, / \

ii

Jackan, aavid tl rm. ‘Some Sttuctural Components of Contracts as they Relate to Canadian Forest Tenures’ The Forestry Chronide. February 1977 :33.

Uckem. Marth and Haley. aavid l9B9. “Forest Tenures - Requirements, Rights and Responsibiitties: An Economic Perspective’. The Foresby Chronide. June 1989. 180.

i paarsch. Hany J. 19Be ‘An Empirical Examination of B W h Columbia Timber Sales’. Vancouver. Forest Economics and Pdicy Analysis Research Unit U.B.C.

Vancouver: Forest Economics and Pdicy Analysis Research Unh U.B.C. P- Peter’H. 1988. *Property Rights in me DevfAoprnent of Natural Resource Policies in Canada’.

P m . Peter H. 1976 l imber Rights and Forest Pdicy in Britlsh Columbia’. 2 vols. Report of Me Royal Commission on Forest Resources Victoria: Queens Printer

Royal - . . on Faerrt Rssouces 1915 ‘Regulation of me Rate of Timber Hatvesting in British Cdumbia’ Policy Background Paper, victoria

sbsn Chid Jmtke Gadon 1945 ‘Repon of the Commlssioner relating to Forest Resoumes of British Columbia’. victoria: The Government Printer.

SterUng Wood Gmup I n c . 1- The Canadlan Forest Resource. Tenures. and Timber Pricing Synems’. 2 vdr Unpublished repon mmmissioned by me Dept of Supply and Services. Canada Vancouver.

Task Fotw on Cnwn Tbnber Dispard 1974. ‘Forest Tenures in E M CdumbW. Pdicy Background Paper, Victoria.

:::-- I .............. ............ .......... .... ... ..” ... ... .... ... ...... .......... ... ..“ ..... %:: mNG WOOD ...... I.... GROUP I N C .

/

October 1989

SUMMARY

In Brit ish Columbia, major changes i n forest policy have usually

followed a Royal Commission. The f i r s t Commission was established i n

1910. Chaired by F.J. Fulton, this Commission recommended polices t o

curb the speculative timber staklng of the time. The Commission's advice

against further long-term allocations was incorporated i n t o forest p o l i c y

for the next thirty years.

This system proved t o be inadequate and in 1945 the second Royal

Comission was established. Headed by G. Sloan, t h i s Commission

recommended the creation of management unlts. The "Private Working

Circle" would grant individual enterprises long-term harvesting rights

r p r i ses to

1 er operators

i c agencies

over forest areas i n exchange for a commitment by these ente

practise sustained yield management on their holdings. Smal

were to have access to t h e Public Working Circles where pub1

performed the management duties.

These policy innovations were reviewed a f t e r a decade t o determine

their effectiveness: a task completed by the third Royal Commission which

was also headed by G. Sloan. In i t s report of 1956, t h i s Commission,

w i t h some minor exceptions, endorsed the implementation of the 1945

recommendations.

The fourth Royal Commission was established i n 1975 and was chaired

by Dr. Peter Pearse. Pearse identified several key issues which required

policy revision. These included an improved framework for the

administration of forest policy: a c lar i f icat ion of forest resource

management goals: improved security of timber supplies through the tenure

system: increased f l ex ib i l i t y i n the allocation of rights to public

timber and the pursuit of deliberate policy outlining the pattern of

future industrial development i n the forest sector.

OF F-T TEN-

INTROWCTION

essential to understand today's tenure system. Over the years the most influential trend in the evolution of tenure policy has been the increasing reluctance of subsequent governments to alienate title to forest land. Consequently, developing a method whereby public ownership can be maintained while granting timber rights to private interests has been the primary objective of the Provincial Government since the turn of the century.

A review of the evolution of provincial forest tenure policy i s

In British Columbia, major changes i n forest policy have usually

previous Royal Commissions were established to reflect changes i n the followed the recommendations of a provincial Royal Commission. The four

forest industry.

the history of forest tenure in British Columbia. To summarize these events in such a limited space does not do justice to the complextty o f the issues involved. However, as a starting point the following summary should Drove useful.

The following summary attempts to provide a comprehensive review of

CROWN GRANTS:

as having any grea t value. Forest land, l ike other c lasses o f Crown I n the pioneer days of the Prov ince, t imber land was n o t regarded

land, was so ld p r imar i l y f o r se t t l emen t . I n 1858, the ear l ies t d isposa l o f Crown lands carr ied wi t h i t a1 1 the natural resources. This Crown Grant procedure was cons is ten t w i th the t rad i t ions o f freehold ownership

Governor o f the co lony rea f f i rmed th is po l i cy . It stated that "un less inherited from England. I n 1859, a proclamation was issued by the

o f the land sha l l inc lude a l l t rees . . . " . o therw ise spec i f i ca l l y announced a t the t i m e o f the sa le , the conveyance

I n 1887. t imber land became recognized as b e i n g o f v a l u e i n i t s e l f . An at tempt was made t o fo rb id t he sa le o f Crown lands " ch ie f l y valuable f o r t imber". However, due t o s tatutory ambigui t ies and admin i s t ra t i ve l ax i t y , g ran ts con t i nued to be r e a d i l y a v a i l a b l e un t i l 1896.

a Special Timber Licence. This pol icy was supposed t o reserve the actual Between 1887 and 1888. grants o f "Patented Lands" were made through

t imber fo r the Crown. I n 1888 t h e p o l i c y was changed t o i n c l u d e t h e t imber wi th the grant. This new po l i cy , however, reserved t o the Crown a f i n a n c i a l i n t e r e s t i n t h e h a r v e s t i n t h e form o f a roya l t y .

forbidden. This was notably the first ef fect ive s tep taken t o es tab l i sh the p r i nc ip le f o rmu la ted i n 1887 that t imber lands should be held by the Crown. The act , however, was loosely enforced due t o inadequate admin is t ra t i ve measures. Thus, i t was still poss ib le fo r " t imber lands" t o pass i n t o p r i v a t e ownership.

