HALIFAX, TUESDAY, FEBRUARY 24, 2004
STANDING COMMITTEE ON RESOURCES
1:00 P.M.
CHAIRMAN
Mr. John MacDonell
MR. CHAIRMAN: I am going to call the committee to order. We are waiting to find out, I guess, whether you're it. There was supposed to be more. Is this it?
MS. MORA STEVENS (Legislative Committee Coordinator): Yes, this is it.
MR. CHAIRMAN: Welcome. I was a little worried that I was going to be late - I guess actually I was. I will let the members of the committee do the introductions. Firstly I will say I am John MacDonell, MLA for Hants East and we will start with Mr. Epstein.
[The committee members introduced themselves.]
MR. CHAIRMAN: I don't know if you are aware of Mora Stevens from the Committees Office. Anyway, gentlemen, I think we will let you make your presentation and hopefully time for the committee to ask some questions. Go ahead.
MR. PETER MACQUARRIE: My name is Peter MacQuarrie. I am Director of Program Development with the Department of Natural Resources and also with me is Dan Eidt, Director of Resource Management with the Department of Natural Resources. We are going to have some things to hand out here as we proceed through our comments. It was our understanding that the committee's request was for DNR to speak on one, matters related to the development of the forest industry; and two, on policy for allocation of Crown resources. So with your permission, I intend to make some comments on that first topic and then Dan will talk on the second, on allocation policy.
1
Much of the department's policy on industrial development stems from the 1986 new policy for forestry that was produced by the government at that time. One of the things that policy directed the government to do was to "encourage the development and management of private forest lands as the primary source of timber for industry in N.S." The private owners were to "have a fair share of the available market for primary forest products . . ."
These concepts were reflected in the 1987 revisions to legislation administered by our department, in particular the Crown Lands Act which now reads that when considering or entering into an allocation agreement, " . . . the Minister shall consider whether the availability of primary forest products from Crown lands will unfairly influence the marketability of such products from privately owned lands."
That 1986 policy also set out a timber objective for the province, which was to double forest harvest by 2025 and that was to be supported by incentive-based silviculture and forest management programs. That production goal was met and exceeded far sooner than was obviously expected; in fact, it was exceeded in 1997 not 2025. The basis for those government-funded incentive programs ended in 1995, with the termination of the federal-provincial co-operation agreements.
As well, since that time the potential harvest on Crown lands has been reduced by large withdrawals of land for the wilderness areas and by the additional planning and land use restrictions on the remainder of the Crown land to address our broad range of resource values other than forest fibre production. So the current policies and legislation still also expect that the harvest of forest products should be constrained within the limits that are considered sustainable, although in Nova Scotia forest laws do not give government the right to regulate the harvest on private property, where most of the harvest actually occurs.
In 1997, the Sustainable Forestry Position Paper, which led to the introduction of the new - I guess it's no longer new - Forest Sustainability Regulations, dealt with the sustainability aspect of that policy or that position. I understand the previous committees had been briefed on those regulations and programs. Once primary processing and harvesting has reached sustainable harvest levels for respective species, regions or land tenure groups, obviously further industry development needs to focus on additional processing of the original resource rather than straight additional capacity. At the same time, as one proceeds down this processing chain, the further they get away from the mandate and authority of the Department of Natural Resources, where the business essentially evolves into a manufacturing business rather than processing of natural primary resources.
We have brought, to leave with you today, a couple of factual pieces on the economic significance of the industry. I don't propose to go through these at great length here today. There are three separate items. This coloured one is an excerpt from another report that was written recently by the Atlantic Provinces Economic Council. I have given the secretary a disk copy of this. She says she can circulate it to you and you will have it in colour, for all the
charts of that report. It's not published or paid for by the department, so I don't have the quantities to distribute.
The coloured chart - one of the things from here shows the estimate of employment by county for the various portions of the forest industry, which I thought you might find of interest. The text piece was something that my group had just recently written as a contribution to the Office of Economic Development on some work they were doing with other departments on trade strategy, to discuss some of the current issues for industrial development.
[1:15 p.m.]
We understand that we have been preceded here at the committee by some others who have made comments and suggestions in part comparing Nova Scotia's policies to New Brunswick or circumstances between Nova Scotia and New Brunswick. I have also brought here a set of charts and I am going to bring your attention to some of the specific ones that are in there, that we put together to try to put Nova Scotia in the Maritimes' context and, in some cases, compare directly to New Brunswick.
