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DECISION NO. 2011-FOR-003(a) In the matter of an appeal under section 82 of the Forest and Range Practices Act, S.B.C. 2002, c. 69.

BETWEEN: Greg Schacher APPELLANT

AND: Government of British Columbia RESPONDENT

BEFORE: A Panel of the Forest Appeals Commission Alan Andison, Panel Chair

DATE: November 23 -25, 2011. Concluded by written closing arguments on January 6, 2012.

PLACE: Nelson, BC APPEARING: For the Appellant: Greg Schacher For the Respondent: Darcie Suntjens, Counsel

APPEAL

[1] This appeal is brought by Greg Schacher against a February 25, 2011 Contravention Determination and Notice of Penalty (the “Determination”) issued by Dave Hails, RPF, District Manager (the “District Manager”), Okanagan Shuswap Forest District, Ministry of Forests, Lands and Natural Resource Operations (the “Ministry”). [2] The Determination relates to timber harvesting activities conducted under Forestry Licence to Cut A83099 (the “Licence”), issued to Ian Franklin in September of 2007. The District Manager found that Mr. Franklin and Mr. Schacher, who conducted the harvesting on Mr. Franklin’s behalf, contravened section 52 of the Forest and Range Practices Act (the “Act”) which states: Unauthorized timber harvesting 52 (1) A person must not cut, damage or destroy Crown timber unless authorized to do so (a) under this Act, the Forest Act or an agreement under the Forest Act, … (4) If a person, at the direction of or on behalf of another person, (a) cuts, damages or destroys Crown timber contrary to subsection (1), or DECISION NO. 2011-FOR-003(a) Page 2

(b) removes Crown timber contrary to subsection (3), that other person also contravenes subsection (1) or (3). [3] The District Manager found that more timber was harvested than authorized by the Licence, some of which was cut in an unauthorized area, and that useable timber was left at the site. He found that some reserve trees had been cut and some standing trees had been damaged by a debris pile burn. [4] Based upon the Ministry’s scaling of the unauthorized cut, damaged and destroyed timber at the site, the District Manager levied an administrative penalty of $3,994.93 pursuant to section 71 of the Act. He also determined that Mr. Schacher was 75% responsible for the contravention and ordered him to pay 75% of the assessed penalty, which amounted to $2,996.20. [5] Only Mr. Schacher appealed the Determination and is the Appellant in this case. [6] The powers of the Commission on this appeal are set out in section 84 of the Act, which states: 84 (1) On an appeal … the commission may (c) consider the findings of the person who made the determination or decision, and (d) either (i) confirm, vary or rescind the determination or decision, or (ii) with or without directions, refer the matter back to the person who made the determination or decision, for reconsideration. [7] The Appellant alleges that the District Manager made mistakes and that there were errors in the scaling process. His main objections to the Determination are summarized as follows: 1. It was never his intention to harvest and use the entire log. The Ministry was always aware that the purpose of the Licence application was to harvest cedar for shake blocks. 2. The application asked for an “estimate” of the volume to be harvested. He should not be held accountable to a harvest volume derived from an “estimate”. 3. The term “harvest” is not defined in the Licence and it should be interpreted to reflect what everyone knew his intention to be: to obtain the wood for cedar shake blocks. His intended harvest volume was 30 cubic metres (“m3”) of processed shake blocks from dead standing cedar. 4. The Ministry’s scaler failed to conduct the scale of the timber in question in accordance with “well-established, precisely defined, widely known standards”. In particular, the Ministry’s scaler failed to expose the top face of each or any log measured to evaluate the extent of the defects present, in DECISION NO. 2011-FOR-003(a) Page 3

particular, the amount of rot. Thus, her calculation of volume and her assessment of the log grades were “vastly over estimated”. 5. The District Manager erred when he preferred the Ministry’s scale assessment over the more accurate scale completed by his scaler. 6. The District Manager implicitly acknowledged that the Ministry’s scaling results were inaccurate and attempted to address this by applying an arbitrary “fudge factor” reduction of 33%. Instead, the Ministry’s scale results should be ignored because “any amount of ‘massaging’ cannot ensure the level of accuracy has been improved”. 7. The District Manager also incorrectly applied the penalty formula from the legislation. [8] The Appellant did not assert or present any evidence in support of any of the statutory defences of due diligence, mistake of fact or officially induced error found in section 72 of the Act. Rather, he submits that, if there was a contravention, the volume assessed is excessive and the penalty is based upon incorrect assumptions and analysis. He submits that there should be no penalty. [9] In his closing argument, the Appellant submits that the Government should compensate him for the additional expenses that he incurred during the investigation and appeal in order to bring the District Manager’s errors to light.

BACKGROUND

[10] This appeal stems from a small scale salvage operation that took place in the Fall of 2007 on the west side of Duncan Lake, adjacent to Puddingbowl Creek in the Kootenay Lake Forest District. At the time, the Appellant was a Silviculture Technician employed by the Ministry, and had been working for the Ministry for approximately 20 years. He also owned and operated a cedar shake business and continues to do so. The Appellant makes shakes by cutting cedar logs into blocks and then hand splitting the blocks into shakes that are ultimately used for roofing. [11] In approximately 2004 or 2005, the Appellant went to the Puddingbowl Creek area to check its cedar supply. He walked to the location of the proposed harvest and saw dead standing cedar. As the site was in a relatively remote area with limited vehicle access, he knew that the harvested timber would have to be removed by helicopter. [12] Although the Appellant’s intention was to obtain wood solely for processing into shakes, the Licence that was ultimately issued was not this specific. The disconnect between the Appellant’s intention and the wording of the Licence is the basis for many of the Appellant’s arguments in this appeal. To fully understand these arguments, the Panel will begin by describing the licensing process.

THE APPLICATION

[13] The licensing process in this case began with the application for a cash sale from the Kootenay Lake Forest District office in Nelson, BC. As the Appellant was employed by the Ministry and was working out of that same District office at the DECISION NO. 2011-FOR-003(a) Page 4 time, he asked his brother-in-law, Mr. Franklin, to submit the application.1 There is no dispute that the Appellant provided Mr. Franklin with instructions on how to fill out the application form. [14] On June 13, 2007, Mr. Franklin submitted an “Application to Purchase Crown Timber, Cash Sale – 0-50 meters, Small Scale Salvage Program” to the District office. The application is a two-page standard form document, with blank spaces for the insertion of information. The relevant portions of the form and Mr. Franklin’s responses (in bold) are as follows: I … Ian Franklin do hereby request to purchase Crown salvage timber on the following described area: Pudding Bowl Fire 60 km Duncan distributed over approximately .5 hectares. No openings over 1.0 ha shall be created: Yes /No I have examined this timber and estimate the approximate volume on the above-described area to be 30 (cubic metres). The type of salvage timber (indicate by mark X): Windthrow Logging residue Landslide Salvage Insect/Disease/Fire X Other (e.g., special forest product) Nature of access: Road X [15] Under the heading “Detailed estimate of type and volume (in cubic metres) to be removed”, Mr. Franklin identified 30 m3 under the heading “cedar”. No other species or volumes were indicated under any of the other categories, including “access/danger trees”, or “Other (eg. Special Forest Products).” [16] Also of note, under the heading “riparian” the form states “are there any estuaries, streams, lakes, or wet areas in the identified area”. Mr. Franklin answered “No” to this question. [17] He also said there were no wildlife trees, no nesting sites and no animal dens. [18] The proposed logging method was identified as “helicopter/handlog”.

THE LICENCE AND HARVEST

[19] Amy Jaarsma, Small Scale Salvage Coordinator in the Ministry’s District office, processed the application and prepared a draft of the Licence which she gave to Mr. Franklin. [20] Ms. Jaarsma prepared a licence for a “Forestry Licence to Cut” rather than the ‘cash sale’ that was applied for because a cash sale is for pre-harvested wood. In this case the trees were still standing and had not yet been harvested. Therefore, a Forestry Licence to cut was the appropriate licence.

1 At the time this appeal was heard, the Appellant had resigned from the Ministry and was working full-time in the cedar shake business. DECISION NO. 2011-FOR-003(a) Page 5

[21] On or about September 21, 2007, both Mr. Franklin and Garry Beaudry, District Manager, Kootenay Lake Forest District, signed the Licence. The relevant portions of the Licence are as follows: A. AUTHORITY AND STUMPAGE 1. The Licensee and the District Manager … have entered into this Licence pursuant to section 47.6 of the Forest Act to allow the Licensee to harvest the volume and type of the Crown timber described in paragraph C.1. The timber is located within the area shown outlined on the map in Exhibit A (“the Licence Area”). …. … C. TIMBER 1. The Licensee may harvest up to 30 m3 from the Licence Area during the Term limited to the following: (a) Killed or damaged as a result of fire, insects, disease or windthrow (b) Dead standing Cedar 2. Timber of the following species and grades is specified as reserved: (a) All other timber unless otherwise approved by the District Manager; D. HARVESTING 1. The Licensee must comply with the following conditions respecting using of equipment: (a) Unless otherwise authorized by a Forest Officer the Licensee must use only (i) Helicopter forwarding (ii) Chainsaw and manual splitting equipment 2. The Licensee may only harvest in accordance with the following conditions: (a) Conditions are indicated in the Schedule A which is integral to this lic ense document. … F. OTHER C ON DITIONS AND EXEMPTIONS 1. The Licensee must comply with any conditions and exemptions set out in Schedule A of this Licence. …. [22] The following “additional conditions” to the Licence are found in Schedule A of the Licence.

