Presentation Transcript

1. Legal Framework for Forest Use in British Columbia Richard Grieve Director, Legislation Branch Ministry of Forests, Lands and Natural Resource Operations Province of British Columbia, Canada Pushkino, Russia December, 2013
2. Legal Framework in British Columbia Outline: Acts and regulations Forest practices Timber tenures Pricing and revenue
3. Legal Framework Forestry activity is governed by a comprehensive set of: Acts and regulations Contracts (tenures) and plans Policies Each of these items govern specific aspects of forest administration in British Columbia
4. Legal Framework - Acts and regulations Federal legislation Provincial legislation
5. Federal Government Agencies and Acts Canadian federal government legislation impacts forest management in BC: Fisheries Act – Fisheries and Oceans Canada Pest Control Products Act – Health Canada Species at Risk Act–Environment Canada
6. Provincial Acts Provincial legislation dictates tenure arrangements and environmental standards on public (Crown) land: Forest Act Forest and Range Practices Act Foresters Act Wildfire Act Range Act Water Act
7. Forest Act Purpose: Provides the authority for the allocation and administration of timber. Regulates rate of cutting Specifies forms and content of agreements Provides for tenure administration Establishes framework for timber pricing
8. Forest and Range Practices Act Purpose: Provides for the regulation of forest and range operational planning and practices. Establishes stewardship standards for forest and range practices Requires companies to demonstrate how they will meet stewardship objectives Establishes a compliance and enforcement regime to ensure stewardship standards are met
9. Foresters Act Establishes the Association of BC Forest Professionals to regulate the practice of professional forestry Members include foresters and technologists Government relies on professionals for their judgment Other professional acts also play a role
10. Range Act Purpose: Provides the authority for the allocation and administration of Crown forage. Allocates and administers range use Specifies forms and content of agreements Provides for tenure administration Most grazing occurs underforest cover
11. Wildfire Act Purpose: Governs wildfire prevention and suppression Specifies the responsibilities and obligations of persons and government with respect to fire use, prevention, control and rehabilitation
12. Regulates the allocation of water Ensures water protection practices are enforceable Water Act Purpose: Provides a framework for the licensing and regulation of surface waters with a focus on water quality, diversion, storage and use.
13. Legal Framework - Forest Practices Acts and regulations Plans
14. Results-based approach Government sets rules & objectives Companies have flexibility to determine how objectives are achieved Strong compliance & enforcement framework Continuous monitoring and improvement Forest Practices
15. Forest and Range Practices Act Forest & Range Practices Act & regulations OBJECTIVES PLAN & PRACTICES REQUIREMENTS COMPLIANCE & ENFORCEMENT EFFECTIVENESS EVALUATIONS PROFESSIONAL RELIANCE
16. Forest Stewardship Plans Identify areas within which forestry activities will occur Contain results & strategies to ensure activities will be consistent with objectives Set out stocking standards for reforestation Licensee must comply with the plan
17. Forest Road Responsibilities Before 1976: Government provided mainline access Industry provided their own operational roads at their own cost Since 1976: Industry built some mainline roads at government cost and all operational roads at their own cost Today: When the forest industry builds mainline roads, their costs are recognized in the stumpage determination as a tenure obligation adjustment
18. Forest Road Responsibilities Currently, there are about 60,000 km of Forest Service Roads (FSRs) and 250,000 km of operational forest roads Government is responsible for maintaining the bridges on the FSRs All other road maintenance is the responsibility of the users When forest roads are no longer needed, they are deactivated or maintained to wilderness standard
19. Legal Framework - Timber Tenures Acts and regulations Contracts (14+ types of timber tenures)
20. Timber Tenure System Major tool for the implementation of government policy. Ensures government objectives for economic development and forest management are fulfilled.
21. Evolution of Timber Tenure Policy Pre-1912: Pioneer Days 1912 – 1947: Resource Development 1947 – 1976: Sustained Yield 1976 – 1988: Integrated Forest Management 1988 – Present: Sustainable Management
22. Evolution of Timber Tenure Policy Pre-1912: Pioneer Days Objectives: Develop industry Crown revenue Infrastructure Industry Rights and Obligations: Changed from no limitations to requiring Timber Leases and Licences and paying royalties.
23. Evolution of Timber Tenure Policy 1912-1947: Resource Development Objectives: Manage timber harvesting Develop timber industry Crown revenue Industry Rights and Obligations: Timber Sale Licences became only means of obtaining new rights to Crown timber. Required to pay the costs of advertising, cruising, and surveying.
