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Parks Settlement Agreement - MacMillan Bloedel

Frequently Asked Questions - June 1, 1999

What is the MacMillan Bloedel Settlement Agreement?

It is an agreement between the Province and MacMillan Bloedel in which government agrees to pay MB $83.75 million, plus interest after January 1, 1999, for timber harvesting rights lost by the company due to the creation of new parks and protected areas on Vancouver Island between 1991 and 1995. The agreement specifies the Province may pay this amount in resource rights, land and/or cash.

How many parks and protected areas were created?

Carmanah Pacific Park was created in 1991 and 37 large parks were created under the Parks Amendment Act of 1995, including Tsitika River, Tahsish-Kwois, Brooks Peninsula, additions to Strathcona Park and areas of Clayoquot Sound. In 1996, an additional 35 smaller areas were identified as special feature protected areas, most of which have since been established as parks. Many of these parks were created in areas where MacMillan Bloedel held timber harvesting rights.

How much of MB’s timber harvesting area was affected by the creation of these new parks?

The parks created between 1991 and 1995 eliminated MB’s timber harvesting rights on approximately 7,793 hectares of timber licenses, and on an additional 43,877 hectares of Crown land within two tree farm licenses (TFLs) 44 and 39. As a result of the creation of these new parks, MB lost access to approximately six million cubic meters of timber in timber licenses. The company also lost allowable annual cut from other Crown forest land.

Why should the Province compensate MacMillan Bloedel?

The Province is committed to fair treatment of resource tenure holders affected by the creation of new parks and treaties. Thus, in December of 1997, the Province and MB initiated negotiations towards a voluntary settlement of MB’s claim in accordance with the Forest Act. The act provides for reimbursement to a licensee for the loss of more than five per cent of harvesting rights and for lost improvements.

How was the value of MB’s lost harvesting rights determined?

The following factors were used to determine the value of the lost harvesting rights:

  • An estimate of the amount of MB's harvesting rights and investment in infrastructure as of the date the parks were formally established.
  • The value of MB’s forgone harvesting rights over the remaining term of the tenures which was about 20 years.
  • The harvest impacts to each of MB’s tenure types: (a) standing inventory on new park lands created over Timber Licenses, and (b) the estimated AAC contribution of new park lands created from Tree Farm Licenses. In each case, the harvest impact was adjusted to take into account the five per cent amount for which the Province is not required to compensate a company; operability and environmental constraints; and other operational factors.
  • Forgone harvest revenues were measured using log market prices for the relevant species. Revenues were corrected for business cycle effects using average prices over a five-year period centered on the valuation date. Costs were assessed according to coastal appraisal procedures used for stumpage determinations.
  • Incomes were adjusted for federal and provincial income taxes, provincial stumpage chargers and royalty charges (taking into account the 1995 schedule of projected royalty rate increases).

Is the Province obligated to transfer lands to MB as part of the agreement?

There is no binding commitment that obliges the government to transfer lands to MB as part of the Settlement Agreement. The agreement specifies the settlement amount of $83.75 million may be paid to MB in resource rights, land and/or cash. The Province will decide whether or not to use potential non-cash forms of currency only after extensive, prior public consultation.

Why is the Province considering using land instead of just paying cash?

Government would prefer to meet its settlement commitment to MB without contributing to the deficit. Accordingly, the Province will consider non-cash currencies such as resource rights or land as part of the settlement agreement. Use of non-cash currencies has the advantage of ensuring the settlement amount remains invested in British Columbia where it can be used to generate employment and other benefits.

Does this undermine First Nations treaty settlement negotiations?

One of the primary purposes of the Settlement Agreement consultation process is to identify the potential implications transferring lands to MB might have on First Nations treaty negotiations. The Province will not transfer land if that would undermine treaty negotiations.

Will the transfer of lands fee-simple to MB impact the ability of government to settle future treaties with First Nations?

No. The Province is committed to respecting the ongoing First Nations treaty negotiations in every way. Any decision to transfer lands to MB must be preceded by full consultation with affected First Nations as per the Delgamuukw and other relevant legal decisions.

Is the proposed transfer of land under the MB Settlement Agreement a precursor to privatizing Crown forest land more widely?

No. Government has said that it is not considering the privatisation of Crown forest land on a large scale.

What are the types of lands that are being considered under the agreement?

There are three types of lands that the Province has agreed to consider as part of the Settlement Agreement:

Schedule A Lands: 91,200 hectares of land that MB already owns which are located within the two Tree Farm Licenses 39 and 44. These lands are subject to the Forest Practices Code regulations.

Schedule B Lands: Crown forest lands within TFLs 39 and 44. There are two parcels, one near Sayward and one near Powell River.

Vancouver Island Plantation Lands: Crown forest lands within the Strathcona and Arrowsmith timber supply areas which are found between Duncan and Campbell River on the east side of Vancouver Island.

Where are the Settlement Agreement candidate lands located?

Schedule A lands (approx. 91,200 ha): Within TFL 44, there is a large block of Schedule A land located northwest and southeast of Port Alberni as well as some scattered smaller parcels of Schedule A lands along the Alberni Inlet (73,829 ha). There is also a small parcel near Esary Lake (828 ha). Within TFL 39, there is large block (9,288 ha) of Schedule A land located on Graham Island in the Queen Charlottes. The remaining small parcels (5,700 ha) are located near Port McNeill, Sayward and Powell River.