DECISION NO. 2011-FOR-003(a) Page 6

Additional Conditions: In addition to the terms and conditions set out in the body of this Licence, the Licensee will also comply with the following: 1. Any timber cut shall be utilized to the standards indicated in the Logging Residue and Waste Assessment Manual. The Licensee will be required to utilize the entire log. 2. No manufacturing of cedar shake bolts, rails, posts and/or blocks shall be conducted at the Puddingbowl Recreation Site shown on the attached Exhibit A Sketch Map. Manufacturing of these products may be conducted at the Helicopter landing site. 3. … 4. Debris resulting from the bucking and manufacturing of cedar products within the road right of way shall be hand piled in an orderly manner on the running surface of the operational road and not be located closer than 20 meters from any stream or watercourse and shall not block or impede the adequate functioning of the ditchline. Slash generated as a result of this salvage license shall be disposed of through burning in accordance with the regulations and within the term of this license by the Licensee. [23] The Licence also included nine standard conditions including conditions regarding operations, waste, aboriginal rights, legislation, liability and termination. Condition 1.01 reiterates that the Licensee “must not fell or utilize timber if the timber is specified in C.2 as reserved timber.” [24] In summary, the Licence authorized the harvest of 30 m3 of standing dead or downed cedar in the Licence Area outlined on the Exhibit A map which is attached to the Licence. The Licence Area shown on the map does not include the helicopter landing area. According to the Licence, all other timber was “reserved”, unless otherwise approved by the District Manager. In addition, the Licensee was required to “utilize the entire log” as set out in condition 1 of Schedule A. [25] Harvesting began under the Licence on or about September 22, 2007. Doug Harrison was the faller hired by the Appellant. A helicopter was used to transport the logs to the landing area where they were processed into smaller blocks prior to being driven to Nelson. Debris from the processing was burned near the helicopter landing area. [26] The volume of timber removed from the site was scaled as slightly over 45 m3. Although harvesting had already been completed, the Ministry amended the Licence on November 27, 2007 to allow the harvest of 45 m3 of dead or damaged cedar, 15 m3 more than originally authorized. [27] A stumpage advisory notice was issued with an applicable rate of $5.30/m3, and Mr. Franklin was issued an invoice for $240.51 (45.38 m3 x $5.30). The invoice was paid. DECISION NO. 2011-FOR-003(a) Page 7

THE COMPLAINT

[28] The following summer, in June of 2008, the District office received a public complaint that a small scale salvage operation had left waste and debris at Puddingbowl Creek. [29] Steve Forrest, a Resource Compliance Specialist, with the Ministry, performed an initial inspection of the harvest site on July 11, 2008. Amy Jaarsma and the Compliance and Enforcement Supervisor, Andy Cosens, attended with him on that day. [30] Based on what he observed, Mr. Forrest believed there was a potential contravention of the Act. Because a Ministry employee from the District was one of the people being investigated, the Ministry brought in a special investigator from outside of the District to conduct the investigation. The special investigator was Jim Garbutt, Compliance and Enforcement Specialist, from the Ministry’s Williams Lake District office.

THE INVESTIGATION

[31] On August 6, 2008, an interagency inspection of the site was performed by Mr. Garbutt and Mr. Forrest, along with Conservation Officer Ben Beetlestone and Ecosystem Officer Kristen Murphy from the Ministry of Environment. [32] From August 19 to August 21, 2008, the harvested timber left in the Licence Area and the landing area was scaled by the Ministry’s District Scaling Supervisor, Val Golley, with the assistance of Mr. Forrest. [33] Ms. Golley scaled 67 logs. Her scaling results were set out in a “Piece Scale Detailed Log Listing”, which shows her calculation of the volume of the wood scaled. It also includes a “Species-Grade Summary”. [34] Although the Appellant’s intention was to obtain wood for cedar shake blocks, Ms. Golley’s scale was based upon a consideration of whether the remaining timber could be used for other purposes such as rails, posts or even fire wood. This is one of the Appellant’s concerns with the investigation and the Determination. [35] Mr. Garbutt considered the results of the scale. He also conducted separate interviews in 2008 with Mr. Franklin, feller Doug Harrison, and the Appellant. He recorded the interviews and transcribed the recordings. [36] On October 28, 2009, Mr. Garbutt produced a seventeen page case report. [37] In a letter of the same date, the Ministry notified the Appellant and Mr. Franklin of a potential contravention of section 52 of the Act. The Appellant and Mr. Franklin were offered an Opportunity to be Heard before a determination was made. [38] Prior to the Opportunity to be Heard, the Appellant hired his own scaler, Sam Relkoff, to attend the site and scale the same logs that Ms. Golley had scaled. Mr. Relkoff scaled 30 logs on April 10, 2010, and provided Mr. Schacher with the scale results. His scale results differ significantly in terms of volume and grade from Ms. Golley’s results. DECISION NO. 2011-FOR-003(a) Page 8

THE DETERMINATION [39] After hearing from the parties at the Opportunity to be Heard held on July 28, 2010, the District Manager issued the Determination now under appeal. A summary of the District Manager’s findings of fact relating to the contravention are as follows: • Mr. Schacher admits that he himself or others under his direction felled trees that he considered danger trees, particularly in the helicopter landing zone. He acknowledged that he needed permission from the Ministry, and his explanation that he did not know who to call or that he should call on the weekend when the operation was occurring was not credible given his lengthy service with the Ministry. • There was wood felled that was to be utilized under the Licence but that remained on site. • There were trees reserved from cutting that were felled, both inside and outside of the Licence Area. Some of this wood was left on site and some may have been burned. [40] The District Manager found that no statutory defences applied. [41] In terms of volume, the District Manager notes that the original estimate of the unauthorized harvest was 153.873 m3, as calculated by the scaling performed by Ms. Golley in August of 2008. However, the District Manager reduced this amount by 33% to “take all the potential discrepancies of volume and grades, the back and forth innuendos into account”. [42] The District Manager calculated the unauthorized harvest volume as 103.095 m3 and levied a penalty based upon section 13(2)(c)(i) of the Administrative Orders and Remedies Regulation, B.C. Reg. 101/2005, which is stumpage plus bonus bid (= $38.75 per m3). [43] At the Hearing before the Commission, the Government agreed that three logs should not have been included in the volume and that the volume should be reduced accordingly. In closing argument, the Government also advised that it would be issuing a stumpage invoice for some of the scaled volume and, therefore, this amount should be deducted from the penalty. Both of these matters will be addressed later in the decision.

ISSUES

[44] The main issues to be decided in this case are as follows: 1. Whether the Appellant cut, damaged and/or destroyed timber that was not authorized under the Licence, contrary to section 52 of the Act? 2. If so, what is the volume and grade of timber that was cut, damaged or destroyed contrary to section 52 of the Act? 3. If there was a contravention, what is the appropriate penalty? DECISION NO. 2011-FOR-003(a) Page 9

4. Should the Appellant be compensated for the money he expended over the course of the investigation and appeal through an order of costs against the Government?

DISCUSSION AND ANALYSIS

1. Whether the Appellant cut, damaged and/or destroyed timber that was not authorized under the Licence, contrary to section 52 of the Act? [45] To determine whether section 52 was contravened, the Panel will first consid er what was authorized under the Licence. a) What was authorized under the Licence? [46] The Appellant argues that, at all times, he understood that he was authorized to remove 30 m3, later amended to 45 m3, of cedar shake blocks from the site. If he was not authorized to do so by the Licence, the Licence was incorrectly drafted and he should not be held responsible for the Ministry’s errors. The Appellant states that Ms. Jaarsma understood that the purpose of the application was to remove cedar shake blocks and that any error in her drafting of the Licence should not be the basis for a contravention. [47] In addition, the Appellant submits that the application asked for an “estimate” of the volume, and that it is not reasonable for an “estimate” to be held as “legally binding”. [48] The Appellant further argues that the District Manager’s finding that he harvested without authority is based upon an incorrect interpretation of the word “harvest”, as that word is used in the Licence. He submits that the “harvest” is not what was cut or felled, it is the volume of the specific product that he applied for, and removed, from the site. In support, he points out that: • there is no definition of the word “harvest” in the Licence, and • the understanding and actions of different Ministry employees support his interpretation of harvest. [49] Regarding the latter, the Appellant states that he discussed the application with Amy Jaarsma. He says that he told Ms. Jaarsma that he was planning to harvest 12-15 trees for 8 to 10 cords of shake blocks, for a total of approximately 30 m3. He states that both he and Ms. Jaarsma understood that “the harvest” was for shake bolts/blocks, and this is how the word should be interpreted. [50] The Appellant also submits that Ms. Jaarsma’s Licence amendment further supports his interpretation. He states: The amendment completed by the Ministry afterwards only confirmed to me what indeed the harvest for this license was understood to be, shake bolts/blocks. In my view, I made application to harvest 30 m3 of shake bolts/blocks and was issued a license to harvest such. Upon harvest completion my scale submitted to the Ministry for the harvest revealed more volume had been harvested and the Ministry amended DECISION NO. 2011-FOR-003(a) Page 10

