Understanding Woodlot Licence Cut Control

Understanding Woodlot Licence Cut Control

The purpose of this article is to increase understanding among woodlot licensees of how cut control provisions operate. The Forest Act requires that the volume of timber harvested[1] during each 5 year cut control period must balance closely with the total of the allowable annual cuts (AAC’s) that were authorized for the woodlot licence during the 5 year cut control period. The total of the AAC’s that were authorized for the woodlot licence during a 5 year cut control period is referred to as the “5 year allowable cut”. Recognizing that it would be difficult to harvest a volume that is exactly equal to the 5 year allowable cut, woodlot licensees are provided with a level of tolerance and are not subject to penalties as long as the 5 year harvest volume falls within prescribed minimum and maximum limits.

On June 12, 2000, the ForestAct was amended so that woodlot licensees are not subject to penalties if they harvest a minimum of 80% of their 5 year allowable cut and do not exceed a maximum of 120% of their 5 year allowable cut. Prior to this amendment, woodlot licensees were subject to penalties if they failed to harvest at least 90% or harvested more than 110% of their 5 year allowable cut.

This increased cut control tolerance (+/- 20%) applies to all 5 year cut control periods that end on or after June12, 2000. For cut control periods that ended prior to June 12, 2000, the previous tolerance of (+/- 10 %) continues to apply.

If a licensee fails to harvest the minimum volume, the AAC, or the Crown land area of the woodlot licence may be reduced. If a licensee harvests more that the maximum volume, a penalty equal to two times stumpage is applied to the excess volume (volume harvested in excess of 120% of the 5 year allowable cut). In addition, the harvested volume in excess of the 5 year allowable cut is charged to the next cut control period, effectively reducing the volume that may be harvested during that period.

The following examples of an interior woodlot licence with an AAC of 1000 m³ will be used to demonstrate how cut control operates.

Example #1

In this example, the woodlot licence was issued in 1996 and the AAC remained constant over the 5 year cut control period at 1000 m³. The 5 year allowable cut for the licence is therefore 5000 m³. In this example the cut control period ends on December 31, 2000, so the new +/- 20 % tolerance applies. The +/- 20% tolerance would allow the licensee to harvest as little as 4000 m³ (80 % of 5000 m³) or as much as is 6000 m³ (120 % of 5000 m³), without being subject to penalties. In this example the licensee harvested 2000 m³ in both 1999 and 2000, for a total of 4000 m³. This volume harvested equals the acceptable minimum volume of 4000 m³ and therefore no penalties apply. The 1000 m³ difference between the 5 year allowable cut of 5000 m³ and the 4000 m³ harvest volume is commonly referred to as an undercut.

The licensee may be allowed to harvest the undercut of 1000 m³ in the next 5 year cut control period if the licensee submits a written request to the regional manager asking that the undercut be carried forward and outlining the steps that the licensee took to prevent the undercut. Section 3 of the Cut Control Regulation allows the regional manager to grant the licensee permission to carry forward all, or a portion of the undercut volume if the regional manager is satisfied that the reason for the deficiency was not a strike, lock-out or other similar occurrence and the licensee has done everything reasonably possible to remedy the reason for the deficiency in harvesting. It is important to note that the woodlot licensee does not have an automatic right to have the undercut volume carried forward to the next cut control period.

Undercut volumes can only be carried forward for one cut control period. When an undercut carry forward is granted, it is important to understand that the AAC for the woodlot licence does not change. The carry forward volume is treated as additional volume that may be harvested over and above the5 year allowable cut for the 5 year cut control period. During a cut control period where an undercut carry forward has been granted, the initial volumes of timber harvested are written off against the carry forward volume until the entire carry forward volume has been harvested. Once the carry forward volume has been written off, subsequent harvest volumes are charged against the 5 year allowable cut for the cut control period. The next example illustrates how the cut control provisions operate if the licensee was granted permission to carry forward the full undercut volume of 1000 m³ (from the first example), to the next cut control period.

Example #2

In this example, the AAC for the woodlot remained constant over the 5 year cut control period at 1000 m³. Although the licensee harvested 4000 m³ in 2005, the first 1000 m³ of harvested volume is written off against the carry forward volume. This results in only 3000 m³ being applied against the 5 year allowable cut, and an undercut of 2000 m³. With the +/- 20 % tolerance, the licensee may be subject to penalties for not having at least 4000 m³ (80 % of 5000 m³), charged against the AAC for cut control purposes. Note that the +/- 20% tolerance is applied to the total AAC for the 5 year cut control period (i.e. 5000 m³) and is not applied against the additional 1000 m³ of carry forward volume.

