(Cite as: 48 FR 10395, *10407)
protection, general development and forest management are other purposes. For example, there is information on the record
regarding one province indicating that the notice of a closure of a forest road must be published in one or more newspapers
having a general circulation in the area of the province affected by the closure. This indicates that usage is presumed to be
general, necessitating widespread public notice regarding closure.
Further, the establishment of minimum standards and specifications for various classes of forest roads, above those standards
which would be required by those harvesting stumpage, ensures that the roads will meet the needs of not only those holding
stumpage rights, but also the traveling public and other users. For these reasons, we preliminarily determine that the
construction of forest access roads does not confer a subsidy within the meaning of the Act.
b. Saskatchewan Forestry Subsidiary Agreement: Opportunity Identification and Technological Advancement. Under the
Opportunity Identification and Technological Advancement Sector of the Saskatchewan Forestry Subsidiary Agreement, research
and feasibility studies were funded and conducted by the province. The studies were designed to determine industrial
opportunities in forestry and transfer known technology to an existing or new industrial application. The response indicates that
the results of the studies were made available publicly. Therefore, we preliminarily determine that the studies did not confer a
countervailable benefit on the products under investigation.
(Cite as: 48 FR 10395, *10407)
c. Forestry Job Progam. The Employment Bridging Assistance Progam (EBAP) is a job creation program sponsored jointly by the
province of BC and the Canadian government (under section 38 of the Federal Unemployment Insurance Act of 1971). The
purpose of the program is to allow forestry-dependent communities to retain their skilled workers and maintain their forestry
payroll during a period of recession. The program also seeks to lend additional economic support to unemployed persons. The
eligibility criteria of the program specify that a project sponsor may be any group or individual capable of implementing an
acceptable project. The sponsor's work program must enhance forest improvement and all projects must be completed before
March 31, 1983. Workers receiving funds must be recipients of unemployment insurance benefits.
Sponsors submit project proposals to the district manager of the BC Ministry of Forests. If approved, the proposals are then
examined by a management committee consisting of representatives from the provincial Ministry of Forests and Labor and from
the Canadian Forestry Service and the Canadian Employment and Immigration Commission (CEIC). The sponsor is responsible for
project administration and for ensuring that project objectives are attained. Projects cannot be used to meet sponsors' forest
management obligations under contracts to harvest public timber.
Funding for the program is provided by CEIC (to bring weekly payment up to Canadian $240 per week), the Canadian Forestry
Service (equipment and
(Cite as: 48 FR 10395, *10407)
supervisory costs), and the BC Ministry of Forests (a Canadian $60 weekly payment for wage, health, and other benefits).
The sponsors act as a conduit in passing payments to the workers and do not retain any funds provided through this program.
Even though funds are paid directly to sponsors the program does not relieve the sponsor of any contractual obligations to
engage in forest management. We preliminarily determine that this program does not confer a subsidy, because there will be no
benefits until future years, and the benefits would be attributable to the government as owner of the resource. Therefore, there
are no benefits attributable to the products under investigation during the period for which we are measuring subsidization.
d. Canada/Nova Scotia Forestry Subsidiary Agreement--Forest Management Component Grants. The forest managment
component of the Canada/Nova Scotia Forestry Subsidiary Agreement provided grants to private landowners to promote
effective management of their forest resources and to support various silvicultural activities. The GOC stated in its responses that
producers of the products under investigation received grants under this program.
We preliminarily determine that forest management component grants do not confer countervailable benefits because they are
not limited to a specific enterprise or industry, or a group of enterprises or industries, or to companies in specific regions.
(Cite as: 48 FR 10395, *10407)
D. Provincial Programs
1. Alberta.--Alberta Opportunity Company. The Alberta Opportunity Company (AOC) is a provincial Crown corporation and is
funded by the government of Alberta. We have reviewed the annual reports of AOC and found that a variety of industries in the
manufacturing and service sectors received assistance from AOC and that the lumber and wood products producers received only
a small percentage of the total assistance provided by AOC. We preliminarily determine that AOC aid is not limited to a specific
industry, a group of industries, or to companies in specific regions, and therefore is not countervailable.