Schedule B lands (approx.13,128 ha): There are three blocks of Schedule B lands. One is near Sayward in the Salmon River area (5900 ha) while another is near Lois Lake, southeast of Powell River (6400 ha). The third block is near Esary and Lizard Lakes (828 ha) near Port Alberni.

Vancouver Island Plantation lands (approx. 19,000 ha): There are 11 blocks of VIP lands situated on the east side of Vancouver Island, stretching from the Miller Creek parcel near Campbell River to the Koksilah parcel south of Duncan.

How were these parcels selected for consideration under the agreement?

At the Province’s request, MB has identified more Schedule B Crown land and Vancouver Island Plantation (VIP) land than would be needed to satisfy its settlement entitlement. 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 MB’s private land out of its TFLs, and whether or not to give the company fee-simple ownership of any Schedule B Crown forest land or VIP lands. Decisions in that regard will depend upon the results of public consultation and the appraisal of land values.

How will the value of the lands be determined?

The Schedule A lands will be appraised to determine the value to MacMillan Bloedel of having any of its private land removed from TFLs 39 or 44, and thus released from the requirements of the Forest Practices Code. For Schedule A lands, the value will be in the form of regulatory savings associated with the elimination of Forest Practices Code and log export restrictions. The Schedule B lands will be appraised at fair market value with consideration given to the existing harvesting rights MB holds over these lands. VIP lands will be appraised for fair market value. The fair market appraisals will reflect raw forest land value and standing timber value. The final value of the combination of changes in land status and/or cash provided to MB will not exceed $83.75 million, plus interest from January 1, 1999.

When will the lands be appraised?

The Schedule A lands will be appraised first. This is to be completed by the end of June. The appraisal of Schedule B and VIP lands will not take place until after the results of the public consultation process are known. Government will then decide if it will proceed with the second phase of the land appraisal.

If lands are transferred fee-simple to MB, will this mean that these lands will be subject to unregulated timber harvesting?

If and when some of the lands are transferred fee-simple to MB, the lands would no longer be subject to Forest Practices Code regulations as these regulations only apply to Crown forest land and private land within tree farm licences and woodlot licences. However, transferred lands would still be managed as part of the Forest Land Reserve and would be subject to the pending provincial standards for private managed forest lands. Further, a restrictive covenant will be placed on any lands that might be transferred to MB prior to the enactment of the private forest land regulations. This will ensure any transferred forest lands are properly managed until the provincial private forest land standards take effect.

If land is transferred from the Arrowsmith or Strathcona timber supply areas, what would be the impact to Small Business Forest Enterprise (SBFEP) operators?

As part of the agreement, MacMillan Bloedel has agree to continue to maintain a small business program for a period of a minimum of five and a maximum of 10 years. The program will be managed in accordance to the standards and procedures established in the existing SBFEP. Further, MB will honour all existing small timber sales occurring on any Crown forest lands that are transferred under this agreement.

Will any land be removed from the Forest Land Reserve (FLR) as part of the Settlement Agreement?

No. The agreement provided for MB to identify any lands that it wished to have removed from the FLR, but MB did not identify any.

What will the public consultation process consist of?

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. Mr. Perry will chair public consultations in the following communities on Vancouver Island, the Mainland and the Queen Charlotte Islands:

  • Vancouver: Plaza 500 Hotel @ 500 W. 12 & Cambie - Thurs., June 10, 1999
  • Port McNeill: Haida Way Motor Inn @ 1817 Campbell Way- Tues., June 15, 1999
  • Campbell River: Coast Discovery Inn@975 Shoppers Row- Wed., June 16,1999
  • Powell River: Coast Town Centre @ 4660 Joyce Ave.- Thurs., June 17,1999
  • Port Alberni: Barclay Hotel @ 4277 Stamp Ave.- Mon., June 21, 1999
  • Nanaimo: Dorchester Hotel @ 70 Church St.- Tues., June 22, 1999
  • Duncan: Cowichan Community Ctr. @ 687 James St.- Wed., June 23, 1999
  • Victoria: Coast Victoria Harbourside @ 146 Kingston St.- Thurs., June 24, 1999
  • Queen Charlotte City: QC Community Hall @ 136 Bay St.- Mon., June 28,1999

At each location an open house will be held from 4 p.m. to 9 p.m. and public consultations will be held from 7 p.m. to 9 p.m. The public may present views in written and/or oral submissions. Ten-minute oral submissions may be booked on the day of the consultation beginning at 4 p.m.

The deadline for receipt of written submissions is Wednesday noon, June 30, 1999 at the following location:

Doug Gibbard
Vancouver Forest Region
2100 Labieux Road,
Nanaimo, B.C.  V9T 6E9

Phone: (250)751-7106 / Fax: (250)751-7198
E-mail: doug.gibbard@gems8.gov.bc.ca

Where can I find more information about the MB Settlement Agreement?

Information, including maps of the candidate land parcels, is available on the Ministry of Forests website: https://www.for.gov.bc.ca/hfd/library/documents/mbparks or you may call toll-free at 1-800-663-7867 and ask to be transferred to Doug Gibbard at 751-7106. In Vancouver, call 660-2421; in Victoria, call 387-6121; in Nanaimo, call 751-7106.

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