On this set of charts, I would like to first bring your attention to Charts 2, 3 and 4. Chart 2, on the front page, shows the government's estimates of what the sustainable harvest is in each province and from what tenure. I think you can see the big difference between the two provinces is the scale of harvest potentially available on Crown land. The amount of industrial land is strikingly similar, actually.
Charts 3 and 4 show where the actual harvest is occurring and 2001 is the most recent year that I have for both provinces. Again, the availability, certainly in total, of the Crown harvest is what puts that expansion up substantially, as well as the substantial amount of import that New Brunswick goes out and buys from neighbouring jurisdictions, that's Maine, Quebec, P.E.I. and Nova Scotia. Whereas the imports into Nova Scotia, certainly on that scale, are almost negligible.
The story is not a whole lot different if we just isolated hardwood. New Brunswick does not report very much import of hardwood, although we know of some, essentially it gets rounded off on a chart like that.
The charts that follow there, which are 5 through 12, just show the amount of actual harvest in total and from Crown land, both for softwood sawlogs and hardwood sawlogs in Nova Scotia and New Brunswick, and their relative share. So the Nova Scotia Crown is producing, of late, under 6 per cent softwood sawlogs and about the same percentage, 6 per cent, of hardwood sawlogs. In New Brunswick it's 50 per cent of softwood sawlogs and 40 per cent of hardwood sawlogs from public land in that province.
My point here on these charts is the magnitude of difference in the market share the Crown plays in the two provinces. It means that even if both provinces had exactly the same policies and processes for allocating Crown timber, the leverage that policy is going to have on the industry is very different. In New Brunswick, virtually all major players have had an historical Crown land allocation and so are affected by those policies. Whereas in Nova Scotia, a very small number of firms either have in the past or could possibly be awarded allocations. So most of the firms would not be under any influence of a policy, if it existed.
I will bring your attention to the chart on the last page, Chart 15, but essentially the same story is painted in the earlier page ahead, which is for all of the Maritimes. It shows a major shift recently that has almost gone without comment and which I personally include in a value-adding or adding-value development, certainly it is from the perspective of the landowners who are selling wood.
From the 1960s to almost the end of the 1980s, 70 per cent of all the harvest in the province was produced as pulpwood and sold at pulpwood prices. We used to get a long string of complaints that the wood was not being adequately utilized, the prices were low, it was difficult to get into the market, but in the past 12 years this has turned upside down. Now 75 per cent of the total harvest of this province is sold as either stud wood or sawlogs, landowners are paid sawlog stumpage values, and the markets they're in are highly competitive, with multiple buyers.
That big shift did not occur because of any government policy, but because the pulp mills realized to reduce their wood costs and fibre costs, it was better for them to buy sawmill chips that were ready to use, than to buy pulpwood and maintain a large wood room to make their own chips, in-house.
It was also our understanding that earlier representations to this committee urged that the government should be more aggressive in applying policies that favour local or Nova Scotian processing, or which would require companies to meet certain minimum processing requirements, whether they were value added or otherwise. We would just like to bring to that discussion two factors, I guess, that we also routinely have to consider.
All the provinces and the federal government have entered into the Agreement on Internal Trade, which amongst other things prevents the discrimination against firms in other provinces. Although existing practices that did discriminate relating to the issue of Crown resource rights, whether it was timber, fish, or mining, were grandfathered in, they were clearly against the spirit of that trade agreement. This agreement has recently been identified as a priority area of work for the new Council of the Federation - if I have the name right - that the First Ministers recently established to deal with some national issues.
Other kinds of government policies that tie the issuing or the retention of Crown rights to a specific kind, amount, or the location of processing by its industry are also the core issues of the softwood lumber dispute the U.S. has with Canada. It's those very tenure policies that the U.S. has called market distorting, and for which they are seeking reforms as a mandatory requirement to settling that dispute. So for the past two years, virtually all of the provinces outside the Maritimes have been grappling with how to undo those policies, which others are suggesting we should rush to adopt.
Now I will turn it over to Dan who is going to go over the policy we have adopted when it comes to allocating hardwood resources.
MR. DAN EIDT: Someday we may have to undo it. I will pass these around. What I'm passing out right now is the policy, itself. I also have a standard overhead that I use for introducing this to staff. I can pass that around, too, and then you can follow through, if you wish.
Canada is a net importer of hardwood, so it doesn't come under the same scrutiny from our neighbours as the softwood lumber. We were asked by the Executive Council to develop a hardwood allocation policy, so what I have handed out is the policy and I will lead you through the overhead.