2. Ontario.--Employment Development Fund. The Employment Development Fund (EDF) was created in the spring of 1979 by an
administrative action of the Cabinet of Ontario. The fund was designed to increase long-term investment and employment in the
province through the provision of grants and loan guarantees to companies making investments that had the potential to create
new jobs. Funding was generally limited to between *10408
(Cite as: 48 FR 10395, *10408)
Canadian $2,000 and Canadian $3,000 per job created where the new fixed asset investment was from 10 to 20 times the size of
the grant. The EDF was terminated in January 1981, although committed disbursements were made through August 31, 1982. The
responses of the GOC indicate that in 1979 one grant was provided under this
(Cite as: 48 FR 10395, *10408)
program to producers of the products under investigation.
EDF funding was provided to a wide range of industries in Ontario and was not limited to a specific industry, a group of industries,
or to companies specific regions. Therefore, we preliminary determine that the EDF did not confer a subsidy on the products
under investigation.
3. Quebec.-Caisse de Depot et Placement du Quebec. The Caisse de Depot et Placement du Quebec (CDPQ) was established by an
Act of the Assemblee Nationale of Quebec in 1965. Under the trusteeship of the provincial Ministere des Finances and the Regie
des du Quebec, CDPQ manages several pension funds and insurance programs, namely:
The universal auto insurance program against physical injury to persons;
A specific insurance program for farmers;
The universal pension plan for all citizens of Quebec; and
Specific pension plans for all Quebec civil servants and construction workers.
It appears that CDPQ is prevented by law from acquiring more than 30 percent of any company's common stock, and that it may
not make funds available to companies on other than commercial terms. Indeed, CDPQ is compelled by law, as a fiduciary
institution, to invest pension and insurance funds in order to achieve the best possible return on investment for the benefit of its
annuitants. CDPQ funds are invested over a broad spectrum of industries not
(Cite as: 48 FR 10395, *10408)
only throughout Quebec and Canada, but also on the international financial markets. Accordingly, we preliminarily
determine that none of the producers of the products under investigation received any countervailable benefits from CDPQ.
b. FRI Industrial Incentives Fund for Small- and Medium-Sized Businesses. This program, which falls under the aegis of FRI (see
the "Programs Preliminarily Determined to Confer Subsidies" section of this notice), was established to allow participating firms to
deposit one half of their income tax payable to the province into an escrow fund, from which they could withdraw funds
equivalent to 25 percent of the cost of approved development projects (up to the amount of their deposit only).
As this program, which was discontinued in 1981, was not limited to a specific industry, a group of industries, or to companies in
specific regions, we preliminarily determine that this program did not confer subsidies within the meaning of the Act on the
products under investigation.
c. Programme Experimental de Creation d'Emplois Communautaires. The Programme Experimental de Creation
d'Emplois Communautaires (PECEC), administered by the Office de Planification et de Developpement du Quebec (OPDQ),
makes cash payments to entrepreneurs to assist them in maintaining and creating jobs for the chronically unemployed. A few
producers of the products under investigation received grants under this program. Because the
(Cite as: 48 FR 10395, *10408)
program was not limited to a specific industry, a group of industries, or to companies in specific regions, terms, we preliminarily
determine that this program does not confer any subsidies within the meaning of the Act on the products under investigation.
d. PME-Innovation. The PME-Innovation (PME-I) program, which was discontinued late in 1981, was administered by the
Ministe>=2re de l'Industrie, du Commerce et du tourisme of Quebec. Its purpose was to assist small- and medium-sized
businesses ("petites et moyennes entreprises") in obtaining capital for investment in a production or marketing project. Under this
program, one loan was made to a softwood lumber export consortium. PME-I assistance was not limited to a specific enterprise or
industry, a group of enterprises or industries, or to companies in specific regions of the province of Quebec. Therefore, we
preliminarily determine that the program does not confer a subsidy within the meaning of the Act.
e. SDI Programs. The Export Expansion Program administered by SDI is discussed in the "Programs Preliminarily Determined to
Confer Subsidies" section of this notice. In addition, SDI manages a number of domestic programs of which producers of the
products under investigation availed themselves. These programs fall under two headings: "development programs" and "financial
assistance to manufacturing firms."