the harvest document to 45 m3 accordingly. I then was billed for and paid stumpage on 45 m3 …. In light of this I feel an accusation of unauthorized harvest is inappropriate. [51] The Appellant also submits that Val Golley’s scale of the unauthorized harvest is based on her understanding that he could use that wood to make products other than cedar shakes. However, the Licence itself only allows him to harvest using hand tools, a truck, and a helicopter. He states: How one could economically make rails and posts using these tools was never fully appreciated by the Appellant, and definitely not clarified by the Ministry. Therefore, the Ministry’s aftermath expectations seem inconsistent with being able to harvest rails and posts. [52] The Appellant further argues: I view the Ministry’s inadequate business practices as the underlying reason as to why this misunderstanding has escalated to the point where we are at today. The inadequate application document with ambiguous wording lacked clarity to the point where identifying something as crucial as “harvest” became impossible. The subsequent harvest document failed to define “harvest” and left this open to a great deal of interpretation. I still cannot understand why the Ministry would not bring to my attention the fact that the license they issued was not for what I had applied. If the Ministry had conducted a comprehensive review of their business practices beforehand, including document management, I believe they would have recognized these shortcomings and not have embarked upon this process which has undoubtedly cost taxpayers thousands of dollars. I believe it to be unfair of the Ministry to expose a client to this degree of liability without first scrutinizing their involvement to determine if any of their actions may have led to the dispute. [53] The Government submits that it is the Licence that provides the only authority for the harvesting activities in this case, and that its terms are clear; the application and/or the Appellant’s intent provide neither a defence nor the required authorization for what occurred at the site. To explain the differences between the application and the terms of the Licence, the Government called Ms. Jaarsma as a witness. [54] As stated earlier, Ms. Jaarsma is the Small Scale Salvage Coordinator with the District office. She has worked for the Ministry for 20 years. [55] Ms. Jaarsma received the application submitted by Mr. Franklin to purchase Crown timber, although she assumed that the Appellant would do the harvesting on site. She recalls talking with the Appellant about his plans for harvest, but says that they did not discuss how many trees he planned to take. [56] Ms. Jaarsma did not go to the site before drafting the Licence; she looked at the location and made sure there was no conflict with major licensees or the nearby recreation area, and made sure the volume was there. She also considered DECISION NO. 2011-FOR-003(a) Page 11 whether there were any wildlife issues or riparian areas identified on the application. None were identified. [57] Although Mr. Franklin applied for a cash sale, Ms. Jaarsma explained that a cash sale was not granted. Instead, she drafted a forestry licence to cut in which she included the terms and conditions outlined earlier. Regarding the “utilize the entire log” condition, she explained that the Crown had, and still has, some cedar trees being wasted due to poor forest practices: licensees were just taking wood for bolts or blocks which meant that additional forest products, such as posts, rails, and firewood, were being lost. With this in mind, she included the requirement for more utilization of the merchantable timber. In her view, if a licensee is going onto Crown land to take out wood, it should take as much of the wood as possible and reduce waste. She states that others could use that volume for something, so she was trying to get the best use out of the wood that would be felled by including the requirement to “utilize the entire log”. [58] Ms. Jaarsma explained that she did not include any volume for access or danger trees, as none was requested. If a licensee needs to cut access or danger trees that aren’t included in a licence, she advised that an amendment is required. Ms. Jaarsma testified that verbal authorizations are often given by Ministry officials for access or danger trees, followed by written authorization. She testified that stumpage will be charged on the additional volume. [59] Regarding the amendment, Ms. Jaarsma testified that, after harvesting, had been completed the Appellant advised the Ministry of the volume taken from the area and that it was more than authorized under the Licence. The Ministry decided to amend the Licence to allow a volume of 45 m3, instead of 30 m3. Ms. Jaarsma testified that no other terms or conditions of the Licence were changed. [60] Both Mr. Franklin and the District Manager signed the amendment. The Government submits that it is not unusual for a small scale salvage licence to be amended after the harvest when the actual volume taken is known. [61] Mr. Forrest was also called as a witness for the Government. During cross- examination he was challenged on the Ministry’s interpretation of the word “harvest”. The Appellant asked why a tree that is felled, but has no useful wood, is considered a “harvested tree”. Mr. Forrest states that it is not the Ministry’s role to assess the quality or determine whether the licensee can make a product out of a tree that is cut. He explained that, for a tree on Crown land to be legally cut, it must be authorized by a licence: if a tree on Crown land is standing and a licensee fells (cuts) that tree, there has been a harvest under the licence. In Mr. Forrest’s view, the quality of the wood is irrelevant. The Panel’s Findings [62] The Appellant submits that he should not be held to an “estimate” of the volume of timber to be removed. However, the Panel finds that the Ministry was not enforcing an “estimate”, it was enforcing a term of the Licence. [63] The Panel finds that paragraph C of the Licence establishes that the Licensee could harvest 30 m3 of standing dead or downed cedar. What began as an estimate, became a definitive number once it was included in the Licence. If that DECISION NO. 2011-FOR-003(a) Page 12 volume was too low, Mr. Franklin could have requested an amendment. Neither Mr. Franklin nor the Appellant did so in this case. In fact, the only amendment made to the Licence occurred after the final scale of the wood that was removed from the site had been completed and it became obvious that 45 cm3 had been removed from the site. [64] The Appellant also argues that the word “harvest” is vague, ambiguous, and has not been interpreted correctly by the District Manager. He submits that the only proper or enforceable interpretation is his; that is, that “harvest” means the removal of the desired product (cedar bolts and blocks) from the site. If the Licence is interpreted in this manner, he complied with the Licence as amended - he was ultimately licensed to harvest, meaning “to remove”, 45 m3 of cedar blocks/bolt, which is what he did. [65] If the wording of the application, as opposed to the Licence, is considered, there is some support for the Appellant’s interpretation. This is because the application asks for the detailed estimate of the type and volume to “be removed”, whereas the Licence establishes the volume to be “harvested”. [66] However, regardless of this difference in wording, it is the Licence that contains the legally enforceable terms and conditions, not the application. Although the Appellant is correct that the Licence does not define harvest, given his lengthy employment in the forestry sector, the Panel does not accept that the Appellant was somehow confused by that word. [67] The Panel finds that harvest is commonly understood to mean the cutting and removal of trees, and that the Appellant was, or should have been, aware of this. As Crown timber, living or dead, cannot be cut without authority, any tree cut must be covered by some legal authority, otherwise it will constitute an unauthorized harvest. The Panel agrees with Mr. Forrest that, a tree felled, regardless of its economic value to the person, is considered part of the harvest under the Licence. [68] Moreover, the Licence itself states in conditions 6.01 and 9.02 that words not defined in the Licence have the meaning given to them in the Act and its regulations. Section 1 of the Forest Planning and Practices Regulation defines harvest to include “felling trees”. If this was not the case, a licensee could cut as many trees at the site as it wanted and only count as “volume” the desired product actually “removed” from the site; in this case, high quality cedar for shakes. Based on the Appellant’s interpretation of the term of the Licence, the volume not taken from the site would be assessed as “waste”. This is simply an unreasonable interpretation. [69] The Panel also finds that the Appellant’s argument about the amendment is flawed. All that the amendment establishes is that the Ministry was willing to “make legal” what would otherwise have been illegal. At that time, no official from the Ministry had attended at the site and, therefore, the Ministry had no idea what the Appellant had cut and left behind. Thus, the amendment has no relevance to the Ministry’s understanding of the volume of “harvest” that had actually been taken. DECISION NO. 2011-FOR-003(a) Page 13

[70] It is apparent from the evidence of Ms. Jaarsma that the authorizing document, whether that is a licence, permit or some other approval, will not be a “rubber stamping” of an application. There are often changes or modifications to the original request. Indeed in this case Mr. Franklin applied for a “cash sale” but was given a “licence to cut”. Ms. Jaarsma also testified that an applicant may decide not to accept the licence as drafted. [71] However, once a licence is accepted, as evidenced by the parties’ signatures, the Panel finds that it is this document that establishes the legal authority for the harvest and establishes the only terms and conditions that bind the parties. [72] In this case, Mr. Franklin accepted the terms and conditions of the Licence, as evidenced by his signature. What he intended is, therefore, not of central importance to interpreting the Licence; the terms and conditions of the Licence will not be changed because of what was intended or believed. Further support for this finding is found in condition 9.00 of the Licence which states: [This] Licence is the entire agreement between the parties as to the matters set out in this Licence, and all previous promises, representations or agreements between the parties, whether oral or written, are deemed to have been replaced by this Licence. [73] Although the Appellant seems surprised by the terms of the Licence, it is the responsibility of the Licensee, and his or her designate, to review and understand the terms and conditions of the Licence, and to seek clarification or modifications as required. In this case, the Licence established the ultimate parameters and legal responsibilities of the Licensee, and it was the Licensee’s responsibility to comply with the Licence. The Licensee, and the Appellant as his designate, must understand and comply with what the Licence actually says, as opposed to what he thinks it should say. The Panel does not accept the Appellant’s suggestion that there was some kind of error in the contract because everyone understood that he would just be taking cedar bolts and blocks. [74] For these reasons, the Panel finds that the Licence, as amended, authorized the felling of 45 m3 of dead standing cedar from the Licence Area; all other timber was reserved. The entire log was to be utilized, not simply the wood appropriate for cedar shakes and blocks. There was no authorized volume for access or danger trees. b) Whether the Appellant cut, damaged or destroyed timber not authorized by the Licence? [75] The Government submits that the Appellant contravened section 52 of the Act by: • cutting trees in the helicopter landing area; • damaging three trees near the helicopter landing area by the burning of waste; • cutting green timber that was “reserved” from cutting under the Licence; and DECISION NO. 2011-FOR-003(a) Page 14

