Foresty Ministry Transformation

February 6, 2002

The following is from a leaked Ministry of Forestry document. It is the government songsheet for explaining its gutting of the Ministry of Forests.

Defined Forest Area Management

Key Messages:

Defined forest area management is a way of organizing existing licensees on a timber supply area-wide basis to co-operate on the delivery of strategic forest management functions. Key activities to devolved under defined forest area management are:
- management planning
- timber supply analysis and public consultation (subject to Chief Forester Allowable Annual Cut determination); and,
- forest health.
Government would remain responsible for setting standards and assessing outcomes. This new framework would support other policy shifts, such as a results-based Forest Practices Code and implementation of the Forest Investment Vote.
Defined forest area management also provides a co-operative framework for licensees to deliver on other functions that are also being devolved as part of the core review, like preparing Forest Investment Vote plans and to pursue discretionary silviculture, research, tree improvement and growth & yield work on a voluntary basis.
In addition to eligibility for Forest Investment Vote funding, an incentive to carry out such activities would potentially be access to improved timber supply in Timber Supply Areas.
The Fort St. John Timber Supply Area Results-based Code pilot project and the Merritt Timber Supply Area Innovative Forestry Practices Agreement are two examples on how defined forest area management could work.
Defined forest area management provides support for certification initiatives of industry and may provide opportunities for increased co-operation with First Nations.
The intention is to begin discussion on defined forest area management with licensees, First Nations and stakeholders this spring and to implement the approach by spring of 2003.
Most timber supply areas (there may be a few anomalies, like Cassiar) will be required to adopt defined forest area management by April 1, 2003.
Co-operation of licensees and other stakeholders, like communities and First Nations, is critical to a smooth implementation of DFAM. Stakeholder consultation will start in April 2002.

Questions and Answers:

1. How much money is this expected to save government?
Savings (program and staff) to government will be associated with devolution of specific forest management functions to licensees.

2. What options, other than a co-operative model, did you look at?
We looked at two other options: the consortium model and the conversion model.

The consortium model, which would involve the surrender of rights within a TSA in favour of shares in one large licence, is considered to go beyond the level of regulation necessary to achieve government's objectives. In addition it is considered counter to the current government shift towards deregulation and freedom to manage. It is also considered unworkable from the perspective of an auction-based timber pricing system.

The large scale application of the conversion model, which generally refers to the replacement of forest licences with tree farm licences, is considered unimplementable due to treaty settlement issues as well as expected levels of public concern.

3. Is DFAM a new form of area-based tenure replacing Tree Farm Licences, Forest Licences and other types of licence?

No, it is not a tenure. Existing licences giving rights to harvest crown timber remain in force and effect. In particular, it has no impact on Tree Farm Licences.

DFAM is a way of organizing licensees in the Timber Supply Areas to co-operate on the delivery of strategic forest management functions now provided by government.

It also offers the opportunity for these licensees to co-operate and find efficiencies in the performance of new and existing forest management activities.

4. How will licensees be expected to organize to deliver DFAM?

We want to provide licensees with as much flexibility as possible, as conditions and circumstances vary greatly between the TSAs. At this point in our thinking, it is expected that in order to deliver new strategic forest management responsibilities licensees will have to form a "co-operative" type arrangement. This could be in the form of a legal corporate structure (likely a society or co-operative) with a Board of Directors and appropriate by-laws. Government would then enter into a management contract governing the performance of the functions devolved to the co-operative.

We need to do some more thinking about the most appropriate arrangement to ensure delivery of forest management functions, but still allow licences maximum flexibility.

5. Specifically, what responsibilities or functions will government be devolving to these co-operatives?

Mandatory Responsibilities:

Forest licensees will be responsible for all timber supply analysis and public consultation (eligible for Forest Investment Vote funding).
Forest licensees will be responsible for dealing with "basic" forest health problems, including bark beetle detection and mapping (eligible for Forest Investment Vote funding).

Discretionary Responsibilities:

Other agencies or organizations may choose to maintain non-industrial, non-residential forest access roads.
Forest licensees, other agencies or other organizations may choose to maintain Forest Service recreation sites and trails.
Forest licensees may choose to undertake discretionary silviculture activities (eligible for Forest Investment Vote).
The private sector may choose to undertake certain research functions (e.g. Growth and Yield, Tree Breeding)
Forest licensees may have an increased role in First Nations consultation.

User Pay Responsibilities:

A portion of fire protection costs will be borne by forest tenure holders and a variety of other stakeholders.
Non-industrial, non-residential roads that are not transferred to another agency or organization may be maintained to industrial standards by the Forest Service on a user pay basis.