(1) Development Programs.--(a) Financial Assistance Program for High-Growth
(Cite as: 48 FR 10395, *10408)
Firms. Under this program, SDI assumes a percentage of the interest charges for an eligible development project. This percentage
is based on the land, building and equipment costs of the project.
(b) Financial Assistance Program for Mergers and Acquisitions. Under this program, which was discontinued in the summer of
1982, SDI paid a percentage of the purchase price of the stock or assets invested in an approved merger. Benefits paid under this
program were sometimes combined with reductions in interest rates on loans bestowed under the program described in (2)
below.
We note that in our final affirmative countervailing duty determination on "Railcars from Canada" (48 FR 6569
(February 14, 1983)), we erroneously determined SDI's domestic programs to be countervailable on the basis that their
availability only in Quebec made them region-specific within the broader context of Canada. Further, we erronoeously
calculated the benefit by considering funds authorized instead of funds actually disbursed. The petition was withdrawn and the
case terminated before we discovered these two errors. We have now calculated that the correct subsidy in that case, after
deduction of the improperly applied SDI "benefit" of the U.S. $173 per railcar, was actually U.S. $110,392 per railcar, instead of
the U.S. $110,565 as set forth in the final determination (a reduction of 0.16 percent).
(2) Financial Assistance to Manufacturing Firms. Under this program, loans, loan guarantees and equity participations are
provided to firms with sound
(Cite as: 48 FR 10395, *10408)
financial prospects when these firms cannot otherwise obtain working capital on commercially reasonable terms. The SDI loan
rate is a monthly composite of long-term commercial loan rates by the 10 major lenders in Quebec.
Because their availability was not limited to a specific industry, group of industries or to companies in specific regions, we
preliminarily determine that they do not confer a subsidy within the meaning of the Act.
III. Programs Preliminarily Determined Not To Be Used
We preliminarily determine that the following programs which were listed in the notice of "Initiation of Countervailing Duty
Investigations" are not used by the manufacturers, producers, of exporters of the products subject to these investigations.
A. Federal Programs
1. Federal Employment Program--CIAP. The Community-based Industrial Adjustment Program (CIAP), which began early in
1981, is administered by the Department of Industry, Trade and *10409
(Cite as: 48 FR 10395, *10409)
Commerce. Its purpose is to encourage industrial firms in "designated" Canadian communities to undertake viable capital
projects.
(Cite as: 48 FR 10395, *10409)
CIAP assistance was not made available to any producers of the products under investigation. Accordingly, we preliminarily
determine this program was not used by producers of the products under investigation during the period for which we are
measuring subsidization.
2. Enterprise Development Program--Loans. The Enterprise Development Program includes a component that provides loans to
companies, as described in the "Programs Preliminarily Determined Not to Confer Subsidies" section of this notice. The GOC has
stated that no loans under the EDP were issued to producers of the products under investigation. We preliminarily determine that
this part of the EDP program was not used by producers of the products under investigation during the period for which we are
measuring subsidization.
B. Federal/Provincial Program
New Brunswick Forestry Subsidiary Agreement. Under the New Brunswick Forestry Subsidiary Agreement, funds are provided to
small independent landowners to increase the future availability of wood fiber. The GOC states in its responses that no funds were
provided under this program to producers of the products under investigation. Accordingly, we preliminarily determine that this
program was not used.
(Cite as: 48 FR 10395, *10409)
C. Provincial Programs
1. Alberta.--a. Deferral of Stumpage Payment. The government of Alberta has deferred the payment of stumpage dues,
reforestation levies and holding and protection charges for one year from May 1, 1982 to May 1, 1983. This applies to holders of
stumpage rights under Forest Management Agreements, Quota Certificates, and Commercial Timber Permits.
However, this deferral was not in effect during the period for which we are measuring subsidization. Therefore, we preliminarily
determine that this program was not used. If these investigations result in a countervailing duty order, the Department will
review Alberta's program for deferral of stumpage payments in the annual review required under section 751 of the Act.
b. Inventory Financing. The Alberta Inventory Financing program was administered by the Alberta Opportunity Company.