If a woodlot licensee fails to harvest the minimum volume of at least 80 % of the 5 year allowable cut, section 66(6) of the Forest Act requires that the regional manager must either reduce the AAC or the Crown land area of the woodlot licence unless the Cut Control Regulation provides a reason for not making the reduction. Section 2 of the Cut Control Regulation provides a list of reasons the regional manager may use to justify the deficiency in harvesting and therefore refrain from reducing the AAC or the Crown land area of the woodlot licence. If none of these reasons apply, the regional manager has the discretion to reduce the AAC of the woodlot licence by a volume that does not exceed the deficiency in harvesting. Alternatively, the regional manager could reduce the Crown area of the woodlot licence by deleting an area of land that is capable of producing a volume of timber not greater than the deficiency in harvesting. If Crown land is deleted from the woodlot licence area, the AAC must be re-determined to reflect the deletion.

Section 66(6) of the Forest Act requires any reduction in the AAC or Crown land area to continue to apply to the woodlot licence and any replacement for the licence. For example, if the AAC is reduced by 200m³, and a subsequent re-inventory indicates the AAC should be 1500 m³, the district manager would be required to set the AAC at 1300 m³ to reflect the 200 m³ cut control reduction.

So far the examples have provided situations where an undercut has occurred during the 5 year cut control period. The next two examples will examine what happens when excessive volume is harvested during a 5 year cut control period.

Example #3

In this example, the woodlot licence was issued in 1996 and the AAC remained constant over the 5 year cut control period at 1000 m³. The licensee harvested 7000 m³, resulting in what is commonly referred to as an overcut of 2000 m³. With the new +/- 20 % tolerance, the licensee could have harvested up to 6000 m³ (120 % of 5000 m³), without being subject to penalties. Unfortunately, in this example the licensee has exceeded the upper tolerance limit by 1000 m³. This 1000 m³ volume is subject to a mandatory penalty of twice the average stumpage rate that was applicable to Crown timber harvested under the agreement during the last year in which stumpage was payable in respect of timber harvested under the agreement. This penalty is in addition to the regular stumpage that must be paid for the timber and there are no provisions in the Cut Control Regulation to provide relief from the penalty. It is important to note that the penalty only applies to the 1000 m³ of excess harvest volume above the maximum (120 %) tolerance limit of 6000 m³.

In addition to the monetary penalty, the 2000 m³ overcut is deemed to be timber harvested in the next 5 year cut control period. The following example will move forward to the next cut control period to illustrate how this works.

Example #4

In this example, the AAC for the woodlot remained constant over the 5 year cut control period at 1000 m³. Note that the 5 year allowable cut of 5000 m³ does not change as a result of the 2000 m³ overcut in the previous cut control period. The +/- 20% tolerance is still applied to the 5000 m³, allowing as little as 4000 m³ or as much as 6000 m³ to be charged during the cut control period before penalties may apply. The 2000 m³ overcut volume is simply treated as if it was harvested during the 2001 – 2005 cut control period, so in essence, 2000 m³ of the 5 year allowable cut of 5000 m³ has already been harvested.

In this example, the licensee harvests an additional 3050 m³ in 2005, resulting in 5050 m³ (3050 m³ + 2000 m³ of overcut from the previous cut control period = 5050 m³), being charged for the cut control period. This results in a minor overcut of 50 m³ which will be charged against the next cut control period. Since the 5050 m³ charged for the 2001 – 2005 cut control period is less than the maximum tolerance limit of 6000 m³, there are no penalties.

In accordance with the principles of administrative law, the Forest Service must administer cut control provisions in a fair and reasonable manner. Cut control provisions are designed to ensure that licensees make every reasonable attempt to fully exercise their harvesting rights. For this reason district managers are reluctant to discuss harvesting deficiency problems until after the conclusion of the cut control period. Licensees who anticipate problems meeting cut control requirements should therefore document their actions so that a good case can be presented to the regional manager.

Cut control provisions are outlined in the Cut Control Regulation and section 64 to 67 of the Forest Act (also see section 53 of the Forest Act for some definitions that apply). Copies of this legislation can be obtained from the Internet at: by contacting your local district office or Al Waters at 387-8308.

[1] The volume charged for cut control purposes may not include all species and grades of timber harvested. The volume of any applicable grades of timber from any waste surveys will be charged for cut control purposes.