Parks Settlement Agreement - MacMillan Bloedel
MACMILLAN BLOEDEL SETTLEMENT AGREEMENT
The Province of British Columbia has reached a Settlement Agreement with MacMillan Bloedel Ltd. (MB) for the timber harvesting rights the company lost due to the creation of provincial parks on Vancouver Island since 1991. This document will provide information on:
Background: parks creation
For years, Vancouver Island has been a focal point in British Columbia for public debate and environmental concerns over critical land use and forest management issues. The debate usually centered on plans to log the old growth spruce, cedar and hemlock forests found on the west coast of the island.
One of the debated areas of the late 1980s was the Carmanah Valley, home to stands of old growth Sitka spruce. The provincial government resolved the conflict by creating Carmanah Pacific Park in 1991 to protect the Sitka spruce found in the lower valley.
In the 1990s, the B.C. government adopted a comprehensive land use strategy designed to end the valley-by-valley conflicts. In 1992, the Commission on Resources and Environment (CORE) was given the mandate to develop land use recommendations for three regions in B.C., including Vancouver Island. The following year, the Province adopted the Protected Areas Strategy (PAS), affirming its intent to increase, to 12 per cent of the province, the amount of provincial land protected for conservation, recreation and cultural heritage purposes.
On Vancouver Island, the PAS was implemented primarily through the Clayoquot Sound land use decision (January 1994) and the Vancouver Island Land Use Plan decision (June 1994) which was based on the recommendations originating from the CORE planning process. As a result of these two decisions, the Parks Amendment Act of 1995 created 14 new protected areas in Clayoquot Sound and 23 new large parks elsewhere on Vancouver Island.
Many of the newly designated parks, such as the Carmanah Pacific, Strathcona additions, Tsitika River, Tahsish-Kwois, Brooks Peninsula and most of the parks in Clayoquot, were created in areas where MacMillan Bloedel held timber harvesting rights either as timber licences or as tree farm licence agreements. As a result of the creation of these parks, MB lost access to approximately six million cubic metres of timber in timber licenses, and also lost allowable annual cut from Crown land.
The Settlement Agreement
The parks created in 1991 and 1995 eliminated MB's timber harvesting rights on approximately 7,663 hectares of timber licences, and on an additional 43,877 hectares of Crown land within two tree farm licences (TFLs). In addition to the lost harvesting rights, the company lost part of its investment in forest-related infrastructure, including roads and bridges on these lands.
The Province is committed to fair treatment of resource tenure holders affected by the creation of new parks and treaties. Accordingly, in December of 1997, the Province and MacMillan Bloedel initiated negotiations towards a voluntary settlement of MBs claim in accordance with the parameters specified in the Forest Act. These provide for reimbursement for the loss of more than five per cent of harvesting rights and for lost improvements.
The Provinces evaluation of MacMillan Bloedels lost harvesting rights was based the companys foregone net income after taxes and Crown charges. The following main factors provided the basis for negotiations:
Following negotiations lasting over a year, the Province and MacMillan Bloedel signed a Settlement Agreement on March 16, 1999.
The Province has agreed to pay MB $83.75 million, which includes interest that has accumulated since the parks were created in 1991 and 1995. That amount was fixed as of January 1, 1999 and interest will accumulate on the principal until such time as it is paid in full.
The Settlement Agreement specifies the settlement amount may be paid to MB in resource rights, land and/or cash. The Province has agreed to diligently pursue settlement by means of one or more of the following three forms of non-cash currencies:
The Province will not use any of these potential non-cash forms of currency without extensive, prior public consultation. To the extent that the settlement amount is not paid by means of the above three types of non-cash currencies by October 31, 1999, the Province will have to pay cash in monthly instalments over a period of up to five years.
Effects of Changes to Land Status
If and when some of MBs private land is ultimately removed from its TFLs, the company will save on regulatory costs because it will no longer have to obtain Forest Service approval of its logging plans. Instead of being managed under the Forest Practices Code, which applies to public land in British Columbia, the private land will be managed as part of the Forest Land Reserve and according to the pending provincial standards for private forest land. If MB acquires ownership of some VIP lands and/or some of the Crown land currently within TFL 39, forest practices there will not become unregulated, but rather will be subject to the pending standards for private land as well as the current federal laws that apply. As with all private land, the company will not have to pay stumpage for timber cut on that land, but will remain fully subject to provincial log export controls.
In all cases, independent appraisals will determine the value to MacMillan Bloedel of having any of its private land removed from its TFLs, and the fair market value of VIP lands and the other Crown land. The Province will take the results of those appraisals into account, along with input gathered during the public consultation phase, and then decide whether to proceed with any changes to land status.
At the Provinces request, MB has identified more VIP and TFL Crown land than needed to satisfy its settlement entitlement. (The company has identified approximately 19,000 hectares of VIP land, and about 13,000 hectares of TFL Crown land.)
In crafting the Settlement Agreement, the provincial negotiators and MB both anticipated candidate land being eliminated from consideration once First Nations, interested groups, local residents, and government agencies presented their site-specific concerns. The same holds true for the land MB already owns and wishes to have removed from its tree farm licences.
It remains entirely up to the Province to decide whether or not to take any of MBs private land out of its TFLs, and whether or not to give the company fee-simple ownership of any VIP lands or any of the Crown land now in TFL 39. Decisions in that regard will depend upon the results of public consultation over the coming months.
The Province has retained the services of Victoria lawyer David Perry to consult representatives of interested First Nations, local governments, interest groups, water purveyors, and others. In May and June, the Ministry and MB plan to conduct public open houses. Mr. Perry plans to chair public meetings in several communities on Vancouver Island and the Mainland. The schedule of these activities will be advertised once finalised.
Candidate Settlement Lands
The candidate lands which are being considered as part of the agreement are located on Vancouver Island, the Queen Charlotte Islands and the Mainland coast, as shown on the Key Map.
These land units are currently managed under the Forest Practices Code as part of two tree farm licences (TFL 39 and TFL 44) and as part of the Vancouver Island Plantations (VIP) lands in the Strathcona and Arrowsmith timber supply areas (TSA).
A TFL is a form of tenure established under the Forest Act; it occupies a specific area of land and is managed by the licensee. TFL land is comprised of the licensees private forest land (Schedule A land) and Crown forest land (Schedule B land).
VIP lands are Crown forest lands managed by the Province under the Ministry of Forests' Small Business Forest Enterprise Program (SBFEP). They are not part of a TFL.
Any land parcels that form part of the final settlement package will become private land held in fee simple and will not be subject to FPC requirements. However, new regulations will be introduced in the legislature this spring to ensure results-oriented environmental standards of practice are applied to private forest land. Until these regulations come into place, a covenant would be registered against any MB settlement lands to ensure the company manages them to the new standards.
The breakdown of individual parcels by management unit is as follows:
Tree Farm Licence 39
Block 1 - Powell River:
Block 2 - Adam River
Block 6 - Queen Charlotte Islands
Schedule A Lands
Schedule B Lands
Strathcona Timber Supply Area:
Arrowsmith Timber Supply Area:
Block of Crown land northwest of Shawnigan Lake.
For more information