The demand for quality hardwood has been increasing on both private and Crown lands in the province. We have a lot of entrepreneurs who would like to get into the business, but we have a very limited land base and we have a very limited resource in hardwood, and there's lots of competition there.
The Treasury and Policy Board approved this policy on April 2, 2003. The policy deals exclusively with hardwood from unencumbered Crown lands. Quite a bit of the hardwood is already encumbered under licence and management agreements in the province.
In the policy we indicated that the unencumbered hardwood volume now is currently nil, so for the quality hardwood, typically users of hardwood would think of sugar maple, yellow birch, there's some oak in the province. It's all allocated on the Crown land right at the moment.
Low quality. There is some available volume, and it's around 50,000 cubic metres per year, that could be allocated. There has been some interest in seeing that used. We get proposals from time to time. But it's difficult material to market, it's primarily red maple. Some people would arguably dispute this, but a lot of the white birch is of low quality. There's pin cherry and poplar and a few other species out there that there's some interest in from time to time. White birch on a good site, though, can be a high-quality species as well for veneer. It's primarily located in the central region.
The current situation. Portions of this hardwood policy would be complementary and others may possibly be superseded by the planned future implementation of the AGFOR recommendations regarding overall tenure arrangements on Crown lands. I haven't brought that here but, just briefly, there would be a lot of advantages to adopting a system like New Brunswick has, major licensees and sub-licensees, and there are some disadvantages. At some point in time, the government may decide to go down that route, but right now we're not. We've implemented, out of the AGFOR report, portions of it, dealing with stumpage and other things but not the tenure recommendations. This policy, when we developed it - we had to keep those recommendations in mind.
Currently the only available hardwood volume for allocation on the unencumbered Crown land is low-quality hardwood material. There will be a potential to allocate an annual volume of tolerant hardwood April 1, 2005. That's when a small volume that's currently allocated will come up for renewal. At this point in time, the decision has been that we would follow this policy to allocate that.
Policy objectives are: to achieve sustainable economic benefits to Nova Scotia through the optimum harvest and value-added manufacturing of Crown hardwood; to demonstrate to Nova Scotia hardwood users and woodlot owners best practice management and harvesting techniques that ensure a future supply of sustainable quality hardwood stands and maximize value-added product recovery; using sound forest management practices, effectively managing unencumbered Crown land hardwood to increase future yields of higher quality hardwood. One of our main objectives as a resource department is to grow higher quality and more quantity of the hardwood.
Highlights of the policy. Prior to April 2005, this policy, possibly modified by AGFOR considerations, will call for expressions of interest for access to tolerant hardwood from qualified candidates/bidders. Requests for lower quality hardwood can be entertained at any time, as opportunities arise. That doesn't necessary mean that we wouldn't put it through a process, it's just that we're not really looking for people to come forward asking for wood of the tolerant high quality at the moment, because there's just none available, but we are looking for anybody who's interested in utilizing the lower quality material. That could invoke that we would go through a call for proposals to ensure there wasn't somebody else out there who could make better use of it and create better benefit for the province.
Qualified applicants and affiliates, if any, will be assessed for demonstrated competence and potential across the full spectrum of vertically-integrated forest sector operations. So we're looking for forest management knowledge and skills, good harvesting practices, processing of log material and recovery. We're looking for that both in the woods, we're looking for people who get the most quantity of usable material from their harvesting operations. In hardwood, it's particularly easy to do that poorly. It's very difficult to do it well. The difference can be 50 per cent or 80 per cent more quality material coming out of a stand if it's done well, as opposed to someone just going in and getting some of the material
and selling the rest for fuel. It's far easier to not do a good job of it. Hardwood requires a lot of skill.
[1:30 p.m.]
We're also looking for high recovery in the mill. We're looking for mills that will utilize very short bolt lengths, and we're looking for systems that recover a lot of lumber out of each bolt of sawlog material, and then we're looking for value-added manufacturing and end product. That can include affiliates, it doesn't all have to happen with the mill, they could be with a particular owner, they could have affiliation with other owners who can do some of this other work for them.
Highlights of the policy. Applicants will be required to demonstrate that in previous operations they have met or exceeded minimal acceptable harvest prescriptions, to ensure future growth and the higher quality improvement of the hardwood resource. We have enough entrepreneurs out there now and we have a limited hardwood base, so we're really gearing this to people who already have the skills; we don't need new entrants, really.