I n 1896 "timber land" was first def ined and s a l e o f t h i s l a n d was

Although the export of t imber cut under al l forms of temporary a l i e n a t i o n had been forbidden as e a r l y as 1901 (unless with the consent of the Lieutenant-Governor) there was no p r o v i s i o n p r o h i b i t i n g the export o f unmanufactured t imber cut from these "patented lands" or other Crown lands disposed of u n t i l t h e passage o f the March 12. 1906 "Timber Manufacture Act". This Act required that a l l t i m b e r c u t from Crown lands g ran ted a f te r t he passage o f t h e A c t must be used or manufactured within the Province.

years these lands were held by the federa l government. This was a r e s u l t o f l a rge tracks o f t imberlands being granted i n a id o f r a i l w a y c o n s t r u c t i o n t o t h e Dominion under the Terms o f Union. I n 1930, fo l low ing the recommendations o f a Royal Commission, t h e Dominion

Val ley b lock. subject t o any a l ienat ions made dur ing i t s ownership. re turned t o the Province most o f t he ra i lway b e l t and the Peace R iver

However, a la rge amount o f f i n e t i m b e r on Vancouver I s land was granted t o the Esquimalt and Wanaimo Railway Company which remained i n p r i v a t e hands f o r a l onger pe r iod o f t ime.

Railway lands were a unique form o f Crown grants. For a number o f

" 2 "

Crown grants were undoubtedly the most secure form o f f o res t t enu re due t o t h e i r permanency and the wide scope o f the r igh ts they conveyed. However, the oppor tun i t ies to in f luence land use and f o r t h e p u b l i c t o main ta in an i n t e r e s t i n f o r e s t l a n d were both.narrow. Whi le the Crown Grant was slowing being phased out, other forms of tenure, which. maintained Crown ownership o f t he f o res t l and base, were introduced.

OLD TEMPORARY TENURES:

the land, by means o f Timber Leases was first i n t r o d u c e d i n 1865 i n a Land Ordinance proclaimed i n t h e Colony o f Vancouver Is land. By 1907, t h e p r o v i n c i a l government had suspended a l l oca t i ons and reserved a l l the remain ing unal ienated t imber . A ref inement o f t h e l e a s e and three o ther

d u r i n g t h i s t i m e which eventual ly r e v e r t e d t o p r o v i n c i a l c o n t r o l i n forms o f tenure evolved. A f i f t h was developed by the federal government

1930. These var ious forms of o ld temporary tenures are outl ined below

The p o l i c y o f g r a n t i n g r i g h t s t o harvest t imber wi thout a1 i ena t ing

1. TIMBER LEASES:

Leases were first granted under the Land Ordinance o f 1865. They

only f i r e d p r i n c i p l e was that the lands should be leased o n l y t o those imposed no limits on s i ze , ren ta l s , roya l t i es , or terms o f lease. The

" a c t u a l l y engaged" in the indus t ry . Th is served the purpose of prevent ing speculat ion i n t imber by p r iva te in te res ts . A new Ordinance passed i n 1870 empowered the Governor t o g r a n t r i g h t s t o t imber through Timber Leases which would be subject to whatever charges, t e r m s , and cond i t i ons t ha t he might prescr ibe.

P r o v i n c i a l l e g i s l a t i o n e n a c t e d i n 1888 created a new fo rm o f lease which required the lessee to pay a r o y a l t y and an annual rent per acre. He was a lso requ i red to ma in ta in a sawmi l l w i th a t a spec i f ied capac i ty . I n r e t u r n , t h e l e s s e e was a b l e t o c u t a l l t h e t i m b e r on the spec i f ied

were much more l i m i t e d t h a n t h e r i g h t s g r a n t e d i n a fee s imple interest . l ands f o r a term up t o 30 years. The r i g h t s conveyed by these leases

They were o f l i m i t e d d u r a t i o n and t h e l e s s e e ' s i n t e r e s t i n t h e l a n d was res t r i c ted to the des ignated purpose -- c u t t i n g and removing timber.

person paying the highest cash bonus. Amendments i n 1892 reduced the lease term to a maximum o f 21 years and tha t t he requ i red mill be appurtenant to t he l ease . By 1895 non-mill owners could acquire leases w i th t he payment o f an inc reased ren ta l ra te . In 1899. amendments were passed which made ownership o f a mill i n s u f f i c i e n t , a mill now had to be operated 6 months each year unless excused by the Lieutenant Governor due t o extenuating circumstances.

I n 1891, a system was introduced which sold leases by tender to the

g i v e n t h e r i g h t to exchange the i r tenures for new 21-year leases which would be renewable for successive terms o f 21 years. This Act a lso requi red that a l l t imber cut f rom t imber leases or t imber l icences must be used or manufactured within the Province. Export was la te r a l lowed on c e r t a i n te rms. Prov is ion was made i n 1915 f o r the conversion o f leases in to spec ia l t imber l i cences .

I n 1901 h o l d e r s o f a l l l e a s e s 1 ssued under previous procedures were

1 " 3 -- 2. PULP LEASES:

granted t o owners o f pulp-mil 1s w i t h one tonne o f p u l p per square mi l e o f

months i n t h e y e a r . S ince the t imber invo lved in pu lp leases was usua l l y lease capacity. One provts ion be ing that the mi 11 was t o be operated s i x

o f l e s s value the rental and r o y a l t y were payable a t lower ra tes . A p rov i s ion was made, however, f o r h i g h e r r e n t a l and r o y a l t y r a t e s regarding sawlogs cut on a pulpwood lease which were not manufactured i n t o p u l p and paper.

Pulp leases were first granted i n 1901 as a form o f t imber lease

A s a resu l t , l ess revenue was co l lec ted on first and second grade logs manufactured i n t o wood-pulp or paper than those cut into lumber.

allowed under the 1901 Act. These leases were no longer granted a f ter Expor tat ion o f manufactured t imber f rom th is form of lease was n o t

1905 b u t r i g h t s o f renewal have been maintained from t i m e t o t i m e by s ta tu te amendments. The conversion o f these Pulp leases i n to Spec ia l Timber Licences occurred i n 1926 and 1927 when the t imber was found t o be unsui tab le for the manufacture o f p u l p and paper.

3. TIMBER LICENCES:

development than leases as i t was not establ ished u n t i l 1884. The 1884 "Timber Act's" main purpose was t o derive revenue from t h e c u t t i n g Of

Reserves or lands exempted by the Lieutenant-Governor were a v a i l a b l e for timber from Crown Lands. Unoccupied Crown lands, other than Indian

l icence.