Although the program was approved there were no disbursements made under it, and the program is no longer in effect.
Producers of the products under investigation have not used the program during the period for which we are measuring
subsidization.
2. British Columbia.--Market Development Assistance (MDA). The MDA program is designed to benefit manufacturers of new,
innovative products who are attempting to develop new export markets. Only two or three producers/exporters of the products
under investigation have received support
(Cite as: 48 FR 10395, *10409)
under this program, and all were assessing markets other than the United States. Therefore, we preliminarily determine that this
program was not used by producers/exporters of exports to the United States of the products under investigation during the
period for which we are measuring subsidization.
3. Quebec. a. Aide a la Promotion des Exportations. The Aide a la Promotion des Exportations (APEX) program,
administered by the Office Quebecois du Commerce Exterieur (OQCE), which is a subdivision of the Ministe>=2re de
l'Industrie, du Commerce et du Tourisme of Quebec, has been available since 1977 to manufacturing and service companies in
Quebec. Under APEX, OQCE grants funds to companies for market research and for trade expositions for the promotion of
exports of Quebec goods and services outside of Canada.
No grants were made under this program to exporters of the products under investigation. Therefore, we preliminarily determine
that the program was not used by producers of the products under investigation.
b. SDI--Financial Assistance Program to Advanced Technology Manufacturing Firms. Producers of the products under
investigation were not eligible for the Financial Assistance Program to Advanced Technology Manufacturing Firms, one of the
three development programs administered by SDI (see the "Programs Preliminarily Determined Not To Confer Subsidies" section
of this notice). Accordingly, we preliminarily determine that this program was not used by any
(Cite as: 48 FR 10395, *10409)
of the producers of the products under investigation.
IV. Programs for Which Petitioner Withdrew Its Subsidy Allegations
The petitioner withdrew its subsidy allegations with regard to the following programs which were listed in the notice of "Initiation
of Countervailing Duty Investigations": "Federal Business Development Bank," "Canadian Forestry Service," "Manpower,"
"Small Business Loans," certain aspects of "Taxation Measures," and certain aspects of "Transportation."
Verification
In accordance with section 776(a) of the Act, we will verify all data used in making our final determinations.
Public Comment
In accordance with section 355.35 of the Commerce Department Regulations, if requested, we will hold a public hearing to afford
interested parties an opportunity to comment on these preliminary determinations at 10:00 a.m. on April 14, 1983, at the U.S.
Department of Commerce, Room 3407, 14th Street and
(Cite as: 48 FR 10395, *10409)
Constitution Avenue, NW., Washington, D.C. 20230. Individuals who wish to participate in the hearing must submit a request to
the Deputy Assistant Secretary for Import Administration, Room 3099-B, at the above address within 10 days of this notice's
publication. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; (3)
the reason for attending; and (4) a list of the issues to be discussed. In addition, prehearing briefs in at least 10 copies must be
submitted to the Deputy Assistant Secretary by April 7, 1983. Oral presentations will be limited to issues raised in the briefs.
All written views should be filed in accordance with 19 CFR 355.34, within 30 days of this notice's publication, at the above
address and in at least 10 copies.
Gary N. Horlick,
Deputy Assistant Secretary for Import Administration.
March 7, 1983.
APPENDIX A
(Cite as: 48 FR 10395, *10409)
Description of Products
The products covered by these investigations are described below:
1. The term "softwood lumber" covers those products included in the Tariff Schedules of the United States (1982) (TSUS) in items
202.03-202.30 (rough, dressed, or worked softwood lumber). Specifically excluded are drilled and treated lumber, wood siding,
and edge-glued or end-glued wood not over 6 feet in length or over 15 inches in width. "Rough lumber" is lumber just as it comes
from the saw, whether in its original sawed size or edged, resawn, crosscut, or trimmed to smaller sizes. "Dressed lumber" is
lumber which has been dressed or surfaced by planning on at least one edge or face. "Worked lumber" is lumber which has been
matched (tongue-and-grooved), shiplapped (rabbeted or lapped joint), or *10410
(Cite as: 48 FR 10395, *10410)
patterned on a matching machine, sticker, or molder.