• cutting timber within the Licence Area in such a way that whole cedar trees were not utilized and substantial amounts of cut timber was left as waste at the site. [76] The main evidence in support of the Government’s position came from Mr. Forrest and Mr. Garbutt. [77] Mr. Forrest is a Registered Forest Technician and is a licensed scaler. He has been employed by the Ministry in various capacities since 1983. In 2003, he became a Compliance and Enforcement Resource Specialist. [78] When Mr. Forrest attended the site on July 11, 2008, he says that he was surprised at the amount of material left behind on the site and surprised that felling had occurred at the helicopter landing site. He also observed a large cedar tree with an osprey’s nest located in the harvest area, although the application had said there were no nesting sites in the area. In addition, while Puddingbowl Creek should have been visible and undisturbed, Mr. Forrest noticed that some bucking had been carried out within the riparian area of the Creek. He also observed tree bark and harvesting debris from tree tops left in the Creek. [Neither the tree with the bird’s nest nor the proximity to a riparian area were the subject of the Determination.] [79] Mr. Forrest explained that he asked to be removed from the file as the investigator because he was both a colleague and friend of the Appellant. However, as noted earlier, Mr. Forrest attended the site on two subsequent occasions, once with Mr. Garbutt and later with Val Golley for the purposes of assisting them with their investigation. [80] Mr. Forrest stated that when he attended the site with Ms. Golley from August 19 to 21, 2008, he photographed nine stumps in the helicopter landing area, the three burned trees, and numerous logs that were included in the Piece Scale Detailed Log Listing. [81] He described the access trail (road) at the location of the burn pile as narrow, approximately 3.5 metres wide. [82] During cross-examination, Mr. Forrest was asked about the amount of rot in the timber left at the site. He agreed with the Appellant that there was a lot of rot in the stumps and timber, but reiterated that he was surprised about the volume of wood left at the site, the landing area, and in the vicinity of the Creek. He was surprised by the number of trees that had been felled and left there. Mr. Forrest stated that he has performed approximately 1,000 inspections and this was “the worst that I have seen”. He also stated that when trees are felled outside of the authorized harvest area, a licensee is supposed to self report and that many major licensees do so. Mr. Forrest stated that he knows that the Appellant removed 45 m3 under the Licence and, in his words, a “shocking amount of volume was left”. [83] Mr. Garbutt has worked for the Ministry in various capacities since 1985, including as a Compliance and Enforcement Specialist. When assigned to this case, he reviewed the Licence materials and then attended the site on August 6, 2008 with Ecosystem Officer Kristen Murphy, Conservation Officer Ben Beetlestone, and DECISION NO. 2011-FOR-003(a) Page 15

Mr. Forrest. He inspected the timber at the landing area and the harvest site. Mr. Garbutt testified that he observed: • a tangle of downed trees, bucked into harvest length; • stumps more than 2 feet tall; • sections of trees in the water; • sections of trees missing; • felled trees with green limbs; and • an Osprey nest in a live tree. [84] He walked up the trail and found that the trail had been blocked by a fir tree, but that a section was cut out of the fir tree. He said that the fir tree should have been bucked to avoid fir beetle. [85] At the landing site, he observed a small pile of waste that had not been burned. A large pile, approximately five meters by ten meters, had previously been burned and he observed burn damage to some surrounding trees. He said that the Appellant did not inform the Ministry of the amount of waste that had been burned prior to burning. This information is required for a waste assessment. [86] When he returned to the shore of Duncan Lake, Mr. Garbutt spoke with the Ecosystem Officer, Ms. Murphy. She advised that Puddingbowl Creek was a fish- bearing stream. Although she observed that logging activities had occurred in the riparian area, she recommended that no Fisheries Act charges be laid as she believed that any impact would be for a short duration. Her observations and findings were set out in a letter dated August 14, 2008. [87] Mr. Garbutt set out his findings and observations in his October 28, 2009 case report. In that report he states: The licence stipulated that the entire log be utilized. Clearly only a small portion or none of each log was utilized. Since what is left is mostly grade 1 and 2 sawlog material only the very best material was taken. [88] He also states: Several trees were felled or damaged by fire outside of the harvest area and at least two large live cedar trees were felled within the harvest area. All of these trees were specified as reserve by the licence. SCHACHER’S actions left behind a jumble of cedar logs, some lying in Pudding Bowl creek and one large fir tree that was felled across, and effectively blocked, a trail used to access this UREP area [an area for the “Use, Recreation and Enjoyment of the Public”]. [89] The Appellant’s evidence did not contradict the Government’s in any significant way; rather, the evidence was more in the nature of an explanation for his decisions and actions. The Appellant testified that, from his pre-application site visit, he thought that the opening at the helicopter landing area was big enough for DECISION NO. 2011-FOR-003(a) Page 16 the helicopter to simply drop off the logs for processing into smaller blocks prior to removal from the site. However, due to prevailing winds, one 150 foot Douglas Fir tree had to be removed to prevent a serious risk to the helicopter access. When the fir tree was cut, the Appellant said that it scoured smaller cedar trees that also had to be removed. The Appellant told his faller, Doug Harrison, which trees to cut. [90] The Appellant said that there were also trees along the cut slope/access trail which he removed as danger trees. [91] The Appellant did not notify the Ministry that he cut access/danger trees, and he did not pay stumpage on those trees. The Appellant understands that he was not authorized to cut access trees, but says that he did so for safety reasons. In his view, except for the large fir tree, the other trees were insignificant. [92] Within the Licence Area, the parts of the felled cedar trees that were suitable for shakes were flown to the landing area where Mr. Harrison “processed” them into two foot pieces. The Appellant then loaded the pieces onto a truck and hauled them to his house for hand splitting into shakes. He did not notice that any green (live) trees were felled, although he also said that it might have been mentioned to him by Mr. Harrison. The Appellant did not report this to the Ministry. He agreed that he probably removed wood from those trees. [93] Regarding the burned trees, the Appellant states that the Licence required burning on the road and that he did so. However, the road did not have a right-of- way so standing timber was immediately adjacent to the running surface of the road. In his view, the Ministry should have expected any burning to result in fringe damage to these stems. He provided photographs showing that other licensees have caused this type of damage and that the Ministry did not take enforcement action against them; therefore, he argues that it is unfair and inconsistent to do so in this case. [94] Regarding the wood left at the site, the Appellant does not dispute that he left wood at the site but says that he tried to minimize the amount left behind. He explains that this was an economic decision; he only intended to harvest cedar for shakes and did not have a market for other products such as cedar rails and posts. Moreover, since he was using a helicopter for the harvest, it would have cost him a great deal of money to remove wood that was of no use or value to him. [95] The Appellant agrees that the Licence states that the entire log was to be utilized and submits that he did, in fact, utilize the entire log for his purposes – those purposes being good quality cedar blocks. Although this is not how the Ministry interprets this phrase, as stated earlier, he suggests the Ministry’s interpretation is unreasonable given that the Licence only allowed him to use hand tools. Further, while he could have used some of the wood for rails and posts he never intended to manufacture rails or posts and did not have a market for rails or posts, and he only intended to manufacture cedar blocks/bolts that were 24 inches in length. [96] The Appellant did not tell the Ministry that he left merchantable timber at the site, nor did he pay stumpage on what was left behind. In his view, a waste assessment could be done to charge him for the remainder; he would be accountable for a waste assessment. DECISION NO. 2011-FOR-003(a) Page 17