This i s a fo rm o f temporary a l iena t ion o f t imber and i s o f l a t e r

Timber dues were imposed b u t p r i o r t o A p r i l 7. 1887 no r o y a l t y was reserved on t imber cut from lands sold by the Crown. No Act s e t any spec i f i c ra te o f roya l ty in respec t o f t imber cu t f rom leased lands . The

other form o f temporary or permanent a l ienat ion then i n e f f e c t . Leases l i cence system, was therefore, more p r o f i t a b l e t o t h e Crown than any

were general ly only granted to mi l l -owners. Such a l i m i t a t i o n was never imposed on t imber l icences. Licences became "Special Timber Licences" i n

the ch ie f Commissioner o f lands. but were no t t rans ferab le . The annual 1898 and were g iven for one year, being renewable a t the d i s c r e t i o n o f

fee and r o y a l t i e s were increased.

U n t i l 1903 the system o f temporary a l ienat ion was conducted with the dual purpose o f o b t a i n i n g revenue and gran t ing t imber to 'opera tors .

with the purpose o f assur ing operators a future source o f supply. This P rov i s ions re la t i ng t o grant ing t imber l icences were t h e n l i b e r a l i z e d

Consequently the revenues o f t he Fo res t Branch soared. The 1903 Act l e d t o a p e r i o d o f g r e a t a c t i v i t y and speculat ion in t imber l icences.

lengthened the term o f l i c e n c e s t o 5 years renewable.

p r o v i s i o n s r e l a t i v e t o the manufacture within the Province o f t i m b e r c u t The "Timber Manufacture Act" was passed, incorporat ing the 1901

from leases and l icences, and enacted that t imber cut f rom a l l Crown

manufactured within the Province. grants issued a f ter March 12. 1906 should l ikewise be used or

" 4 - Licences issued af ter 1908 c a r r i e d one year renewable t e r m s , t o a

maximum o f 21 years. The new l e g i s l a t i o n s t i p u l a t e d t h a t t h e o l d

t h a t a l l l i c e n c e s would be f r e e l y t r a n s f e r a b l e . This l a t t e r f e a t u r e made l i c e n c e s a l r e a d y i n f o r c e would be annually renewable f o r 16 years and

t h e Timber Licence very popular and by 1907 it had become the m o s t w idespread fo rm o f harves t ing r igh ts . In 1910 l icences could be converted into l icences renewable from year t o year so long as there was t imber o f commercial quanti t i e s on the li tensed area. This made 1 icences an equally secure form o f t imber tenure as leases. Time fo r conversion was eventua l l y extended t o 1929.

forest p ro tec t ion tax , and the t imber cut was s u b j e c t t o r o y a l t y as

yea r t o yea r w i th an annual renewal fee. These annual renewal fees were prov ided by the "Forest A c t " . Also, t imber l icences were renewable from

f i x e d u n t i l December 31, 1954 by the "Timber Royalty Act" of 1914. This was la te r incorpora ted in to the "Fores t Ac t " . As o f 1974. the Timber Licence was still t h e most important form of o ld temporary tenure.

As of February 1944. l icensed lands were subject t o the annual

SPECIAL FORMS OF LICENCES:

forms of l icences: "hand- loggers ' l icences" and "hemlock-bark licences". Hand-loggers' Licences were personal l icences a l lowing the h o l d e r t o cut t imber. These were first granted i n 1886. I n 1688 the term for which such l icence could be issued was l i m i t e d t o one year.

I n a d d i t i o n t o these general t imber l icences there were two special

I n 1908 the fee was ra i sed and the a rea o f opera t ions was conf ined t o c e r t a i n p a r t s o f t h e N o r t h e r n Coast. The 1908 Act a lso forbade use of steam powered machinery by the holder o f a hand-logger's 1 icence. I n 1920, use o f any powered machinery was banned for these loggers. Timber

Licences were real ly a form o f lease. All o f these have either lapsed or cut f rom th is fo rm o f l i cence was subject t o roya l t y . Hemlock-bark

been conver ted to spec ia l t imber l icences.

THE NLTON REPORT - 1910:

a f renzy o f " t imber s tak ing" in the p rov ince . The number o f Timber

years. The government welcomed the rental revenues that th i s i nc rease Licences rose from l e s s than 15 hundred t o more than 15 thousand i n 3

produced, but was w o r r i e d a b o u t t h e p o s s i b i l i t y t h a t a l l Crown Timber i n the province would become comnitted.

From about 1904 on. a v a r i e t y o f circumstances converged t o produce

i

I

r i g h t s were suspended and a l l una l l oca ted t imber land was placed under reserve. Before taking anymore steps, the Government sought an

Commission o f I n q u i r y i n t o F o r e s t Resources. This Commission's report assessment o f i t s p o l i c y by appoint ing the first p r o v i n c i a l Royal

was released i n 1910. The Commissioners est imated that roughly three-quarters of the province's merchantable t imber had been a l ienated i n one form or another. The Commission was convinced that the forest indus t ry 's supp ly o f t imber was more than adequate for the foreseeable fu tu re . It, therefore, endorsed the government's decision t o reserve the remaining unal ienated t imber f rom disposi t ion.

I n 1907, by an Order-in-Counci 1, f u r the r i ssuances o f cu t t i ng

many were incorporated i n t h e " F o r e s t A c t " o f 1912. T h i s l e g i s l a t i o n The recommendations o f the Fu l ton Repor t were wel l rece ived and

created the Forest Service as a specia l ized agency w i t h i n t h e Department o f Lands. The Fulton Report was a l s o d i r e c t l y r e s p o n s i b l e f o r t h e development o f Timber Sale Licences.

TIMBER SALE LICENCES:

The "Forest Act" o f 1912 requ i red t ha t an area proposed for sale be

were preceded by advertisements and tenders were ca l l ed . The successful "cru ised and c lass i f i ed " be fo re a Timber Sale Licence was issued. Sales

app l ican t was obl iged t o pay the s tandard renta l , roya l ty and the appraised upset price determined by the Forest Service.