6. What are the implications of government not delivering these services?

The potential impacts of government not delivering these programs will vary depending on whether the activity is deemed mandatory, discretionary, or user pay (see above categories).

Government will continue to be responsible for setting standards and policies, approving timber supply analyses (subject to chief forester AAC determination) and forest investment vote plans, discharging First Nations right and title issues, and compliance and enforcement.

7. How will DFAM be implemented?

The intention at this point is to require most TSAs to adopt DFAM by April 1, 2003. Starting in April 2002, negotiation teams will be established within the ministry to explain DFAM to all licensees in each TSA and to assist them in organizing for the devolution of responsibilities. At the same time, any specific legislative requirements would be identified.

Formal negotiations on a "co-operative forest management agreement" (or whatever the agreement is called), would begin by October 2002, and will have to be concluded by March 31, 2003 in order to be ready for devolution of forest management functions. This assumes that Legislation, if required, can be brought in through the spring 2003 session.

8. Does it make sense for each TSA co-operative to pursue all functions separately?

It may be more feasible to provide some functions, like research, tree improvement, and growth and yield, over a larger scale than a TSA. We expect that TSA co-operatives will identify these types of activities and organize delivery mechanisms that span many TSAs that share similar timber types, conditions - making program delivery even more efficient. (There are examples of regional level activities of this kind already in place.)

9. How do communities, First Nations and other stakeholders fit into the DFAM model?

The licensees in developing their co-operative arrangements will be required to consider how to deal with community, First Nation and stakeholder interests. Depending on the arrangements, licensees may chose to deal with the interests of communities and First Nations in the planning process, in a formal structure like representation on the Board of the co-op, or by establishing an advisory committee made up of those groups to provide an ongoing link to the public about management activities in the TSA. For example, a public advisory group was successfully set up with the Fort St. John results-based code pilot project.

With the shift in responsibilities, industry will inevitably assume a new profile and leadership role in the Timber Supply Area.

First Nations - First Nations occupy a special role - in some cases as licensees themselves they will be participating in the co-ops. Separate work is underway as part of the First Nation economic measures strategy to determine how opportunities could be provided to First Nations to participation in the forest sector in these areas.

In the Merritt Innovative Forest Practices Agreement, for example, licensees and government have worked with local Indian Bands to find ways of including them - similar efforts in other TSAs are encouraged.

See related material on First Nations - Treaty and Economic Measures.

10. What are the advantages of DFAM for licensees?

Experience with the Fort St. John code pilot reveals that licensees can gain efficiencies when they closely co-operate on joint planning and development. DFAM provides the widest possible scope to encourage licensees to explore those efficiencies.

DFAM provides more flexibility to licensees to pursue certification by providing them with more hands-on management of the TSA land base.

DFAM also supports a results-based code by providing a framework for developing a TSA-wide operational plan rather than inefficient licence-specific plans.

DFAM also supports the Forest Investment Vote by providing a vehicle for developing the required TSA wide investment plan.

The inclusion of an Innovative Forestry Practices Agreement or IFPA-like arrangement would put many of the licensees on an incentive base - where they could reap the rewards of intensive silviculture and other stewardship activities and approaches that increase timber supply.

11. What about licensees who want to 'go it alone' - establish their own market advantage?

DFAM is about cooperating to deliver key functions. Government is determined to achieve its objective of devolving certain program responsibilities, responsibilities that can only be effectively and efficiently delivered at a TSA-wide 'corporate level' - while providing flexibility for licensees to organize in a way that meets as many of their objectives as possible.

12. What are the implications for small licensees - they may be reluctant to closely collaborate with large licensees in the unit?

Licensees will have to wrestle with governance as they set up their society or association.
It is expected that the specific arrangements adopted by licensees within a TSA (i.e. by-laws of a society or co-operative) would specify how such decisions are to be made. Some decisions, for example a major money matter, may require 100 per cent consensus while other decisions a simple majority.

Similarly, the rights of holders of non-replaceable agreements and Pulpwood Agreements, and timber sale licences must also be protected in the organization of the TSA.

There will no doubt be a requirement for dispute resolution processes, potentially including an Ombuds position - something that could be considered for establishment in the enabling legislation, if licensee groups believe that is necessary.

13. Will licensees be compensated for the increased costs associated with DFAM and the devolution of programs?

There is some funding available through the Forest Investment Vote that licensees may choose to use to underwrite some of these functions, including initial planning costs.