The Panel’s findings [97] The Panel has carefully reviewed the Licence, the evidence and the photographs provided by the parties. The photographs show trees fallen across Puddingbowl Creek, harvesting debris and parts of trees lying in various locations. [98] The Appellant does not dispute that he left wood at the site and cut access and danger trees without notifying or receiving permission from the Ministry. Nor does he dispute that green trees may have been cut, although there was some suggestion that the branches would have been very high up and difficult to see. Thus, there is little doubt that the Appellant contravened section 52(1) of the Act by cutting, damaging or destroying trees not authorized by the Licence. Furthermore, any possible doubt there may be, was removed by the evidence of Mr. Forrest. [99] Mr. Forrest’s “surprise” at the amount of material left behind on the site, the felling that had occurred at the helicopter landing site, and his statement that out of approximately 1,000 inspections he thought there was a “shocking” amount left behind in this case, was compelling. Although it is not clear whether Mr. Forrest’s surprise is based on the fact that the Appellant, as a former employee, was expected to know better, Mr. Forrest’s evidence highlights for the Panel that this was no ordinary aftermath of a small scale salvage operation. [100] The Panel finds that contrary to the Licence and without prior, or any, authorization, the Appellant directed or allowed the large fir tree to be cut at the landing site along with nine other trees, the stumps of which were identified as “A” through “I” by Mr. Forrest when he attended the site with Ms. Golley in August of 2008. The landing site is clearly outside of the Licence Area shown on the Exhibit A map to the Licence. No prior or post harvest approval from the Ministry was sought, or given. [101] It is also clear that three trees were damaged by the large debris pile burn. The Panel does not accept the Appellant’s suggestion that this damage should have been expected by the Ministry, nor does it accept the Appellant’s argument that this type of damage is normally tolerated by the Ministry – essentially a “two-wrongs” argument. Given his evidence that standing timber was close to the narrow road, the burn pile should have been sized accordingly. Instead, Mr. Garbutt estimated the burn pile to be approximately five metres by ten metres. Even if the burn was not quite that large, it is clear from the extent of the burn on the trees that the burn pile was simply too large given the size of the road and its proximity to standing timber. Consequently, the Panel finds that the Appellant damaged standing timber without authority. [102] In addition, within the Licence Area certain reserve trees were cut. At least two green trees were cut and some other reserved trees were cut, albeit “for safety” reasons. No prior or post harvest approval was sought or given. [103] The Appellant, as a designate or contractor of the Licensee, must understand and comply with the terms and conditions of the Licence. If the site conditions were such that an amendment was needed, or access/danger trees needed to be cut, there are mechanisms to address these issues. However, the mechanisms do not include ignoring the Licence and simply doing whatever is most efficient and economical. DECISION NO. 2011-FOR-003(a) Page 18

[104] Further, the Licence states that the entire log must be utilized. This does not mean utilize as much as you can for high quality cedar shakes only. Reading the Licence as a whole, and in particular conditions 1 and 2 of Schedule A, the Panel finds that the requirement to use the entire log meant utilize it for shake blocks, other special forest products such as rails and posts, lumber, or even fire wood. The Appellant clearly cut more than 45 m3 in order to remove that amount from the site. The volume of the trees not utilized, but that could and should have been utilized under the Licence, is included in the unauthorized harvest. [105] Based upon all of the evidence, the Panel finds that the Appellant cut, damaged and/or destroyed Crown timber without authorization, contrary to section 52 of the Act. 2. What is the volume and grade of wood that was cut, damaged or destroyed contrary to section 52 of the Act? [106] The evidence regarding the volume and grade of the timber at issue was provided by two expert witnesses, Ms. Golley and Mr. Relkoff, whose approaches and results were significantly different. The decision as to whose evidence will be accepted is important to the Appellant because the higher the assessed volume and the higher the grade given to the timber, the higher the monetary penalty. [107] In making the Determination, the District Manager relied upon the scale results of Ms. Golley. Ms. Golley is the District Scaling Supervisor and was qualified at the Hearing to give expert evidence on scaling practices east of the Cascade mountains. She is a Registered Forest Technician and has held a scaling licence since 1981. Ms. Golley worked as an industry scaler prior to her employment with the Ministry in 1992. Since January of 2002, Ms. Golley has performed 533 check scales of industry scalers. [108] Ms. Golley explained how she performed the scale at the site between August 18 and 21, 2008. She located the logs that she believed were part of the Appellant’s unauthorized activities and matched them to the stumps. She also scaled the standing trees damaged by the burn. Ms. Golley noticed that some stumps resulting from the harvest were considerably higher than 30 centimeters. Although the Waste and Residue Manual states that the maximum stump height is 30 centimeters and, therefore, she could have included in the scale any stumps above that point, she chose not to do so. Therefore, this additional volume was not included in the District’s Manager’s penalty assessment. In addition, none of the wood she found along the trail was scaled. [109] Ms. Golley used a hand held data collector to input her measurements and defect observations. She scaled 67 logs on site as having a gross volume of 166.736 m3 and a net firmwood volume of 153.873 m3. [Scale results in British Columbia are reported in terms of the “net firmwood volume in cubic metres”. Firmwood can be described as the healthy fibre of a log. Deductions are made from the gross volume of a log for things such as rot, hole, char or missing wood to arrive at the net firmwood (healthy fibre) volume.] When determining net volume, Ms. Golley includes “useable wood” (healthy fibre) between the defects. [110] Ms. Golley also determined the grade of the logs. The grade given to timber reflects the quality and end use of the timber, and therefore also reflects its value. DECISION NO. 2011-FOR-003(a) Page 19

The Scaling Regulation, B.C. Reg. 446/94, describes the applicable Interior timber grade codes. The Ministry’s Scaling Manual provides the detailed process for determining grade. Of relevance to this case, the grade given to a log takes into account various defects: the more defects in the log, the lesser the grade. Grade 1 reflects the highest quality and most valuable timber. [111] For the cedar logs scaled at the site, Ms. Golley assessed 7 logs as grade 1 cedar, 26 logs as grade 2 cedar, 7 logs as grade 4 cedar, 9 logs as grade 6 cedar, and 3 logs as grade “Z” cedar. [112] For the other species, Ms. Golley scaled 5 logs as grade 1 fir and 1 log as grade 2 fir. She also assessed 1 log as grade 1 hemlock, and 8 logs as grade 2 hemlock. [Note: one hemlock and two cedar logs were the standing trees damaged by the debris pile burn.] [113] The Appellant’s scaler, Sam Relkoff, also testified at the Hearing. Mr. Relkoff received his scaling licence in 1961 and worked for the then Ministry of Forests as a log scaler from 1967 until 1978. He has worked with cedar logs and performed scaling at various mills over the years. The Panel accepted Mr. Relkoff as an expert in the area of scaling. However, his expertise is limited to scaling at mills, where the logs have been cut, as opposed to in the woods. [114] Mr. Relkoff attended the site on April 28, 2010 and scaled 26 of the cedar logs in the Licence Area that had been scaled by Ms. Golley. At the time, the logs had been on the ground for two years. He took this into account when assessing the different types of rot and the quality of the logs. For instance, he explained that Heart Rot would remain the same over a year, but Sap Rot continues. Sap Rot can be found in standing dead trees. [115] Mr. Relkoff explained how he scaled the cedar. He measured the log to a point where any wood beyond that point was not suitable for manufacturing into a product due to shattered and splintered wood. Most of the tops of the wood he scaled were split into splinters and shattered. He also measured the diameter inside the bark and looked for pathological defects such as rot. Any logs that “were in question or doubt” were bucked and topped to determine the extent of any defect and then scaled accordingly. [116] Like Ms. Golley, Mr. Relkoff determined the volume of the logs using his hand held computer. He set out his results in a document that was provided to the District Manager at the Opportunity to be Heard. Mr. Relkoff’s scale showed the 26 logs as having a gross volume 98.624 m3, and a net volume of 81.541 m3. His net volume differed from Ms. Golley’s net volume of the same logs by 27.060 m3. [117] Regarding grades, unlike Ms. Golley who assessed 7 cedar logs as grade 1, Mr. Relkoff did not assess any as grade 1. He assessed all as either grade 2 or grade 4. In addition, some of the logs scaled by Mr. Relkoff were given two or three grades because he gave a grade to each piece of the bucked log. [118] The Appellant submits that the wood left behind was full of internal rot and that the Ms. Golley’s scale is inaccurate because her volume and grade does not reflect the extent of the decay. He submits that, where they differ, Mr. Relkoff’s scale results should be preferred for the following reasons. DECISION NO. 2011-FOR-003(a) Page 20

[119] The Appellant notes that many of the factors used in scaling are purely estimates and, therefore, many assumptions, opinions, and estimates are employed. For instance, a scaler must: • Estimate the extent of rot/decay as it appears on the log end – delineate this; • Estimate the degree it penetrates into the log; • Estimate the shape (conical or cylinder) it may take; • Estimate the % of lumber that can be cut from between the defects; • Estimate the % of merchantable lumber that can be recovered from the total. [Appellant’s emphasis] [120] Although both Mr. Relkoff and Ms. Golley relied upon their respective “estimates”, the Appellant submits that Mr. Relkoff used field practices that allowed him to more accurately assess the factors impacting volume and grade: he bucked and topped most logs. As a result, the Appellant submits that the scale conducted by Mr. Relkoff better reflects actual measurements, as opposed to best guesses. The Appellant submits that section 7.7.6.2 of the November 18, 2009 version of the Scaling Manual confirms that Mr. Relkoff’s scaling method is more accurate. Under the heading “heart defect – conventions – partial length”, the Manual states: 1. In heart defects with only one end visible, the diameter of the defect at the unseen end is assumed to be the same as at the measured end where the defect penetrates ½ way or less. However, in logs where the rot penetrates more than ½ the length of the log, this assumption is less reasonable, and the Forest Service may order that logs be bucked prior to scaling to improve accuracy. The ratio of the area of the rot to the area of the end which the rot occurs must be maintained at the unseen end or an over-deduction will result. [Appellant’s emphasis] [121] The Appellant submits that Ms. Golley conducted her scale without the proper equipment necessary to accurately evaluate the extent of the internal decay, rot and breakage and, ultimately, grade. He notes that if Ms. Golley’s estimate of grade is used, he will have to pay a penalty of $328 for Log #41, whereas Mr. Relkoff’s estimate of grade would result in payment of $1.06 for the same log. He submits that Mr. Relkoff used field practices that enabled him to arrive at a grade with much more certainty. Therefore, Mr. Relkoff’s grade results should be preferred. [122] The Government argues that Ms. Golley’s evidence should be preferred with the following exception. As noted in the background to this decision, the Government acknowledged that there were three logs erroneously included in Ms. Golley’s scale. The evidence established that logs 10, 19 and 21 were likely felled prior to the Appellant’s harvest. They were scaled as follows: Log 10: Grade 6 cedar, net volume 0.120 m3 Log 19: Grade 1 fir, net volume 0.854 m3 Log 21: Grade 1 fir, net volume 0.694 m3 DECISION NO. 2011-FOR-003(a) Page 21