The Timber Sale Licence system was important as, a t the t ime, i t was the on ly means ava i l ab le for disposing o f new r i g h t s t o Crown t imber (o ther than the Hand Logger 's L icences). Unt i l Sustained Yield pol ic ies were

w i t h o u t r e s t r i c t i o n . introduced i n 1948. the Forest Service processed Timber Sale Licences

FOREST RESERVES:

Forest Reserves were another impor tant prov is ion o f the 1912 l e g i s l a t i o n . Once Crown land was designated a Forest Reserve by an Order-in-Council. i t could not be a l i e n a t e d f o r any non-forestry purpose unless taken out o f reserve by Cabinet,

PvLpwOoD TENURES:

Pulpwood Timber Sale Licences are a m o d i f i c a t i o n o f the Timber Sa le

a t t r a c t and encourage investments i n pu lp and paper manufacture and t o Licence authorized under the 1912 Forest Act. These were designed t o

Proposed mi 11 s. f a c i l i t a t e t h e use o f t i m b e r b e s t s u i t e d f o r p u l p i n g i n e x i s t i n g or

t imber harves t ing -and over inadequate provisions for f u t u r e f o r e s t By 1943 apprehensions had ar isen over the unbalanced pattern of

crops. Timber Sale Licences were growing i n importance but they were mainly c lustered around the more developed areas.

little assurance of cont inuous forest product ion. The f o r e s t i n d u s t r y There was only scant protect ion o f fered by Forest Reserves and

d i d n o t l i k e the short-term Timber Sale Licence system as i t d i d n o t provide adequate assurance of long-term raw mater ia l supply necessary for investment i n new u t i l i z a t i o n p l a n t s . These concerns led to the appointment o f t h e second Royal Commission o f I n q u i r y i n 1943.

the des ign o f a s u s t a i n e d y i e l d f o r e s t p o l i c y f o r t h e p r o v i n c e i n h i s 1945 repo r t . He concluded that the publ ic in terest requi red a sustained y i e l d p o l i c y t o g a i n maximum advantage from the province's f o r e s t resources. Th is wou ld a l so p rov ide s tab i l i t y t o t he i ndus t r y . Fo res t

pe rpe tu i t y . land, the Sloan Report proposed, should be managed t o produce t imber i n

The Commissioner. the Honourable G. McG. S loan deal t main ly wi th

HORKING CIRCLES:

w i t h t h i s task. These Sloan re fer red to as "Pr iva te Working C l r c l e s " and Two types o f sus ta ined y ie ld management u n i t s were proposed t o cope

04Publ ic Working Circ les". "Pr ivate Norking Circ les" involved a new

o l d temporary tenures to combine t h e i r h o l d i n g s with add i t i ona l Crown l i c e n s i n g arrangement which would enable owners o f Crown-granted land and

t o a susta ined y ie ld p lan. By delegat ing t o the l i c e n s e e d i r e c t land to form coherent management units which would be managed according

responsib i 11 t y f o r managing these uni t s , the p r i va te resources o f t he

Service would still be able to prov ide publ ic safeguards through the i r i ndus t r y would work towards the sus ta ined y ie ld goa l and the Forest

superv isory ro le .

had several object ives. "Working Circ les" were to provide f o r m u l t i p l e f o r e s t uses; t he pe rpe tua t i on o f t he f o res t resource f o r the support o f industry with the consequent development and the s t a b i l i t y of reg ional communi t i e s dependent upon permanent payro l l s .

"Working Circles" as a sustained-yield program o f f o r e s t management

which the pr ivate ly owned and Crown owned timber would be u t i l i z e d t o supply the needs o f one or mre par t i cu la r conve rs ion units, whereas. Publ ic work ing-c i rc les were t o fall i n t o s e v e r a l c l a s s i f i c a t i o n s . The first would be areas from which Crown timber would be s o l d i n accordance w i th sus ta ined -y ie ld p r i nc ip les and the product ion from which would be a1 l oca ted t o t he open log market or to small mi 11 ers with little or no t i m b e r o f t h e i r own bu t whose manufactur ing p lants were o f economic b e n e f i t t o t h e i n h a b i t a n t s o f l o c a l communities. Another form o f p u b l i c

owners w i t h no convers ion p lan ts o f t he i r own bu t who des i re t o p r a c t i s e work ing-c i rc le m igh t resu l t f rom the merger o f the holdings o f p r i v a t e

susta ined-y ie ld forest ry .

P r i va te work ing -c i r c les , i n pa r t i cu la r , were t o be those areas f rom

-- 7 "

arrangements would be d i v ided i n to "Pub l i c Working C i r c l e s " and each Crown forest lands not incorporated under these l icens ing

would be d i r e c t l y managed by the Forest Service as a s u s t a i n e d y i e l d u n i t .

r e v e r t t o t h e Crown when logged there was no mot ivat ion for Operators who Under the 1944 system o f temporary a l ienat ions of t imber lands that

cut these lands t o t reat these lands as permanent tree-farms producing

another to ma in ta in p roduc t i on " cu t t i ng ou t and ge t t i ng ou t " . continuous crops. They were f o rced i ns tead t o move from one area t o

Responsible operators with large investments i n sawmills and pulp and paper p lants rea l ized that th is process could not be kept up i n d e f i n i t e l y . The first step, Sloan concluded, was the development of a form of tenure which permi t ted the operator to re ta in possess ion i n perpe tu i ty o f the land now held under temporary forms o f a l i e n a t i o n . on the condi t ion that the product iveness o f these lands be maintained cont inuously and t h a t t h e c u t i s regulated on a sustained-yield basis.

maintain our f o res ts on a susta ined-y ie ld bas is to secure permanency of our f o res t i ndus t r i es .

Sloan upheld that i t was undoubtedly i n t h e p u b l i c i n t e r e s t t o

c o n t i n u i t y o f s u p p l y o f raw mater ia l f o r those industr ies. There can be a c o n t i n u i t y o f s u p p l y o n l y i f , on the second ro ta t ion , the cu t does no t exceed increment, and the cu t must be s u f f i c i e n t l y l a r g e t o ensure product ion a t a r a t e adequate t o m a i n t a i n a p ro f i t ab le ope ra t i on . P r i v a t e l y owned timber reserves would be inadequate t o m a i n t a i n t h i s program. Therefore Crown timber would be u t i l i z e d f o r t h i s purpose.

would serve two purposes: F i r s t , i t would enable the operator to maintain product ion f rom the cut of mature Crown t imber dur ing the per iod

p r i v a t e and Crown acreage should, on the second rotat ion, produce enough necessary t o restock h i s own land; Secondly, the combined area o f the

t imber on a s u s t a i n e d - y i e l d b a s i s t o m a i n t a i n p r o d u c t i o n o f t h e u n i t i n perpetu i ty , a lbe i t perhaps not a t the peak o f capac i ty . bu t su f f i c ien t enough t o ensure a p ro f i t ab le ope ra t i on .