An evaluation process will be undertaken with interested applicants. A short list of qualified applicants that meet the policy objectives and selection criteria will be developed. From this short list a small number, contingent on hardwood volume availability, will be awarded a five-year renewable licence, either by price tender or possibly in accordance with the evaluation rating scores. If only one person qualifies we might not have to go to the second step, that's basically what that means.
Successful licensees will be required to conduct Crown hardwood management, with the objective to increase future hardwood volume yields, as well as improve the longer-term quality of the hardwood in the managed stands.
Nova Scotia DNR will not allocate to any one applicant more than 20 per cent of the log material processing requirements of the applicant's associated mill - that, basically, is to do with what Peter mentioned before. That ensures the private sector has the ability to sell the mills, so the Crown is always a minor supplier to any one mill - and not more than 70 per cent of the total sustainable annual harvest from the available Crown hardwood from the region of application.
In order to keep our industry strong in Nova Scotia we have to make sure that on Crown lands there is the ability to get forestry certification, our IRM process on Crown lands goes a long way towards that. We do assessments for other values out there; it could be hardwood that's important for wildlife value, it could be scenery, it could be something next to a highway. There is a certain percentage of the AAC out there that at any given point in time can't be made accessible, or at least in the quantities that could be if those concerns weren't being looked after. We put a further restriction there so that within the sustainable
yields, we do have hardwood that will be able to meet old-growth objectives, or sensitive wildlife habitat objectives and other objectives.
Licensees will contribute to the Crown Lands Silviculture Fund and/or undertake silviculture work. Basically, on Crown lands we are parallelling the sustainability regulations on private lands, we have always done that by policy and now it is more or less being formalized in Crown policies. So we just parallelled what is required of the private users of wood.
Additional considerations. Hardwood stands that are needed to satisfy old-growth policy and certain IRM objectives may result in reserved areas or modified harvests. Harvests will be undertaken to be complementary, as much as possible, with recreational activities, maintenance of wildlife habitat and aesthetic values. Stumpage payments will be assessed normally on an annual adjusted market-based formula. On Crown we try to ensure the rates that we're charging are complementary with what the private sector can expect to get with their wood. We don't want to get more and we don't really want to get less, we want to get in the same ballpark. Existing Crown licensees who have hardwood volume will be encouraged to direct sales of hardwood material to value-added Nova Scotia manufacturers.
There's a section on applicant qualifications, which is more or less just a repeat of what I have already said, so you can read that on your own. It continues on, I guess. I would emphasize, though, that we do want applicants who have knowledge of the silvics of the various species, or life histories, how they grow in association with each other - a very complicated business to do right in hardwood.
Forest site factors. What implication that has for the kinds of harvesting and silviculture treatments that should be done. Those all have an impact on what we call silvicultural treatment prescriptions and when we say that in hardwood we're applying that right to the harvest, we start with the harvest.
Promote and participate in the development of forest-research knowledge based within the hardwood sector. I mention that one because there is a hardwood working group in the province. A lot of the individuals who are trying to acquire hardwood in the province are working together and we have representation within the department from our research branch. So they are trying to understand how the trees grow and they're also viewing it from a market approach themselves, which I support; I think it's a really good thing, it's an area where you do need to be able to commiserate with the other people in the industry and in the business.
So we have criteria for selection and evaluation. Basically, if we put out a proposal - we have to put out a proposal this year by this policy and our call for proposals - we would want people to respond and tell us about themselves, their business and their abilities. We want some evidence that they have proven experience in all those fields we talked about. So
we have listed the evaluation criteria here and we would also tell them how we were going to evaluate them, how they would score on each of these sections, how we would propose to score them.
It's in fine print here, it's in a little larger print in the policy, I'm not going to read it but it is examples of value-added products. Because we have such a small volume on Crown land to actually allocate, it's not a great amount, all I will say is we have raised the bar a bit. If people are already producing it in the province and there are a lot of mills already producing certain products, you won't find that in what's included, more likely you would find it in what's excluded because what we're looking for is to allocate to these higher-end things that some people are into but not everyone is into.
Allocation process. We can identify the potential applicants from the registered buyers list. If you are acquiring hardwood in the province in any amount, you are supposed to be registered. We would call for proposals, the applicants submit the proposal, we would evaluate, only the qualified applicants would be invited to bid on the available hardwood volume allocation. The policy now allows the successful bidder to be awarded a five-year forest utilization agreement, that has to go to Cabinet and be approved by Cabinet. The minister can enter into a two-year allocation but can't exceed two years under the Crown Lands Act. That is my presentation, I guess.
