Auditing BC Timber Sales

Introduction

A significant portion of the provincial timber harvest is carried out by the holders of timber sales licences under a program called BC Timber Sales (BCTS), formerly known as the Small Business Forest Enterprise Program.

The management, organization and practices of BCTS differ significantly from other forest tenures. The Forest Practices Board therefore must adapt its standard audit approach to reflect these differences. This policy describes how Board audits are structured for BCTS.

Background

The Forest Practices Board was established by the provincial government in 1995 to serve the public interest as the independent watchdog for sound forest practices in British Columbia. A key function of the Board is to conduct periodic independent audits of forest practices of both industry and government and to report the results of these audits to the public and government.

The Board carries out audits to determine compliance with the requirements of the Forest and Range Practices Act (FRPA).

BC Timber Sales

BCTS is made up of twelve distinct business areas across the province. Each business area has a Timber Sales Office operating under the direction of a Timber Sales Manager (TSM). A fundamental goal of BCTS is to develop and auction timber sales licences, a harvesting opportunity that is similar to a cutting permit under a major forest tenure. The development costs and auction price evidence (stumpage rate) are used to price the stumpage on non auctioned timber.

Outside of BCTS, it is the major licensees who hold the harvesting rights and are responsible for all operational planning, silviculture obligations and roads. Once the district manager (DM) has approved cutblocks under a major licensee’s forest development plan (or forest stewardship plan) the cutblocks may be harvested under the authority of cutting permits. In contrast, in BCTS, the TSM is responsible for operational planning, silviculture and major road construction. Once the district manager has approved cutblocks in a forest development plan (or development units within a Forest Stewardship Plan), the TSM may advertise a timber sale licence for one or more approved cutblocks (or cutblocks within an approved development unit). Thus a timber sale licence grants the harvesting rights (and the cutting authority) to its holder without requiring its holder to carry out the operational planning, most major road construction, or silviculture. As the cutting authority, the timber sale licence has many similarities to a major licensee’s cutting permit.

The Ministry of Forests, through the TSM, the individual licensees and the DM each have separate but interrelated roles and responsibilities associated with the program:

• The TSM is responsible for the overall management and implementation of BCTS and carries out these activities either directly with staff or through competitively awarded contracts to service providers. This includes preparing forest stewardship plans (previously forest development plans) and site plans, most road construction, (maintenance is generally carried out by the holders of timber sales licenses), and some road deactivation, as well as meeting silviculture obligations. One or more forest stewardship or development plans are prepared within the BCTS business area, each plan often coinciding with the forest district. These forest stewardship or development plans must be approved or given effect by the respective district manager prior to plan implementation.
• Timber sale licence (TSL) holders have a number of statutory and contractual responsibilities, as reflected in their TSL, road permits and road use permits. The TSL holders must carry out all operations in compliance with provincial legislation and regulations. In addition, there may be additional requirements set out in the TSL as contractual obligations such as reservation from cutting of specific trees, specific road construction etc.
• The DM is responsible for approving the forest stewardship plan or development plan as well as the day to day monitoring of the TSL holder’s activities through the compliance and enforcement program.*

BCTS responsibilities and individual TSL holder responsibilities and performance are closely linked, yet designed to be separate. The planning done by BCTS can impact directly on the TSL holder’s ability to adequately carry out its responsibilities. The quality of a TSL holder’s timber harvesting activities can affect a business area’s ability to adequately carry out its work, such as silviculture obligations, after logging is completed. However, BCTS does not supervise the day-to-day field activities of the TSL holder in terms of statutory obligations. BCTS does monitor for compliance with contractual obligations and enforces compliance through the Advertising, Deposits, Disposition and Extensions Regulation and contractual remedies. Statutory obligations are subject to compliance and enforcement by Ministry of Forests district staff, who report to the district manager.

BCTS intends to ensure a clear transfer of responsibility to the TSL holder prior to the TSL holder beginning field activities. A pre work conference is held with each TSL holder prior to commencing work. At this time, the BCTS staff reviews the requirements in the TSL document, the objectives of the sale and provides other information requested or potentially useful in assisting the TSL holder in successfully achieving the objectives of the sale.

Auditing BC Timber Sales

The Board’s mandate is to report on compliance by the party responsible for the forest practices, which includes planning. In conducting a full scope audit, or even a limited scope audit, it would not be appropriate for the Board to focus only on the TSL holder.

Rather than trying to separately audit the responsibilities of TSL holder and the TSM, the Board has chosen to audit the entire BCTS within a geographic area. The Board will randomly select a forest district for a BCTS audit. Within that district, the Board will audit compliance by TSL holders as well as compliance by the TSM. The Board will then issue one report that covers the program within that district.

The Board has chosen this approach as it gives the public a more meaningful report on the Board’s findings. That is because reporting on isolated TSLs would not give a clear picture of the extent of practices occurring on the ground within BCTS.

This means that any problems in performance by individual TSL holders – for which the BCTS may not be responsible – will be reported in the single report. The audit report may identify individual TSL holders as being non-compliant.

On the other hand, in some cases, problems with planning carried out by BCTS may contribute to problems in licensee performance on the ground.

Conclusion

Under the BCTS, the Timber Sales Manager has an overall responsibility for managing the program. The BCTS business area is responsible for planning and silviculture obligations. The TSL holders are responsible for their practices on the ground. Although it is not the responsibility of BCTS to ensure that TSL holders have met their Code/FRPA obligations on the ground, these practices are shaped by the planning conducted by BCTS.

The Board believes that the performance of BCTS within a forest district is equally important to the performance of the TSL holders operating under BCTS. Therefore, Board audits of BCTS will focus on operations within a forest district within a BCTS business area, rather than a specific TSL holder operating under BCTS, and will report publicly on both the business area’s practices and the timber sale licensees’ practices.

* Compliance and enforcement is generally not part of an audit of the BCTS. This is because the compliance and enforcement program is subject to a separate type of audit conducted by the Board that specifically looks at the “appropriateness of government’s enforcement” under FRPA on all agreement holders, including TSL holders.