Forest industr ies would only be s t a b i l i z e d i f there was a

The a l l o c a t i o n or reserve o f Crown timber for u n i t s o f i n d u s t r y

mean tha t t he owner o f the p r iva te t imber lands cou ld acqu i re the Crown t r a c t s when needed. His logging methods would be subject t o regu la t i on and on the second r o t a t i o n he would be l i m i t e d i n h i s c u t t o the sus ta ined-y ie ld p roduc t ion o f the combined areas.

The reserve o f Crown t imber located near pr ivately held lands would

product ion from this convers ion un i t on the second r o t a t i o n on the bas is ou t l ined . he would be f r e e t o augment his supply o f raw mater ia l f rom the open log market or from o the r p r i va te owners o f t i m b e r who would be w i l l i n g t o merge the i r resources w i th h i s on a planned management bas is during the mature cut.

I f I n s u f f i c i e n t areas were ava i l ab le t o mainta in economic

proposals of the 1946 Commission. The M i n i s t e r had t h e a u t h o r i t y to grant Forest Management Licences which embodied the "Pr iva te Working Ci rc le" proposal . The name was l a t e r changed t o "Tree-Farm Licence".

Uni ts" . "Public Working Circles" were eventua l l y renamed "Public Sustained Yield

Amendments to the Fores t Ac t of 1947 incorporated many o f the

Y'IFLD -:

TREE-FARM LICENCES:

O r i g i n a l l y c a l l e d t h e " P r i v a t e Working C i r c le " , t he Tree-farm Licence was appeal ing as an instrument o f the new sus ta ined y ie ld p o l i c y . W i t h o u t r e l i n q u i s h i n g t i t l e or complete control Over publ ic

o l d temporary tenures, and o ther Crown land, whi le assur ing lands, the government was a b l e t o b r i n g under management pr ivate lands.

i n d u s t r i a l i s t s of the long-term t imber suppl ies they required for investment i n u t i l i z a t i o n f a c i l i t i e s . S h o r t l y a f t e r t h e new l e g i s l a t i o n was passed. the government began t o r e c e i v e Scores o f app l i ca t i on f o r t h i s new form o f tenure.

The M in i s te r had unqua l i f i ed d i sc re t i on t o dec ide how many l icences were t o be issued. what size and who they would be awarded to. This of ten generated cr i t ic ism f rom unsuccessful appl icants and the independent logging industry.

A S o f 1974 there were 34 tree-farm l icences. The r i g h t s and ob l i ga t i ons o f t he l i censees were defined i n p a r t i n the con t rac t document and p a r t l y i n t h e F o r e s t A c t and Regulations. Many Prov is ions a r e common to a l l l i cences wh i le o thers vary depend ing on the Spec ia l c h a r a c t e r i s t i c s o f d i f f e r e n t l i c e n c e a r e a s or differences i n P o l i c y when the l i cences were issued or renewed. Although only a general d iscussion of T.F.L. 's shal l be pursued here, most Tree-farm l icences contained unique provis ions.

1. COnPOSITION OF TFL's:

Tree-farm l icences include lands of varying status, but a l l the

under a s ing le p lan . The Crown-granted lands and o l d temporary tenures lands i n each l icence are managed as an i n teg ra ted sus ta ined y ie ld un i t ,

cont r ibuted by the l i tensee are des ignated as "Schedule A" lands i n t h e

as "Schedule B" lands. l i cence document, wh i l e t he add i t i ona l Crown lands included are described

2. MANAGEMENT OBLIGATIONS:

under Tree-farm Licences than under any other form of tenure. TO ensure proper management and harves t ing accord ing to sus ta ined y ie ld p r inc ip les the l icensee i s requi red to submi t management working plans for successive 5-year periods. These plans cover operations on a l l tenures w i th in the l i cence, and inc lude re fo res ta t ion programs, inventory data, a l lowable cut ca lcu lat ions, and general development p r i o r i t i e s f o r the areas covered. They must be prepared by a Registered Professional Forester and approved by the Forest Service. and they govern a l l h a r v e s t i n g a c t i v i t i e s .

The f o r e s t management r e s p o n s i b i l i t i e s o f l icensees are heavier

To harvest timber from any land i n the l i cence a rea , inc lud ing o ld temporary tenures and Crown grants, the l icensee i s o b l i g e d t o o b t a i n Cut t ing P e r m i t s from the Forest Service, authorizing short-term operations on prescr ibed t rac ts under de ta i led t e r m s and condi t ions. Cut t ing P e r m i t s a lso con ta in d i rec t i ves concern ing u t i l i za t ion s tandards , slash disposal, environmental protection, etc.

3. CONTRACTOR HARVESTING:

Was first introduced i n 1953 t o meet the growing anxiety of small logging operators as more t imber become a l loca ted under Tree-farm Licences. It commits the l i censee to p rov ide the oppor tun i ty t o independent contractors t o l o g a speci f ic percentage of the harvest f rom "Schedule 8" 1 ands .

PUBLIC SUSTAINED YIELD UNITS:

TFL's i n two main cons idera t ions . F i rs t , the Fores t Serv ice was t o be d i rec t l y respons ib le f o r p lanning, re forestat ion and protect ion on these

compet i t ive b idding. Publ ic Sustained Yield Uni ts were to p rov ide a lands. Secondly. cut t ing r ights i n these uni ts were t o be a l located by

source o f t i m b e r for those who could pay the market price. The first o f these un i ts was designated i n t h e e a r l y 1950O.s and w i t h i n a decade much of the province's major avai lable t imber producing regions had been d e l i n e a t e d i n t o what became known as "Public Sustained Yield Units".

Or ig ina l ly the Publ ic Susta ined Y ie ld Uni ts were t o d i f f e r f r o m

were modif ied forms of the standard Timber Sale Licence. The M in i s te r had w ide s ta tu to ry l a t i t ude i n p resc r ib ing t he t e rms and c o n d i t i o n s o f

having assumed a v a r i e t y o f specia l forms such as Pulpwood Timber Sale these l icences, and they had already proven t o be h i g h l y v e r s a t i l e ,

Licences and l icences for o ther spec ia l products .

