the woodlot licence and that ends on the expiry date of the term of the licence in effect as of the effective date of the designation of the SPA). There are other issues with a SPA. If it is unclear what the special purpose for the area is then to declare the area without justification for the special purpose is problematic.
What Can You Do ?
There is a lot that the Woodlotter can do. The important aspects are being informed, being current with obligations and costs, being engaged with local First Nations, the public, the Ministry of Forests and Woodlots BC.
1. The first important step for the Woodlot Licensee is to become aware and familiar with changes.
As a business operating on crown land, it is your responsibility to stay current with the actions of the government and others that share an interest in the woodlot licence area. Becoming aware and familiar is necessary for you to determine what you can do in your specific area.
The good news is that you are not alone. The woodlot community shares a common interest in learning, sharing experiences and doing something together.
2. Ensure that you are current with all your licence obligations.
A woodlot that has outstanding obligations is at risk. There are more than 200 separate obligations that exist in a small-scale forest management enterprise. One strength of the woodlot program has been attention to detail in small-scale forest management. Let’s move to our strengths and demonstrate achievement of excellence.
3. Be current with the documentation of revenue and costs of your operation.
The new formula for compensation uses AAC and net revenue as the tool for determining valuation. This can be a difficult metric for those who do not keep reasonable documentation. Fortunately, the FBCWA has, on a few occasions, put together the costs associated with a woodlot operation. We want to demonstrate the cost and benefit of managing a small tenure.
By focusing on AAC, the compensation formula has the effect of penalising the conservative forest stewards.
4. Engage your local public and First Nations about the issues facing your small-scale forest management area.
The Forest Act changes, and others coming in FRPA, have enabled dramatic and impactful consequences on small licensees, and First Nations forest enterprises. However, political or policy levers at a regional level have yet to be developed and can be used to manage the impact of such changes.
Our Executive Director and Regional Representatives are reaching out to be connected to the policy work. The woodlot licensee needs to attend meetings, speak with their District staff to influence and understand what can be done collectively.
5. Engage your forest district (MOF).
As always, the local Ministry of Forests staff share similar goals for the health and use of local forests. The staff will need to be the implementers of any policy that is directed by the government. And this will not be an easy task. We can all help each other by providing support to the district staff to ensure intended government changes are implemented with respect.
6. Engage the Woodlots BC and your Regional Representatives.
A woodlot strength at the regional level is in sharing information and ideas within the woodlot community. Our recent organisational changes have created a new ‘power of us’. We have knowledgeable people to gather and distribute important information. We have resources to exert the interests of woodlots. We have influence that can address the pace and impact of change. If you would like more information, then please contact us.
7. Legal Advice.
There are options for payouts, variations of the terms and conditions of documents and obligations, woodlot relocations and other things that can be negotiated over time. Each situation is unique. Once there has been a formal notification the options are rigid and at this point untested through new legislation. There are many issues that are problematic with this process. There are factors that are best described as legal, and it would be best if you sought your own legal advice if you are negotiating compensation for your investment and your licence to operate your Woodlot.
Conclusion
It turns out that there is a lot that the Woodlotter can do. The important aspects are being informed, being current with obligations and costs, being engaged with local First Nations, the public, the Ministry of Forests and Woodlots BC. We will all need to work together to ensure the intentions of the government are achieved, and implemented to ensure that forest stewardship and woodlot licensees are not harmed.
There is a prior understanding that area-based tenures in BC are “evergreen” and are in place to maintain a social licence for all British Columbia residents. This concept is challenged with this latest legislation as well as other objectives of the Government with modernization initiatives. Rights and Titles are being tested and the Government has the role to respect the rights of all Canadians.
Today the Federation is committed to “No Net Loss of Woodlots”. There once were 860 woodlot tenures now there are 841. There are many different reasons for the reduced number. Not all woodlot tenure holders have the same long-term plans. External forces such as wildfires, markets or social expectations have been problematic for some. The successional planning or estate plans on the woodlots are subject to the plans of each individual licensee. Woodlots and the business sustaining the forest have been a long term investment for many and were part of their retirement plans. Some woodlotters are tired of the bureaucratic process and are focusing on greener pastures.
Once the modernization process is over, I hope we maintain our Woodlot Program in BC, and move on to talking about stewardship concerns, forest improvements and woodlot expansion again. If you have any questions, please feel free to contact us at gm@woodlotsbc.ca.