[123] After removing these volumes, the Respondent submits that the following results of Ms. Golley’s scale of volume should be preferred by the Panel:

Area Volume Scaled (m3)

Helicopter landing area (logs 1-30) 24.552

Licence Area (logs 31-67) 127.653

Total 152.205

The Panel’s Findings [124] There was a great deal of tree by tree, stump by stump evidence and analysis provided by both parties in support of their respective positions. For convenience, Mr. Relkoff produced a table highlighting the differences between his assessment of grade and volume and Ms. Golley’s assessment. In terms of grade, as stated above, Mr. Relkoff found no grade 1 logs, whereas Ms. Golley scaled over 30 m3 as grade 1. Mr. Relkoff says that only 30% (+/-) were grade 2 cedar, whereas Ms. Golley found 75% were grade 2. Mr. Relkoff ranks 60% of the wood as grade 4 or less, whereas Ms. Golley scaled only 10% as grade 4 or less. [125] Prior to the Hearing, Ms. Golley was asked to review Mr. Relkoff’s scaling results and procedures and provide a responding opinion. She wrote: It appears that Mr. Relkoff has applied the 2010 Scaling Manual grading rules for cedar rather than the 2007 Scaling Manual grading rules. The grading rules around cedar changed in January of 2009. The 25 rad2 midpoint diameter and 50% availability to cut lumber for grade 2 and 75% for grade 1 cedar was removed and the availability for lumber to be cut was changed to 75% for all diameters for a grade 2 sawlog and 90% for a grade 1 sawlog. Using the 2007 Scaling Manual grading rules and Mr. Relkoff’s deductions 14 logs would have been a higher grade log (pieces 32, 34, 35, 37, 44, 47, 54, 55, 59, 61, 62, 64, 65, 66). There are 8 logs which have a firmwood deduction showing on only one end of the log and Mr. Relkoff has estimated the length to be the entire length of the log. This would cause an under estimation of the firmwood volume (over estimation of the rot volume) (Pieces 34, 35, 37, 38, 46, 56, 61 piece 3). There are 9 logs with a significant difference (greater than 1 meter less) in the gross length of the log from what I scaled. This would also cause an under estimation of the firmwood volume (Pieces 37, 43, 44, 54, 55, 57, 59, 61, 66).

2 “rad” is the radius class unit (equal to 2 cm). It is used for diameters, widths and thicknesses. DECISION NO. 2011-FOR-003(a) Page 22

Logs number 7 and 60. Mr. Relkoff has graded these two pieces correctly according to the Scaling Manual however these two pieces would be classified as bucking waste according to the Residue and Waste manual and would both be graded as grade 2 sawlog. (66 and 59% available to cut lumber using Mr. Relkoff’s deductions). [126] At the Hearing, Ms. Golley was asked to explain in more detail why her scaled volumes and Mr. Relkoff’s differed by so much. She testified that some of the difference in volume was due to the way Mr. Relkoff measured the log. She explained that Mr. Relkoff did not measure past shattered wood because he believed it was not useable. In her opinion, this is not in accordance with the Scaling Regulation or Scaling Manual. She explained that the proper practice is to: (1) find the gross volume of the log, even if the top is shattered. The scaler should measure to where the log is still holding together; and (2) take grade deductions from that gross measurement to find out what firmwood is available. In short, she explained that a shattered top does not affect the volume – only the grade. As long as the log is holding together, it is still part of the gross volume. [127] In terms of merchantability of timber, Ms. Golley explained merchantability comes into play in the grade assessment, after the gross measurements are taken and the firmwood deductions are made. It is the final step: it does not affect the gross volume measurements. [128] She also explained that some of Mr. Relkoff’s firmwood deductions overestimated the amount of rot in the logs. For example, she observed firmwood between some of the rings in Log #57 and, therefore, she reduced the rot deduction to account for some of that firmwood. However, Mr. Relkoff deducted a greater amount for rot and did not account for the firmwood that was there. When considering defects such as Heart Rot, she explained that the Scaling Manual states that there must be a 10 cm collar around the rot. In her opinion, provided that there is a 10 cm space between defects and if there is one inch of lumber that can be cut then that wood is counted. [129] Another reason for the difference between her scaling and Mr. Relkoff’s resulted from his bucking of the logs into separate pieces. Ms. Golley explained that, without a bucking order issued by the Minister under section 4 of the Scaling Regulation, it is not appropriate to scale individual pieces. Section 4 states: Bucking at the scale site 4 (1) A person must not cut timber that has arrived at a scale site until the timber has been scaled, except in accordance with an order or permission under subsection (2). (2) The minister may, to ensure accurate scaling, order or permit a scale site owner or operator to cut the timber before scaling. (3) The order or permission may specify (a) the circumstances under which the timber may or must be cut, and (b) the point at which the timber may or must be cut. [Emphasis added] DECISION NO. 2011-FOR-003(a) Page 23

[130] If the log is in separate pieces, Ms. Golley explained that the scaler must reconstruct the log and scale it as one piece. This is confirmed in section 8.3.1 of the Scaling Manual which states, “Although the defects affecting timber quality are described separately, the scaler must evaluate the whole log in terms of the cumulative effect of the separate quality defects observed.” Ms. Golley did not buck any of the logs as she explained that she is not certified to buck logs. [131] In Ms. Golley’s opinion, the way Mr. Relkoff performed his scale was not in accordance with the Scaling Regulation or the Scaling Manual and resulted in an overestimation of the amount of rot. She states that he should have reconstructed the log, taken the defect volume away from the firmwood volume, and then graded the log as one piece. [132] In response to Ms. Golly’s grading and assessment of useable wood, the Appellant called Mike Nazaroff to testify. Mr. Nazaroff has owned and operated A.M. Cedar Ltd. in Nelson B.C. since 1985. In that capacity Mr. Nazaroff has been directly involved in the production of cedar shakes, shingles, split rail fence products, lumber, cedar specialty products and from logging for 25 years. Mr. Nazaroff inspected and evaluated the quality and usability of downed cedar logs at the Puddingbowl Creek site for the purpose “of determining the suitability of these logs for shakes, lumber, and/or alternative uses.” In Mr. Nazaroff’s assessment letter, he states that a total of sixteen logs were low grade logs, suitable for the manufacture of cedar post and rail and low grade shingles. There were eight possible lumber grade logs. In his view, the product grade logs are unlikely to have any commercial value because “the costs related to the removal of these logs would greatly outweigh the income received for them, if any.” At the Hearing, Mr. Nazaroff testified that there was not one log that would get good recovery. He concluded that both the lumber grade and the product grade logs inspected at this site were undesirable in quality and grade, for commercial purposes. [133] The Appellant asked Ms. Golley to respond to Mr. Nazaroff’s evidence that much of the remaining wood on site was undesirable for commercial purposes, in terms of quality and grade as Mr. Nazaroff’s evidence contradicts her assessment that there was a significant amount of grade 1 and 2 timber. [134] Ms. Golley explained that the grades in the Scaling Manual focus on the percentage of the “lumber” that must be merchantable, and the percentage is based on one inch lumber at 2.5 metres in length. She advised that Mr. Nazaroff incorrectly based his assessment of the percentage of merchantable lumber on two inches of lumber which is contrary to the Manual. [Section 1 of the Scaling Regulation, defines “merchantable” as “general purpose lumber graded higher in quality than utility”.] She testified that it does not take into account the amount or quality of a specific end product such as shakes. [135] The Panel finds that Mr. Nazaroff’s evidence is relevant to the Appellant’s business decision to leave the wood at the site, but is not relevant to the scale results. There is no question that there was rot in the wood remaining at the site. The question before the Panel relates to the volume and grade of that wood for the purposes of determining the nature and extent of the contravention, not whether the Appellant will get “good recovery”. DECISION NO. 2011-FOR-003(a) Page 24