The a l l o c a t i o n of t imber r i gh ts i n Pub l i c Sus ta ined Y ie ld Un i t s

The new Timber Sale Licence arrangements introduced with the establ ishment of Public Sustained Yield Units were directed toward two ob jec t ives . The r e s t r i c t i o n o f t h e r a t e a t which new licences were issued and t h e r e g u l a t i o n o f t h e r a t e o f h a r v e s t i n g u n d e r i n d i v i d u a l l icences. These changes enabled the government t o r e c o n c i l e h a r v e s t i n g w i th t he ca l cu la ted sus ta inab le y ie ld i n each u n i t .

E iesides the Tre

- 10 - OTHER SUSTAINED YIELD UNITS:

+Farm Licences and Publ ic Sustained Yield Uni ts, two o ther t ypes o f sus ta ined y ie ld un i ts evo lved a f te r the 1946 Royal Commission repor t . Farm Wood-lot Licences were designed t o serve the

Crown-granted f o r e s t land t a x incent ives t o p rac t i se sus ta lned y ie ld specia l needs o f farmers, and Taxation Tree Farms o f f e r e d owners o f

f o r e s t r y .

passed i n 1948 whfch author ized the Minister t o g r a n t t o bona f i d e farmers the t imber r i gh ts over small areas o f Crown forest land. Actual product ion f rom these un i ts i s neg l i g ib le ' i n the p rov lnc ia l con tex t .

Farm Wood-lot L icences resul ted from an amendment t o the Forest Act

Th is amendment provided tax relief for owners o f Crown-granted land who A 1951 amendment to the Taxat ion Act created Taxat ion Tree Farms.

agreed to prac t ise sus ta ined y ie ld forestry according t o plans approved by the Forest Service.

Sloan. i n h i s 1956 Report, f e l t t h a t he was s tand ing a t a momentous p e r i o d i n t h e economic and soc ia l development o f t h i s industry. It was a

o f sus ta ined y ie ld and f o r e s t management. Consequently, his main t i m e o f t r a n s i t i o n f r o m a d i s c a r d e d p o l i c y o f f o r e s t l i q u i d a t i o n t o one

o b j e c t i v e was t o evaluate and r e s o l v e t h e c o n f l i c t s e x i s t i n g between those o f the long and the shor t v iew o f our f u t u r e p o l i c i e s - a t a s k o f great complex i ty .

S loan conc luded tha t t he u t i l i za t i on o f a desirable degree o f . a d m i n i s t r a t i v e f l e x i b i l i t y , i f proper ly exerc ised in f u tu re yea rs , cou ld ,

i n i t s e l f , a v e r t or minimize any unforeseen and det r imenta l consequences

unknown years ahead. t h a t m i g h t a r i s e from the p ro jec t i on o f our present concepts Into the

Fo res t po l i c i es as t h e y r e l a t e t o stumpage ra tes , t axa t i on i n i t s d i f f e r e n t forms on f o r e s t land and forest products, tenures and t h e

o t h e r r e l a t e d m a t t e r s must a l l be guided by an informed and sympathetic assured supply o f raw mater ia l a t r e a l i s t i c cos t levels. regenerat ion and

understanding o f t h e v u l n e r a b i l i t y o f our f o r e s t i n d u s t r y t o f o r e i g n markets. I n these matters government p o l i c y will o f necess i ty p lay a major and dec is ive par t .

The t h i r d Comnission report, released i n 1956 reviewed the government's progress over the in te rven ing decade and made a number o f suggestions fo r improvement. These recomnendations were aimed c h i e f l y a t

no t he ra ld major shif ts i n po l i cy . t i g h t e n i n g admin i s t ra t i ve arrangements and. w i t h a few except ions, d id

second Royal Commission had taken firm r o o t i n the form o f Tree-farm By the mid-1960's the sustained yield program proposed by t h e

Licences and Publ ic Sustained Yield Uni ts, and t o a l e s s e r degree as Farm Wood-lots and Taxation T r e e Farms.

government to i n t roduce new pol icy innovat ions, but wi thout the adv ice o f The dramatic industr ial developments since the early 1960's led the

Royal Commissions. Most s i g n i f i c a n t have been new arrangements t o accommodate the pu lp i ndus t r y i n t he I n te r i o r , ce r ta in ad jus tmen ts t o t he

Timber Disposal . old temporary tenures and the recommendations o f t h e Task Force on Crown

PULpwooD HARVESTING AREA AGREEMENTS:

Coast. I n 1955 a Tree-farm Licence was issued in the sou th-eas tern par t o f the p rov ince to supp ly the first I n t e r i o r v e n t u r e -- an in teg ra ted pulp and lumber complex a t Caslegar -- which began p r o d u c t i o n i n 1961. Pulpwood Harvesting Area Agreements were conceived t o make a v a i l a b l e t o new pulp ventures the small and decadent t imber that was then considered u n s u i t a b l e f o r s a m l l l i n g . T h i s would leave the sawtimber "quota" a l locat ions in tact , super imposing a complementary pu lp indust ry over the establ ished sawni l l ing sector .

An amendment t o t h e F o r e s t A c t i n 1961 gave t h e M i n i s t e r a u t h o r i t y

Unt i l the ear ly 1960 's . pu lp manufactur ing was conf ined to the

to designate any In te r io r Pub l ic Sus ta ined Y ie ld Un i ts as Pulpwood

maximum 21-year term authorized by statute, renewable upon exp i ry . The Harvest ing Areas. All of the agreements i n f o r c e i n 1976 c a r r i e d a

main feature of these agreements was the op t ion they con fer red to harves t pulpwood i n t h e designated area. Their holders were under no obl igat ion

Sale L icences author iz ing cut t ing. to harves t t imber bu t they c o u l d c a l l on the government t o i s s u e Timber

CLOSE UTILIZATION LICENCES:

more of the stumps and tops and more defective pieces. New technology enab led t he u t i l i za t i on o f th i s ma te r ia l and the government o f fe red

t imber inventor ies and al lowable harvests were reca lcu la ted t o t he " c lose i n c e n t i v e s t o lumber producers t o i n s t a l l t h e needed f a c i l i t i e s . When

u t i l i za t i on " s tandard t hey were inev i tab ly larger . Therefore, the

F o r e s t S e r v i c e ' s s u s t a l n e d y i e l d c r i t e r i a was considerably higher than revised annual rate o f cu t t i ng t ha t cou ld be maintained according t o t h e

t h a t commi t t e d under "quotas".