MR. MACQUARRIE: That's the end of our prepared comments.
MR. CHAIRMAN: Thank you, very much. Mr. Parker, I see your hand up. I would like to give all members of the committee a chance to ask a question and I will probably put myself last, just to make sure everybody else who might want to ask a question gets there. I have so many but hopefully, someone will knock them off before my turn.
MR. HOWARD EPSTEIN: Mr. Chairman, before we start the questioning, could I ask what happened to the deputy minister?
MR. CHAIRMAN: If anybody can tell us that.
MS. MORA STEVENS (Legislative Committee Coordinator): That is a good question.
MR. CHAIRMAN: Do you have any information . . .
MR. EPSTEIN: Was he scheduled to appear? According to our witness list he was.
MR. CHAIRMAN: Yes.
MS. STEVENS: It was my understanding that he was appearing and I had a list of the officials who were coming. From what I understand, when I left the room earlier, I checked with the deputy minister's secretary and it was not scheduled on his calendar, so obviously, he had changed his mind at some point. He wasn't specifically . . .
MR. EPSTEIN: Was there any communication in writing with his office?
MS. STEVENS: Yes, to the deputy minister, it was asked to go through the deputy - the outline of the topic was given and that we had already spoken to Taggart Hardwood as well as Economic Development and NSBI, what the topic was . . .
MR. EPSTEIN: Maybe the committee can discuss this later, I don't want to eat into the question time too much.
MR. CHAIRMAN: Mr. Parker.
MR. CHARLES PARKER: Mr. Chairman, this is a very broad subject and one that is on the minds of many Nova Scotians. The forest industry throughout our province is certainly a big employer and there is also some, I guess, fear or trepidation that perhaps things are not necessarily going right all the time. There is concern about overharvesting and sustainability. I know you're working hard in trying to get this registered buyers system and the sustainability regulations. You're heading in the right direction.
Nonetheless, I guess, coming from rural Nova Scotia, I do see a lot of land out there that is cut over, it's harvested and then it's forgotten. I am just wondering, is there a policy by your department to, perhaps, work with private landowners - and it's on industrial land as well that it happens - it's just harvested and forgotten. There is a lot of good silviculture and replanting and so on going on but on the other hand, there is a lot of acres that are just harvested and that's it. Is there a policy or educational program or any initiative by your department to work with private landowners to try to get replanting or some silviculture work done or with silvicultural contractors, is there some incentive for them to approach private landowners and try to get all our lands into production? So I guess that would be my first question, perhaps, to Peter, or Dan, whoever wants to answer it.
MR. EIDT: Well, I can answer for Crown lands certainly. On Crown lands, we apply for budgets every year and we work with licensees and our target is to reforest all of the Crown lands that are harvested. In some years we're able to achieve that and in some years, there are budget limitations or there's a downturn in the industry, so it doesn't always get done every year, but in general, we usually manage to keep it going at a good steady pace.
We do rely on a lot of natural regeneration. It can take five to eight years on a lot of sites for natural regeneration to actually establish and come up to the height where we start spacing it. In a lot of clear cuts, there is lots of natural regeneration but if you haven't got an
experienced eye, it's actually hard to see and it's not very visible. We receive those complaints as well, on Crown that's my point and we go out and investigate and those areas do generally come back. Where we know it won't come back or it likely won't come back that's where we undertake the planting.
MR. PARKER: It's primarily on private land, where your department has no direct authority, that I was asking my question about.
MR. EIDT: Well, we do have the sustainability regulations now and the users of wood either have to do silviculture work or contribute to the fund and Peter can explain that more fully than I can. But in order to acquire wood, they have to do a certain level of work and that whole program is geared to ensure a sustainable wood supply. It wouldn't mean that every acreage would have to be treated, but a lot of the acreage that is harvested would have to be treated under that program in order to be successful.
MR. MACQUARRIE: I am not sure what more I would add. Yes, I guess, the forest sustainability regs are the current policy instrument that places the onus on the people who've created the demand to have the silviculture activity, in aggregate across the province, that's adequate to support that demand. The level of program that's expected under those regulations does not expect every hectare to be tended immediately after harvest, because it is relying on natural regeneration. Once the generation is up and growing, there is a target of how much an area needs to be improved through spacing and such.