[136] Although the Appellant submits that Mr. Relkoff’s scaling results should be preferred because they were more “accurate”, the Panel disagrees. The Panel accepted Mr. Relkoff as an expert in the area of scaling at mills, where the logs have been cut, as opposed to in the woods. He does not have the expertise of Ms. Golley who has scaled in the woods, and has scaled wood to determine volume in an unauthorized harvest, as was the case here. In addition Ms. Golley has check scaled wood of similar quality as the wood found at the site. Check scaling is carried out by senior Ministry scalers such as Ms. Golley to confirm that the original scale was completed in compliance with Ministry standards. In fact Ms. Golley has check scaled Mr. Relkoff’s scales in the past. Therefore, although the Panel accepts that Mr. Relkoff is an experienced and knowledgeable scaler – his experience and knowledge is not as extensive as Ms. Golley’s nor as directly applicable to the present situation. [137] In addition, Mr. Relkoff bucked the logs to assess the defects and then graded them separately. The Panel accepts Ms. Golley’s evidence that he should not have scaled the pieces individually without a bucking order. This shortcoming in his knowledge of proper scaling procedures reduces the Panel’s confidence in Mr. Relkoff’s results when compared to Ms. Golley’s. Mr. Relkoff’s results are also limited to 26 of the 67 logs scaled by Ms. Golley. [138] Finally, the Panel notes: • Ms. Golley did not include the additional wood that could have been scaled from the stumps over 30 centimetres; and • Ms. Golley did not include logs from the trail. [139] Thus, the volume could have been even higher. [140] The Panel finds that Ms. Golley was reasonable in her decisions as to what she scaled and that her knowledge and results are more consistent with the Scaling Regulation and accepted scaling practices as set out in the applicable Scaling Manual than were Mr. Relkoff’s. [141] Having said that, the Panel also acknowledges that scaling involves estimates and judgments and Ms. Golley’s scaling was not perfect. The Government acknowledges that three logs were included in the original scale that had not been cut by the Appellant. In addition, the District Manager discounted Ms. Golley’s total volume by 33%. The Appellant submits this is just an acknowledgement of Ms. Golley substandard scale, is an arbitrary fudge factor, and is a further ground to completely disregard Ms. Golley’s results. [142] The Panel disagrees. The Scaling Regulation prescribes a tolerance of 3% between the original scale and the check scale. Rather than being evidence of a “fudge factor”, the Panel finds that the 33% reduction is an example of the District Manager giving the benefit of the doubt to Mr. Franklin and the Appellant. This is supported by the following passage on page 6 of the Determination: Mr. Schacher has called into account the scaling rules associated with the volumes of both cedar and other species left on site. Mr. Schacher, Mr. Franklin, and I are not certified scalers, nor experts in the field of scaling timber in the province of British Columbia. Mr. DECISION NO. 2011-FOR-003(a) Page 25

Schacher however has extensive experience in what constitutes the best and highest grade of cedar blocks, and it is that product which he admits he was manufacturing. At question, is what has been left on site, as either waste, the bi-product of Mr. Schacher’s operations, and/or merchantable material that was felled under the conditions of the tenure and simply not utilized, therefore also wasted. Basically, I have been given two scaling records and opinions from two certified scalers of the volumes left onsite. It is not my need or intent to complete a review of the scaling laws and practices within the Province, nor review the performance of the two scalers in question. …. I am aware that scaling tolerances in volume and grades are strict, while under other situations in forestry plus or minus 15% is the acceptable tolerance level. In this case and only to take all the potential discrepancies of volume and grades, the back and forth innuendos into account, I will reduce the Government Scaler’s volume by 33% or 50.778m3, from 153.873m3 to 103.095m3. [143] After carefully reviewing the evidence, the Panel finds that Ms. Golley’s scale, less the three logs, was a fair assessment and the preferred scale in the circumstances. Although the Panel is of the view that the District Manager was overly generous in his 33% reduction, the Government did not request that it be varied and the Panel will not interfere with his reduction at this time. [144] For all of these reasons, the Panel accepts the District Manager’s findings on the volume and grades, less the three logs incorrectly included in Ms. Golley’s scale: logs 10, 19 and 21. 3. What is an appropriate penalty for the contravention? [145] The District Manager levied the administrative penalty pursuant to section 71(2) of the Act. This section allows the minister (or delegate) to levy an administrative penalty that does not exceed the prescribed amount. The maximum penalty for a contravention of section 52(1) of the Act is prescribed in section 13(2) of the Administrative Orders and Remedies Regulation, BC Reg. 101/2005. The District Manager applied the formula in subsection 13(2)(c)(i) which is: (i) the stumpage and bonus bid that in the opinion of the minister would have been payable if the volume of timber that was the subject of the contravention had been sold under a BC timber sales agreement at the time of the contravention [Emphasis added]. [146] Brian Russell, Timber Pricing Coordinator with the Ministry, calculated the average Small Business Rates (i.e., BC Timber Sales stumpage rates) for the Kootenay Lake District as $28.75 m3 and the average bonus bids as $10/m3, for a total of $38.75. [147] The District Manager calculated the penalty as: 103.095 m3 (66% of volume scaled by Ms. Golley) x $38.75 = $3,994.93 per m3. [148] The Appellant takes issue with the rates that were used to calculate the average rate. He states that Mr. Russell used nine other timber sales to arrive at DECISION NO. 2011-FOR-003(a) Page 26 an average stumpage rate of $38.75. However, all of these timber sales employed conventional logging methods at locations much closer to processing facilities. He submits that these are significant factors affecting stumpage determinations. [149] In particular, the Appellant points out that his method of harvesting was heli- logging. In his view, “There is a reason why no helicopter sales were included within the 9 sales cited. This method of harvest is extremely expensive and as such rarely utilized.” The Appellant notes that, historically, stumpage rates charged for these sales were less than $10.00 per m3. Had one or two of these sales been included amongst the sample population, he submits that the resulting penalty rate would have been much lower. [150] The Appellant further submits that the vast amounts of timber harvested from these sales would have been green trees which yield high value saw logs. [151] When considering whether a penalty should be issued, the Appellant submits that the Panel should consider the following. He estimates that the cost of harvesting was $5,000 to $6,000 for the helicopter (helicopters are $1,400 per hour), plus his own labour. In terms of profit, he sold 15 cords at $600, for a profit of $8,000 to $9,000. He testified that if he had manufactured the remainder of the wood on site, he would have received “no profit”. [152] He also suggests that, if the stand had been left untouched (e.g., Mr. Franklin had not accepted the Licence), it would have been less valuable to the Crown. However, when he put this question to Ms. Jaarsma, she responded that, even if the stand had been left for another 20 years, it would still have value: its use may change – it may become critical wildlife habitat – but she doesn’t believe it was degrading in value to the Crown if it was left standing. [153] Taking into consideration all of the circumstances, the Appellant submits that no penalty is warranted. However, if there is to be a penalty, he maintains that a “fair penalty” would be $1,016.47, which he says reflects a type of waste assessment billing. This calculation is based upon Mr. Relkoff’s volumes and grades. [154] The Government submits that the Appellant’s suggested penalty of $1,016.47 is “dramatically low” and is based upon volumes and grades from a flawed scale, conducted in the most favourable manner to the Appellant. The Government submits that the stumpage and bonus bid for BC Timber Sales suggested by the Appellant is one half of what Mr. Russell determined to be the average rate. [155] Regarding the Appellant’s argument that the average rate did not include any heli-logging, the Government submits that the method of harvest is not a factor that must be considered under section 13(2)(c)(ii) of the Regulation. Moreover, the amount proposed by the Appellant does not compensate the Government for the timber cut by the Appellant, let alone meet the objectives of deterring the Appellant and others from committing similar contraventions. [156] The Government also submits that some penalty is appropriate when the factors in section 71(5) of the Act are considered: DECISION NO. 2011-FOR-003(a) Page 27

(5) Before the minister levies an administrative penalty under subsection (2), he or she must consider the following:

(a) previous contraventions of a similar nature by the person;

(b) the gravity and magnitude of the contravention;

(c) whether the contravention was repeated or continuous;

(d) whether the contravention was deliberate;

(e) any economic benefit derived by the person from the contravention;

(f) the person's cooperativeness and efforts to correct the contravention;

(g) any other considerations that the Lieutenant Governor in Council may prescribe.

[157] Of note, the District Manager found as follows: • the gravity was high and the magnitude of the contravention was moderate; • the contravention occurred over a period of three to five days; • the Appellant and Mr. Franklin contravened section 52(1) in a deliberate fashion and against the terms and conditions of the Licence; and • the Appellant and Mr. Franklin derived some economic benefit by felling well beyond the 45 m3 permitted, and only extracted processed shake material which is not what the tenure intended to achieve. The District Manager did not remove all profits derived from the Licence because he attributed some of the contravention to be due to the Appellant’s “confusion” over the intent of the tenure. [158] However, the Government does not ask the Panel to confirm the assessed penalty, less the three logs scaled in error. In its closing argument, the Government noted that it had found an error in the penalty. Under section 13(3) of the Administrative Orders and Remedies Regulation, a penalty levied under section 71(2) of the Act cannot include any amount recoverable under section 103 of the Forest Act – that is, recoverable in stumpage. This subsection states:

(3) For a contravention of section 52 of the Forest and Range Practices Act, the minister, in a penalty levied under section 71 (2) of that Act, may not include any amount for the value of the timber, if any, that is recoverable under section 103 of the Forest Act.