2. The term "softwood shakes and shingles" refers to wood products most frequently made from red cedar, that are used for
roofing or siding. "Softwood shakes" are approved durable wood or random widths ranging from 4 inches to 14 inches which come
in four types: hand-split and resawan, taper-split, straight-split and taper-sawn. "Softwood shingles" are tapered pieces of
approved durable wood, sawed both sides, of random widths ranging from 3 inches to 14 inches and in lengths of 16 inches, 18
inches or 24 inches. For purposes of this investigation, the term "softwood shakes and shingles" refers only to
(Cite as: 48 FR 10395, *10410)
those products designated in TSUS as item 200.85.
3. The term "softwood fence" refers to three types of fences: picket, stockade, and rail. Picket fences are made of wood pickets
nailed to horizontal back rails which are fastened to the supporting posts. The pickets vary in length and thickness, lengths range
from 24. to 92., and thickness varies from 1/2 . to 3.. The species of wood used in picket fences is usually cedar for the posts and
conifers or softwoods for the backrails and pickets. Rail fences consist of line posts and horizontal rails. Cedar is generally used for
the line posts and cedar or conifers or northern softwoods are used for the rails. Stockade fences vary in height from 3 feet to 10
feet. Widths are usually 7 feet or 8 feet. Line posts are generally cedar, and stockade sections are made from northern softwoods.
This investigation covers softwood fences both assembled and unassembled, which fall under TSUS item 200.75.
Appendix B
Provincial Stumpage
Provincial Crown lands account for 81 percent of the productive forest lands in Canada. Under the terms of the Canadian
Constitution, provincial crown lands fall under the jurisdiction of the provincial governments who are
(Cite as: 48 FR 10395, *10410)
exclusively responsible for the management and administration of the forests on these lands.
Alberta
Background
Approximately two-thirds of Alberta is covered by forests, almost all of which are owned by the provincial government. Much of
the forested area is inaccessible, and logging can only be carried out during winter when the ground is frozen. According to the
provinical government, cold-weather logging increases timber harvesting costs. Managed by the Alberta Forest Service under a
long-term sustained yield policy, the forests are divided into forest management units which are allocated under the stumpage
allocation arrangements described below. Only 60 percent of the annual allowable cut (AAC) has been allotted under the
stumpage allocation arrangements because supply exceeds demand. Any company, including foreign companies, registered in
Alberta or Canada can be awarded stumpage rights under the various allocation arrangements.
Softwood lumber is the only product under investigation manufactured in Alberta. Lumber accounted for 61.7 percent by volume
of the coniferous round
(Cite as: 48 FR 10395, *10410)
timber harvested in 1981. Plywood accounted for 8.9 percent and pulpwood 25.9 percent.
Stumpage Allocation Arrangements
There are five stumpage allocation arrangements in Alberta:
1/8 Forest Management Agreement (FMA)
1/8 Timber or Coniferous Quota Certificate (Quota)
1/8 Commercial Timber Permit (CTP)
1/8 Local Timber Permits
1/8 Forest Products Tags
FMA's and quotas are 20-year allocations while the CTP's can range from 1 to 5 years, and the Local Timber Permits and Forest
Products Tags are limited to terms of 1 year or less. The rights to cut standing timber under any of these allocation arrangements
do not vary by the type of product that will be manufactured from the stumpage, but they do vary by type of allocation
arrangements. These arrangements can cover both coniferous and deciduous timber; however, different requirements and dues
rates are specified for each type of timber. Under all the allocation arrangements, the Forest Service retains primary
responsibility for fire prevention and suppression, as well as for insect and disease control.
(Cite as: 48 FR 10395, *10410)
Forest Management Agreement
Currently, there are six Forest Management Agreements (FMA's) outstanding which account for 35.8 percent of the allocated
annual allowable cut (AAC). The term of each FMA is 20 years with renewal rights for an additional 20 years. The procedure for
acquiring stumpage rights through an FMA is as follows.