24. Evolution of Timber Tenure Policy 1947-1976: Sustained Yield Objectives: Develop & stabilize forest industry Establish forest management units Umbrella tenure plus cutting permits Develop pulp and paper industry (pulpwood tenures)
25. Evolution of Timber Tenure Policy 1947-1976: Sustained Yield Industry Rights and Obligations: Increased obligations Right to annual volume & replaceable Timber processing required Timber Sales Harvesting Licence Volume based & shared rights Tree-Farm Licence Area based & exclusive rights
26. Evolution of Timber Tenure Policy 1976-1988: Integrated Forest Management Objectives: Stabilize forest industry Expand tenures to small business Encourage diversity in timber processing Increased public involvement Industry Rights and Obligations: Increased obligations
27. Evolution of Timber Tenure Policy 1988-Present: Sustainable Management Objectives: harvest consistent with sustainable development principles comprehensive land use planning increase diversification and industry competitiveness encourage bio-economy Industry Rights and Obligations: increased obligations regarding planning and compliance with statutes and regulations
28. Features of Timber Tenures British Columbia has a very complex tenure system 14+ tenure types provide timber harvesting rights on Crown land
29. Features of Timber Tenures - Content Timber tenures typically deal with the following: Term (e.g. 20 years replaceable, 5 years fixed term Area in which tenure holder can harvest Licence area for area based licences Timber supply area for volume based licences Volume of timber that can be harvested and means by which harvesting is authorized Whether it is replaceable Requirement to pay stumpage and waste assessments
30. Types of Timber Tenures Area Based Tenures Have a defined area to operate Tree Farm Licences Timber Licences Community Forest Agreements First Nation Woodland Licences Woodlot Licences Volume Based Tenures Share areas with others Forest Licences Timber Sale Licences Pulpwood Agreements Various Licences to Cut Free Use Permits
31. Timber Tenures in British Columbia
32. Timber Tenures in British Columbia Allowable Annual Cut (AAC) by Tenure Type
33. Area Based Tenures Larger Held by large companies Community Control SmallerIndividual control Tree Farm Licences = 34Average Annual cut (AAC) = 344,000 m3 Community Forest Agreements = 49 Average Annual cut (AAC) = 27,000 m3 First Nation Woodlot Licences = 2 Average Annual cut (AAC) = 44,900 m3 Woodlot Licences = 864 Average Annual cut (AAC)= 2,050 m3
34. Volume Based Tenures Larger Held by large companies. Timber processing facilities.SmallerIndividual control. Sell timber harvested. Replaceable Forest Licences = 186Average Annual cut (AAC) = 161,000 m3 Non-replaceable Forest Licences = 344 Average Annual cut (AAC) = 46,000 m3 Timber Sale Licences = 581 Average Annual cut (AAC) = 34,000 m3 Forestry Licences to Cut= 1,564 Average Sale Volume = 2,950 m3
35. Trends in Timber Tenures Policy Development of tenures to support the evolution of the bio-energy industry; Tenures designed to complement a carbon market under a cap and trade system; Area-based tenures to provide First Nations with viable forest-based economic opportunities and employment; and More local community control of forest resources (community forest agreements)
36. Legal Framework - Pricing and Revenue Forest Act Policies
37. Pricing and Revenue Pricing: Means to determine Stumpage Rate Market pricing system Administrative system Appraisal Revenue: Billing harvested timber & wasted timber
38. Timber Pricing Stumpage: The fee paid for harvesting Crown timber is called stumpage Stumpage is paid based on dollars per cubic metre of timber harvested Two means to determine stumpage Administratively On the basis of sales
39. Timber Pricing in British Columbia 1912-1948: Resource Development Stumpage = Upset + Bid Price Relatively simple and easy to administer Open tender auction provided no business certainty Suggestion of bidder collusion jeopardized revenue Competition between bidders became personal Government revenues quite variable and unpredictable
40. Timber Pricing in British Columbia 1948 to 1987: Residual Value Pricing (Administrative) Stumpage = Selling price – (operating cost + profit & risk) Much data was required to estimate values and costs Selling price was based on value of lumber and chips, or logs on the Coast Significant government costs to monitor product values for all species and operating costs Wide fluctuation in government revenue Continual petitions by industry to recognize unique costs Administratively unwieldy
41. Timber Pricing in British Columbia 1987 to 1999: Comparative Value Pricing (Administrative) Stumpage = Base rate + (value index – mean value index) Little fluctuation in government revenue Much data was required to estimate values and costs Significant government costs to monitor values and selling prices for all products Continual petitions to recognize unique costs created friction within industry due to waterbed effect Administratively unwieldy
42. Timber Pricing in British Columbia 1999 to present: Market Pricing System Stumpage = Bid Price – Tenure Obligation Adjustmentsfor representative BC Timber Sales auctioned timber Major industry stumpage tied to BCTS auction results BCTS manages representative areas throughout province Much data is required to compare values and costs Significant government costs to ensure credible representative values and operating costs exist Government revenue tied to market response Tension between BCTS and government to keep BCTS costs ‘clean’
43.  Standing Timber Auction Volume is competitively auctioned Timber representative of the overall provincial harvest is developed for sale   Auction prices are used to set stumpage (what government is paid for Crown trees). Statistical techniques and timber characteristics are used to translate auction prices into stumpage rates for the remaining harvest Auction Prices Stumpage Timber Sale Licences are auctioned according to strict rules. For these licences, auction prices, (auction reserve price plus the competitive bid) can be used directly as the stumpage rate. Comes from different types of tenure. Long term tenure holders have additional forest management responsibilities, so tenure obligation adjustments are made to create the final stumpage rate Auctioned Volume Remaining Harvest Market Based Pricing
44. Market Pricing System Cost Recognition
45. Appraisal Is the process of gathering and submitting information to government to determine a stumpage rate for a stand of timber Data submitted includes stand information such as volume / species and development costs For MPS, stumpage rate is determined by subtracting development and obligation costs from the indicated market value A simplified process is available for minor tenures: the rate is determined using district averages
46. Revenue Stumpage is due as harvesting progresses Stumpage owed is based on: stumpage rate x cubic metres of wood harvested Harvested volume can be determined one of two ways: scale-based cruise-based
47. Scale-based Volume ‘Scale’ means measuring harvested timber to determine the volume Two Methods: Piece Scale: individual logs are measured Weight Scale: sample of logs are measured and weighed to determine volume & conversion factor applied to larger volume
48. Cruise-based Volume Harvested volume is determined by multiplying the area harvested x the volume per hectare determined from the cruise Challenges for non-homogenous stands
49. Waste Billing ‘Take or pay’ concept means that any merchantable volume that is not harvested, that was included in the appraisal, must be paid for Waste survey is done after harvesting is completed Volume of merchantable timber that was wasted is determined Bill is issued
50. Summary Each of the following play a role in the governance of forest administration in British Columbia Acts and regulations Contracts (tenures) and plans Policies The importance of these depends on what subject matter is being governed
51. Thank you