The "c lose u t i l i za t i on " s tandard i nvo l ved removal o f smal ler t rees,

" 12 -- REVISIONS IN TREE-FARM LICENCES:

" 13 "

-:

to close utilization standards, substantially increasing the annual cutting rates approved under management working plans. In Tree-farm

harvest in the licence area, so there was no need for pol icy to a1 locate Licences, the licensee is entitled to the entire approved sustained yield

the additional cut among competing users as was done in Public Sustained Yield Units. Each licensee automatically inherited all of the additional harvest indicated when "close utilization" recovery standards were adopted for the unit. This contributed substantially to the increases i n approved annual cutting rates for Tree-farm Licences.

Holders of Tree-farm Licences also made the shift from intermediate

TIMBER SALE HARVESTING LICENCES:

traditional Timber Sale Licence in 1967. The Timber Sale Harvesting

with the inventory of licenced area. Between 1965 and 1969 four licences Licence eliminated the awkward task of reconciling volume allocations

in the northern interior were issued to confer harvesting rights for 18, 19 and 21 years. In 1973 another special form of Timber Sale Harvesting Licence, carrying a 12 year term was introduced to allocate timber in Public Sustained Yield Units in the northern part o f the province. The "third band" Timber Sale Licence was introduced in 1969 as a reward.

technology and moved to the practise of close utilization standards. tn the form of additional cutting rights, for flnns which adopted new

Timber Sale Harvesting Licences emerged as a modification of the

WILL LICENCES:

Another forest management instrument was introduced in our province in 1969. Regulations passed under a Forest Act amendment empowered the Minister to require anyone wishing to construct or expand a wood utilization plant to first obtain a Mi11 Licence. Mill Licences are not forms of tenure over Crown timber. They only give permission to construct and operate manufacturing faci 1 1 ties.

. OLD TEMPORARY TENURES:

Since 1907 when a moratorium was placed on them, no new old temporary tenures (Timber and Pulp Leases and Licences) have been issued by the province. From that date, the acreage covered by these tenures and their relative importance has gradually diminished, as licensees have liquidated the original timber or otherwise allowed them to revert to the Crown.

The recomnendations of the Sloan commission of 1945, and its subsequent endorsement by the 1956 comnission, had far reaching impacts on the forest industry. Within a short period of time a majority of the

management. ei ther through private or public means in accordance with the forest resources of the province were brought under the sustained yield

recommendations of the two Sloan Commissions. By 1976, however, it was felt that the effects of these profound changes in forest policy needed

the forest tenure system in the province. to be reviewed once again in light of the increasingly complex nature o f

Political changes, coupled with mounting pressures on the available timber supply and increasing demands for environmental protection of the resource were cited as key factors in the determination that the present forest tenure policy was in need of reform. Thus, a fourth Royal Commission was struck, under the guidance of the Dr. Peter H . Pearse. to reevaluate and assess existing policies. The Commission was directed to examine the current state of timber allocation in the province, in order to formulate coherent recommendations that identified weaknesses and set p r i o r i ties for reform.

objectives which guided his subsequent recommendations for tenure At the outset of his Report, the Commissioner identified two

policy. First, Pearse concluded that the public interest was best served by continued public ownership of unalienated forest lands, but conceded that established private property rights effectively limited the scope of

be avoided. Second. new policies needed to acknowledge the existing any possible policy reform, and that any abrogation of such rights was to

mandated restructuring was not practical. economic and social structure of the industry, implying that publicly

Policy revision, namely: the administration of forest policy; the pursuit Of a deliberate policies outlining the pattern of future industry

management goals with reference to the security of timber supplies and development in the forest sector; and a clarification of resource

governmental flexibility in the allocation of rights to publicly owned timber.

Given these constraints. Pearse identified several key areas for

ADMINISTRATION OF FOREST POLICY:

Recornendations were also made in the 1976 Report to improve the framework of public admfnistration f o r implementing forest policy. Changes were requested i n the formal instruments of policy (ie. legislation. regulations. and contracts); reforms i n the organization of the administrative agencies and their financina: and new aaaroachez tn planning forest operations and reformed administrative procedures for regulating them.

~ I. -~ - -rr ~ "

" 14 -- The most obvious priority was the overhaul of the Forest Act of

1912 which was updated through a patchwork of amendments. Pearse also

and the Forest Service into a new Department of Forest and Wildlife recommended that there be a consolidation of the F i s h and Wildlife Branch

Resources. Proper provisions were to be made for silviculture. other forest uses and environmental values.

R E S W R C E W A G M E N T GOALS:

management, but found several shortcomings with current practices. The Commissioner found serious inaccuracies in the determination of accurate

and, thus, also the calculation of annual allowable cuts. Moreover. i t timber inventory data necessary for the calculation of sustainable yields

was found that operators were penalized, irrespective of possible market fluctuations, if harvest rates did not approximate the allowable cut on a five year basis. To remedy these problems, Pearse called on the Forest Service to develop more reliable estimates of recoverable timber and recommended that harvest rates be made more responsive to technological trends and economi c real i ties.

Dr.Pearse reaffirmed the Province's commitment to sustained yield

1. UTILIZATION POLICIES:

Problems were also encountered in the area of utilization policy. It was found that rigid utilization standards were being imposed without consideration to the silvicultural, environmental and economic needs of a region. In addition to stumpage incentives for operators i n areas where the recovery of marginal and sub-marginal timber was required, a system of variable utilization standards, dictated by local forest conditions, the circumstances of logging, and silvicultural practices, was, therefore, recomnended by the Comnissioner.

2. REGIONAL AND LOCAL MANAGEMENT PUNS:

regional level with regards to resource use. Dr. Pearse called for the Furthermore, it was realized that there were difficulties at the

participation of public agencies and resource users besides the Forest Service, in the creation of, regional management plans so that potential conflicts could be resolved prior to harvesting.