The Forest Service advertises a development area and invites proposals for one year. The proposals are analyzed by the Forest
Service and public hearings are held, after which the successful proponent is selected by the government. After selection, the
actual agreement is negotiated and approved by the Cabinet through an Order-in-Council.
The government's intent in allocating timber under an FMA is to ensure sustained long-term yield of the timberland. In order to
achieve this, the company holding an FMA is required to develop a management plan to ensure sustained yield, and to develop
inventory studies, conduct reforestation and regeneration, conduct on-going silviculture, develop roads, and make a capital
investment ranging from Canadian $25,000 to Canadian $2,000,000 in the development area.
In addition to undertaking these responsibilities, the company must pay
(Cite as: 48 FR 10395, *10410)
stumpage dues on the sawlogs harvested. All FMA holders except one pay the regulation rate of dues set forth in the Timber
Management Regulations of the Forest Act of 1971. The Regulations state that the General Rate of Crown Dues on green coniferous
timber suitable for lumber manufacture is Canadian $0.70 per cubic meter. Holders must also pay annual holding and protection
charges which cover ground rent and protection costs.
Under the FMA's the provincial government must approve the management plan and the annual allowable cut in accordance with
Timber Management Regulations.
Timber Quota Certificates
The quota certificate (Quota) is a long-term right to harvest a share of the AAC of a forest management unit. Implemented in 1966,
the Quota system replaced the short-term competitive bid system. Currently, the Quota system accounts for 19.9 percent of the
allocated AAC. The purpose of the Quota system was threefold:
1. To eliminate abuses inherent in the bid system, such as speculation resulting in timber being held and not cut;
2. To ensure that a fair price would be paid and that timber would be cut; and
3. To provide timber operators with a long-term secure stumpage supply in
(Cite as: 48 FR 10395, *10410)
order to encourage industry to make capital investments in the area.
In 1966, quotas were granted to all established timber operators for up to 20 years based on each operator's average production
from 1960 through 1964. Most Quotas issued since 1966 have been sold competitively.
The 20-year term of the Quota is divided into 5-year periods. At the end of every 5-year period, a Quota holder is subject to
penalties, including revocation of the Quota, if the amount of timber harvested is not within 10 *10411
(Cite as: 48 FR 10395, *10411)
percent of the total of the annual allowable cuts for the 5-year period.
In order to cut the timber authorized in the Quota, a holder must submit, for Forest Service approval, an annual operating plan.
The Quota holder is also responsible for regeneration and reforestation as well as for road construction and silviculture.
Stumpage dues paid by the Quota holder are determined through an appraisal formula which modifies the regulation rate of dues
according to logging conditions. The appraisal factor is based on four elements and is fixed for five years:
1. Average haul distance to nearest usable trackage point;
2. Average gross volume per harvestable acre;
3. Average gross volume per tree; and
4. Average cull as a percentage of gross volume.
(Cite as: 48 FR 10395, *10411)
Timber Management Regulations provide that the minimum rate of dues under the Quota system, after taking into account the
appraisal factor, cannot be less than 25 percent of the regulation rate. The appraisal system, in effect, provides incentives to log
the poorer, more distant stands of timber. Quota holders must also pay annual holding and protection charges.
Under the Quota system, the Forest Service is responsible for the sustained yield management plan. The Forest Service lays out
the cutting sequence and selects the areas to be logged, thereby limiting the annual allowable cut under the Quota.
Commercial Timber Permit
The Commercial Timber Permits (CTP's) are short-term (1 to 5 years with an average of 2 to 3 years) arrangements which are sold
at public auction to the highest bidder except when issued to Quota holders for the salvage of dead or damaged timber. Only 2.4
percent of the allocated AAC is allotted under CTP's. Generally, to obtain a CTP the permittee must own or operate a mill within
the area and must not hold any other active stumpage arrangement.
The bidding process for a CTP determines the actual amount of dues to be paid. The minimum starting bid equals the regulation
rate of dues plus the appraisal factor which can be a positive or negative number. This starting bid
(Cite as: 48 FR 10395, *10411)
becomes the upset price which is added to the highest bid rate in order to establish the rate of dues to be paid. In addition to dues,
the CTP holder must deposit a performance guarantee, pay a reforestation levy, and pay holding and protection charges.