[159] Based upon the scale results of Ms. Golley (minus the three logs 10, 19, 21), and based upon the Average Sawlog Stumpage Rates in table 6-1 of the Interior Appraisal Manual in effect as of August 2007, plus basic silviculture costs, the DECISION NO. 2011-FOR-003(a) Page 28

Government states that it will be issuing a bill to the Appellant in the amount of $2,136.68, which is a separate appealable decision. [160] Deducting the stumpage that is payable on the unauthorized volume calculated by Ms. Golley, the Government submits that the penalty should be adjusted by the Panel as follows: $3,994.92 - $2,136.68 = $1,858.24 [161] The Government submits that although the District Manager could have imposed a much higher penalty, he chose to levy a much lower penalty. With the reduction of the amount to be billed as stumpage, the penalty should be $1,858.24. Of this, the Appellant is responsible for 75%. The Panel’s findings [162] Because this stumpage issue was identified by the Government during closing arguments, the Appellant did not specifically respond to it in his reply. However, the Panel agrees with the Government’s analysis of the legislation that, a penalty levied under section 71(2) of the Act cannot include the stumpage recoverable under section 103 of the Forest Act. Therefore, the Panel agrees that the stumpage amount must be deducted from the penalty. As noted by the Government, a separate appeal lies to the Commission from stumpage notices issued under the Forest Act. [163] The Appellant submits that the timber sales used for the average stumpage and bonus bid should have been more similar to the one that is the subject of this appeal in terms of harvesting location and harvesting method. The District Manager considered this argument prior to making his Determination. At page 7 he states: I have reviewed the BC Timber Sale areas that were used to determine the penalty rate. These sales represent significantly more volume and risks than FLTC A83099. Within the 9 sale areas 68% was harvested by conventional methods and 32% was harvested by cable methods. Mr. Schacher makes an incorrect assumption of this section, that is, he appears to believe the areas to be used to generate the penalty rate are to be harvested the same way FLTC A83099 was harvested and for the same products. The section clearly states, the penalty rate will be what the Minister could reasonably have expected had the volume of FLTC A83099 been sold by competition by BC Timber Sales. Having reviewed the area of FLTC A83099 and the type of harvesting opportunities it has to offer in a routine BC Timber Sales type tenure, I believe the 9 sales are entirely appropriate to be used for the penalty calculation. I believe Mr. Schacher’s assumption to be wrong. As mentioned above, I have reduced the volume in non-compliance by 33% to additionally account for any significant discrepancies arising from the calculation of the penalty rate. I have also contemplated not using this section so as [sic] eliminate any perceived discrepancies and using section 13(2)(a)(ii), the penalty rate of $200/m3, however, have determined that rate to be an excessive amount in this case. DECISION NO. 2011-FOR-003(a) Page 29

Therefore, I agree the penalty rate as determined under section 13(2)(c) as $38.75/m3 is appropriate. [164] The Panel agrees with the findings of the District Manager on this point. The $38.75 is an appropriate average Small Business Rate for stumpage and bonus bid. [165] The Panel also finds that a penalty is warranted in this case and that the Appellant should be held responsible for 75% of the penalty. Although the difference between the Appellant’s penalty calculation and the Government’s is now approximately $800, the Panel finds that the Appellant’s calculation is too low. The Panel accepts Ms. Golley’s scale as the appropriate one to use for the purposes of this contravention determination, and accepts the District Manager’s reasoning for reducing the volume by 33% as being extremely generous. The Panel also notes that the Appellant has not been prevented from pursuing other licenses and, in fact, has been awarded licences since the events at issue here. [166] Finally, the Panel notes that Ms. Golley incorrectly included three logs; Log 10, Log 19 and Log 21 in the scale. The Appellant submits that the volume of these logs should be deducted from the penalty calculation. However, the Panel finds the District Manager accounted for any errors in the scale by giving the Appellant a 33% reduction in the scale that was arrived at by Ms. Golley. The Panel is satisfied that no further reduction is necessary or justified under the circumstances. [167] In all of the circumstances, the Panel orders that the penalty be varied to $1,858.24. 4. Should the Appellant be compensated for the money he expended over the course of the investigation and appeal through an order of costs against the Respondent? In his closing argument, the Appellant submitted that he incurred over $11,000 in expenses over the course of the Ministry’s investigation and the appeal. He submits that it would be appropriate for the Government to reimburse him for his expenses because, through these processes, he has identified various shortcomings in the Ministry’s business practices which resulted in, or contributed to, the contravention and appeal. The Panel’s findings [168] The Panel has the authority to award costs pursuant to section 84(3) of the Act, which states “The commission may order that a party or intervener pay another party or intervener any or all of the actual costs in respect of the appeal.” [169] The Commission has established a policy on costs in its Procedure Manual. It states, in part: The Commission has adopted a policy that costs should only be awarded in special circumstances. Those circumstances include:

(a) where, having regard to all of the circumstances, an appeal is brought for improper reasons or is frivolous or vexatious in nature; DECISION NO. 2011-FOR-003(a) Page 30

(b) where the action of a participant or the failure of a participant to act in a timely manner resulted in prejudice to any of the other participants;

(c) where a participant, without prior notice to the Commission, fails to attend a hearing or to send a representative to a hearing when properly served with a Notice of Hearing;

(d) where a party unreasonably delays the proceeding;

(e) when a party’s failure to comply with an order or direction of the Commission has resulted in prejudice to another party; and

(f) where a party has continued to deal with issues which the Commission has found to be irrelevant.

[170] The Panel has considered the Appellant’s request and his reasons for it. With respect to the expenses incurred as a result of the Ministry’s investigation and Opportunity to be Heard proceedings, the Panel has no jurisdiction to order those costs to be paid. The Commission’s power is limited under section to 84(3) of the Act to only costs “in respect of the appeal”, not prior proceedings before a different decision-maker. [171] Regarding the costs in respect of the appeal, the Panel finds that there are no special circumstances under the Commission’s policy that warrant an award of costs. The Appellant provided a thorough and detailed case which clearly took a great deal of time. However, this is not the test for a costs award. [172] The Panel notes that one of the reasons the Appellant has requested these costs is because he is convinced that the investigation of his harvesting, and all subsequent proceedings, have been a waste of time and resources for all. In his final reply argument, the Appellant expresses his frustration and anger at the Ministry’s enforcement of what he considers to be “a small matter” and, in particular, the Ministry’s assertion that Mr. Relkoff, who bucked the logs to ensure accuracy, was in violation of the Scaling Regulation. He points out that the Small Scale Salvage Program administers small volumes of timber harvested by small operators. Small operators have limited resources to draw upon, unlike major licensees with professional foresters and lawyers, well versed in legislation pertaining to forestry issues. He states, “Is it reasonable to expect a small operator to employ the degree of knowledge and expertise, as suggested by the ministry, and research all legislation to access the information cited to ensure nothing has been overlooked? I feel this is an unreasonable expectation …. ” [173] While small operators do not have all of the resources of large licensees or the Ministry, this does not mean that they should be held to the lowest of standards. These licences should not be entered into lightly, and generally aren’t. Small operators are expected to carefully read and understand their licences and to ensure that that the terms are complied with. If this cannot be done, the normal procedure is to notify the Ministry and request changes as soon as possible. This is a requirement that applies to all small (and large) operators. This Appellant, DECISION NO. 2011-FOR-003(a) Page 31 having worked for the Ministry for many years, should not be held to a lower standard than those applied to other small licensees. Nor should his scaler be held to a lower standard. [174] The public expects a licensee, especially one authorized to work at or near recreation and riparian areas, to be held to appropriate standards. Considering the evidence and photographs provided in relation to this particular harvest, the Panel is of the view that the Appellant should feel fortunate that the Determination did not hold him accountable for more infractions and greater penalties. Based on the evidence, the Ministry officials appear to have given the Appellant the benefit of the doubt at every turn – in the contraventions that were ultimately pursued, and in the volume determined to be unauthorized. [175] Despite this, it is clear that the Appellant believes that he is being treated unfairly. However, given the 33% reduction in the total volume, the lack of enforcement action taken on other irregularities noted at the site (e.g., the burning of debris without first measuring the amount, work in and around the riparian area and a nesting site), and his evidence that he has been awarded at least one licence after the events in this case, the Panel is of the opinion that his belief is unfounded. [176] The application for costs is denied.

DECISION

[177] In making this decision, the Commission has considered all of the evidence and arguments, whether or not specifically reiterated here. [178] The Panel understands that the Appellant feels strongly that he was not treated fairly in many ways. He prepared his case thoroughly and made his points clearly. However, in the end, the Panel is not convinced by his evidence or arguments. The Panel finds that regardless of what he believed that he could do under the Licence, that is not what, in fact, the Licence authorized. The Panel finds that he harvested timber that was not authorized under the Licence or amendment, did not comply with the terms of the Licence, did not seek approval for his actions, and has not established a defence to the actions. Therefore, his appeal of the contravention fails. [179] The penalty is varied to $1,858.24, with the consent of the Respondent. [180] The appeal is dismissed. [181] The application for costs is denied.

“Alan Andison” Alan Andison, Panel Chair Forest Appeals Commission

April 30, 2012