Finally, the Comnissioner. noted that resource management was

management units, particularly the Public Sustained Yield Units, and that generally of higher quality in the Tree Forest Licences than i n any other

such localized planning should be brought up to the standard o f practice found in the TFLs.

recommendations with regard to the security of raw material supply. The Royal Commission of 1976 made some of its most important

Citing a perceived threat to timber supplies by forest companies due to ambiguities and inconsistencies in the tenure system, Pearse put forth extensive recommendations for the clarification of rights and obligations under all the major forms of licensing.

1. FOREST LICENCES:

In Public Sustained Yield Units, a new form of renewable harvesting right termed the "Forest Licence" was recommended to replace the Timber Sale Harvesting Licences and the "quota" Timber Licences. Such licences would have terms of 10 years or 15 years where needed to support a new enterprise. Sale would occur by competitive bid, and at the time o f

licence with a matching bid privilege allowing a cut of at least 80 renewal. The licensee would have the right to initiate a new Forest

percent of that authorized by the expiring licence.

flexible and less onerous to the licensee who was usually a smaller, Timber Sale Licences were to be revised in order to be more

unintegrated operator. Such licences were intended to convey rights to timber supplies outside the current "quota " system - principally the "third band" timber sales introduced in 1969.

The scope of the licensee's responsibilities would be narrower than for Forest Licences, and a variety of sizes and terms ranging from 3 to 10 years were recommended. All Timber Sale Licences were to be sold by

order to avoid the emergence of another "quota" system. competitive bid, and were to carry no contractual renewal privi 1 eges in

designated geographical area in addition to specifying an annual allowable cut. The licensee's forest management responsibilities would extend over the entire area during the term of the licence.

Finally, it was suggested that all licences be identified with a

2. TREE-FARM LICENCES:

Pearse concluded that Tree-farm Licences were responsible for providing a rapid improvement o f resource management. The Comnissioner

defined geographical area over which the licensee had rights and sought to preserve the great advantages this system offered, such as the

responsibilities; the long terms of these tenures; and the strong incentives given to licensees to increase the productivity of the land. However. the somewhat ambiguous perpetual terms remaining in some licences needed to be revised to finite terms so that the Crown could retain more flexibility i n the determination and allocation of forest land i n the future.

As a result. Pearse recornended that all future Tree Forest Licences were to be renewed f o r a term of fifteen years. This

additional five year renewal at the end of each five year period (le. "evergreen" renewal also provided the licensee with the option for an

-- 16 - upon expiry of a 5 year management working plan). As well i t was advised that the Forest Act be amended so that the terms of all previously granted TFL's, w i t h perpetual terms, be fixed a t 21 years from the date the legislation was passed, w i t h a subsequent option for t h e 15 year "evergreen" renewal.

Thus, TFL's which had already been granted i n perpetuity would expire af ter twenty-one years and then be subject to the new TFL terms. Moreover, new TFL's would now only be granted i f the licence contributed a matching annual allowable cut through private lands and Old Temporary Tenures and i f the new licence d i d not increase the concentration of harvesting rights amongst forest operators. I t was assumed that the terms for each of these "evergreen" licences would be discharged t o sat isfact ion of the Forest Service. Thus, the licence could be renewed

providing the incentive for sustainable management by the usually 1 arge i n perpetuity, thereby, ensuring an adequate timber supply while

scale licensee.

complicated issue i s the government's role i n shaping the structural pattern of industrial development.

Pearse concludes i n the 1976 Report that the best industrial

w i t h competition and opportunities for new part ic ipants a t a l l levels. structure i s one which includes a wide range of entrepreneurial forms

Consequently, he voiced concern over the rapid concentration of timber rights i n the hands of a few. large corporations. This problem warranted the recommendation for a measure of balance between firms o f different

not to encroach on Public Sustained Yield Units w h i c h were well suited to size and operations of differing structure. For example, new TFL's were

the operation of small enterprises under short-term tenure.

Finally, Pearse also provided a variety of other recommendations which would promote d ivers i ty , f lex ib i l i ty , and balance i n the industry. These included relaxation o f appurtenant m i l l requirements i n licence contracts, abandonment o f procedures that l i n k timber r ights to

rules for transferring rights. licensees' m i l l capacit ies, and adoption of clearer and more f lexible

3. REVISED TIMBER LICENCES:

THE FOREST ACT OF 1978:

(Timber LIcences and Leases, P u l p Licences and Leases, and Timber Berths) Pearse reconended that a l l forms of the O l d Temporary Tenures

be consolidated under a revised "Timber Licence" category which would ensure an orderly harvesting and liquidation of these tenures, some of w h i c h dated from the nineteenth century.

t h e l a t t e r , and licensees were assured the right to harvest these tenures i n accordance w i t h the management plans for the TFL's.

Timber Licences w i t h i n TFL's would be issued terms coinciding w i t h

. maximum of 20 years, t o ensure efficient harvesting of timber before the tenure reverted expi red. All such non-incorporated tenures were t o be

were situated. considered as a part of the Public Sustained Yield U n i t i n which they

For tenures outside existing TFL's new terms would be s e t , t o a

4. WLpwooD AGREEMENTS:

regarding pulpwood agreements, the Cmiss ione r reconended that the In order to resolve perceived d i f f icu l t ies and uncertainties

provision for the acquisition of Crown timber by pulp companies to o f f se t deficiencies i n residual chip supplies be retained and clar i f ied i n renegotiated agreements extending for 21 years. A large number of Timber Sale Licences would be maintained w i t h i n reach of the m i l l s t o f u l f i l l these needs.

ALLOCATIOW OF TIMBER RIGHTS:

government can shape the pattern of industrial development to best serve Public ownership of forest land has the advantage that the

economic and social objectives through i t s resource policies. A more

p u t forth by the 1976 Royal Commission w i t h some minor administrative revisions.

The Forest Act of 1978 i n large measure enacted the recommendations

coNcLusIoN:

Columbia i s extremely complex. An understanding of the evolution of As this report demonstrates, forest tenure policy i n Brit ish

forest tenure policies should, however, provide insight into the policies which exist today. Unfortunately, due to the limited scope of t h i s

reader i s urged to consult specific Royal Commissions or Forestry Acts i f summary only a general survey of past policies has been presented. The

greater detail regarding particular topics is required.