As with the Quota system, CTP holders must submit an annual operating plan for Forest Service approval. Under a CTP the Forest
Service is responsible for selection of the stands to be cut, silviculture and reforestation (the company pays a reforestation levy).
The CTP differs from a Quota in that the CTP represents the right to cut standing timber while the Quota grants the right to a
certain share of the AAC. As such, while the "value" of the stumpage forms the basis of the bid price for a CTP, the Quota bid cannot
be based on the "value" of the stumpage since the share of AAC provided under the Quota varies in accordance with the changes in
the AAC.
Local Timber Permit (LTP)
Issued for a term of one year or less, the LTP authorizes logging for the permittee's own use or to supplement his income by selling
logs to local mills. LTP's account for 1.5 percent of the allocated AAC. LTP's are issued on a first-come first-served basis unless
demand is high, in which case they are
(Cite as: 48 FR 10395, *10411)
issued by draw.
The dues charged are the regulation rate in effect at the time the LTP is issued. Permittees are exempt from cruising, holding and
protection charges, and only pay a reforestation levy if the volume harvested is over 130 cubic meters.
Forest Products Tags
Forest Products Tags are 30-day authorizations to cut timber for personal use or for small volumes of Christmas trees, firewood
and fenceposts. The Tag is non-renewable and non-refundable. The holder pays the regulation rate of dues but no other charges.
The percentage of AAC allocated under Forest Products Tags is negligible.
British Columbia
Background
There are seven different forest tenure arrangements in British Columbia: Three Farm Licenses, Forest Licenses, Timber Sale
Licenses (Major), Timber Sale Licenses (Minor), Timber Sales, Pulpwood Agreements and Woodlot Licenses.
(Cite as: 48 FR 10395, *10411)
Annual rents represent a charge for reserving the use of the resources under license.
On request or independently, the Minister of Forests may advertise and invite applications for licenses. A license may not be
entered into unless there has been an advertisement and a public hearing has been held on all applications. In addition, an
evaluation of the proposal in terms of social benefits in the province (increased employment), management and use of Crown
timber, environmental issues must be made, and the development of Crown objectives and revenues must be appraised.
Stumpage rights can be awarded to non-Canadian persons and/or companies doing business in British Columbia. However, a non-
Canadian company must register in British Columbia before acquiring the license.
The tenure agreements are described in detail below:
1. Tree Farm License.
A tree farm license shall:
(a) Be for a term of 25 years, and can be revised at each succeeding 10-year anniversary under an "evergreen arrangement" which
initiates a new 25-year replacement license with revised conditions;
(b) Describe a tree farm license area composed of Crown land and private tenures;
(c) Require its holder to pay to the Crown stumpage or royalty, in addition to
(Cite as: 48 FR 10395, *10411)
a bonus bid (which is fully paid when the license is issued);
(d) Require its holder to submit for the approval of the Chief Forester, once every five years, a management and working plan
prepared by a registered professional forester;
(e) Grant to its holder the exclusive right to harvest timber (chosen by licensee) from the tree farm license area during the term of
the license;
(f) Provide for cutting permits to be issued by the Crown to its holder authorizing the annual allowable cut (determined by the
Chief Forester) to be harvested from specific areas in the tree farm license area within plus or minus 50 percent on a yearly basis
and within plus or minus 10 percent on a five-year basis, subject to a penalty assessment;
(g) Require that each year during its term a volume of timber chosen by the licensee shall be harvested by persons under contract
with its holder;
(h) Reserve to the Crown the right to enter into a free use permit on the tree farm license area with a person other than the holder
of the tree farm license.
A tree farm license cutting permit authorizes timber harvesting operations on a specific portion of the tree farm license area. It
provides for the determination of stumpage rates payable through an appraisal system established under section 84 of the Forest
Act and for periodic rate adjustments based on changes in the average market value of the logs or lumber products. Separate
permits are issued for operations on different geographic parts of the license,
(Cite as: 48 FR 10395, *10411)
where separate stumpage rate determinations are appropriate or where different cutting permit conditions are needed.
*10412
(Cite as: 48 FR 10395, *10412)
Tree farm licenses account for 28.6 percent of the Province's total annual allowable cut.
2. Forest Licenses (formerly Timber Sale Harvesting Licenses).
The timber sale harvesting license was a license to harvest timber within a public sustained yield unit at a stipulated annual rate.
These licenses, granted under the former Forest Act, were not replaced by forest licenses until the latter part of 1982. We assume
that the timber sale harvesting licenses in effect during the period of investigation are very similar to the forest license explained
below.
A forest license:
(a) Shall be for a term not exceeding 20 years, and can be revised at each succeeding 5-year anniversary under an "evergreen
arrangement" which initiates a new 15-year replacement license with revised conditions;
(b) Shall describe a public sustained yield unit of a timber supply area within timber may be harvested;
(c) Shall specify an annual allowable cut (determined by the Chief Forester) that may be harvested under the license from specific
areas of land, subject to annual and five-year cut control provisions;
(d) Shall require its holder to pay to the Crown stumpage and a bonus, if any,
(Cite as: 48 FR 10395, *10412)
in the amount offered in the application;
(e) Shall require its holder to submit, for the approval of the regional manager, a management and working plan prepared by a
professional forester;
(f) Shall require that if the allowable annual cut of the timber supply area declines, the licensees must accept proportional
reduction in harvesting rates without compensation;
(g) May make provisions for timber to be harvested by persons under contract with its holder.
A forest license cutting permit is identical to the tree farm license cutting permit.
Forest licenses account for 61 percent of the Province's total annual allowable cut.
3. Timber Sale Licenses (Major).
The timber sale licenses (major) have the same requirements as the new "forest licenses." The award of a new timber sale license
(major) is by the appropriate Regional Manager or District Manager. The Forest Act requires the award be made to the applicant
submitting the highest bonus bid.
This license is used in circumstances where an evergreen replacement feature would not be appropriate; for example, a situation
where an ongoing supply of timber is not intended (flood area, fire, insect infestation), but where the volume comprises part of the
approved annual allowable cut and a
(Cite as: 48 FR 10395, *10412)
limit is therefore imposed on the rate of harvesting.
A timber sale license (major):
(a) Shall be for a term not exceeding 10 years; there is no provision for replacement and rights are renewable pursuant to section
18(5);
(b) Shall describe an area of land within which Crown timber may be harvested;
(c) May specify an annual allowable cut (determined by the Forest Service) that its holder is eligible to harvest, subject to annual
and five-year cut control provisions;
(d) May provide for cutting permits to be issued by the Crown to its holder to authorize an annual allowable cut to be harvested,
within the limits provided in the license;
(e) Shall require its holder to pay to the Crown stumpage and a bonus, if any, in the amount bid;
(f) Shall require its holder to submit, for the approval of the Chief Forester, a management and working plan prepared by a
registered professional forester.
Timber sale licenses (major) account for 1.3 percent of the Province's total annual allowable cut.
4. Timber Sale Licenses (Minor).
The award of a timber sale license (minor) is made by the appropriate Regional or District Manager of the Forest Service to the
highest bidder.
(Cite as: 48 FR 10395, *10412)
This license is used for sales of timber under the small business enterprise program and other instances where the volume of
timber is not sufficient to warrant delegation of major forest management responsibilities for investments.
A timber sale license (minor):
(a) Shall be granted through a competitive bid process which determines the total amount of stumpage dues payable (although the
appraisal system determines the base rate of stumpage due, adjusted monthly and subject to annual reappraisal);
(b) Shall be for a term from one to three years, without provision for replacement;
(c) Shall allow the licensee to cut the timber, within site-specific areas, at any rate within the terms of the license and the periodic
cut control requirements;
(d) Requires small business enterprises without timber processing facilities to sell all harvested logs, small business enterprises
with timber processing facilities to process a pre-specified portion of the logs harvested.
Timber sale licenses (minor) account for 7.2 percent of the Province's total annual allowable cut.
5. A pulpwood agreement shall:
(a) Be for a term not exceeding 25 years, with "evergreen replacement" at 10- year intervals;