I guess that policy is relying on creating a market for silviculture, in that the previous policy was to offer incentives to get silviculture done, this policy is an attempt to create a market for silviculture and that market is between the landowners and the buyers, not between the landowners and the government.
[1:45 p.m.]
If the landowners want to do the work themselves and offer it as finished work to buyers, I guess that's one option they have; if buyers want to engage contractors and go to the areas that they've located, that's another option that's there for them. I think many of those buyers have chosen contractors that they want to work with and perhaps have consolidated work more than in the past to those contractors they have confidence in and they're going to do it for a price that has been negotiated between themselves and those who have an understanding of the types of conditions they're prepared to go into and operate in.
MR. PARKER: So that these new regulations within the last two or three or four years, whenever it came in, then is designed to be balanced between what acres are harvested and the silviculture work to be done on those acres. What about before these regulations came into effect, where there were still thousands of acres that were clear cut and in many
cases there was no silvicultural work done or no replanting, is there any initiative to try to get those lands covered?
MR. MACQUARRIE: I disagree that there was none. Through the 1970s and 1980s, under those financial arrangements, we had programs that were worth $10 million a year and a lot of work was done. But, again, participation was not mandatory and there was not a link there between the initial person who did the harvest and any follow-up work, which, I think, we have more of a link now. The old programs relied on the landowner coming forward and enrolling in a program, if he didn't enrol, he wasn't part of our set of clients.
MR. PARKER: I know there was some good work done in the past but I was just wondering about those acreages that are out there now, that are not replanted, that are perhaps growing up and a lot of pin cherry and I know succession is starting but it's slow. But is there work that could be done to put those lands back into production?
MR. EIDT: It is slow and you're right about that and it will reach a stage where it can be spaced, almost all of it will reach a stage where it can be spaced. I would anticipate, under the regulations that, eventually, as it reaches spacing height, which is two metres and above, that it would - and that's your crop trees, which may be overtopped by some the species that you have just mentioned, like pin cherry. So when the crop trees are ready, a lot of those sites will, in fact, or should be spaced, subject to the money that comes through that program in those arrangements that Peter was talking about.
MR. PARKER: Can I ask one further question, Mr. Chairman?
MR. CHAIRMAN: You may, yes.
MR. PARKER: Dan, in particular, on Crown land, you talked about the stumpage rates and I know some of those are long-term contracts with the pulp companies and others, you said, were being adjusted with inflation or whatever, but are we getting a fair share out of our Crown-owned resources at this time through our stumpage rates? The impression was that for many, many years, the rates were low or very low compared to the private sector, where are we today in relation to that?
MR. EIDT: Well, the AGFOR report did a study on what the private sector was receiving in 1999, a six-month period, and recommended base rates and then a formula. At that time, we did come in with rates that were on par with what the private sector was receiving, plus we adjust those annually by the formula. All the licensees are along those lines. We do have one longer-term arrangement and some of its rates do go back to a former agreement, so with the exception of one out of 25, we're all on line and the last one is still under negotiation and, hopefully, we'll soon be concluding it at current rates.
The difference there is not substantial because the industry is in a downturn. Actually, by not having it negotiated, there's no great loss there because the fair market value has actually dropped, by formula.
MR. PARKER: How do our rates compare to the Province of New Brunswick?
MR. EIDT: They're on a par.
MR. PARKER: Are they?
MR. EIDT: Yes. A lot of the difficulty comes in people comparing stumpage to maybe roadside value. In some cases we get extremes where people will compare stumpage to millgate value; that causes some confusion from time to time. But when you go back to the value of the tree that's standing in the forest, it's pretty comparable. We also brought in a new system. A lot of the administrative, not the inspection role or compliance role that the department has with their licensees on Crown land but the day-to-day administrative role, we've turned a lot of that over to the licensees. In the stumpage rate, they get an allowance now for the work that they take on that the province normally would have taken on, and that has freed up staff to do other things, like the integrated resource management process, because there's a lot of emphasis on providing for other forest values out there besides wood fibre.
They also have to do the layout on the ground, and then we inspect it. We still inspect layout on the ground. The forest wildlife and special watercourse protection - they're now in regulations, so they apply to the Crown as well. So we carry out an inspecting role, and we've moved the onus down to the licensees to get it laid out right and do the administration.
MR. PARKER: What are our rates right now in the province, approximately, for hardwood and softwood?
MR. EIDT: I didn't bring them with me. I could have. I can forward them to you.
MR. PARKER: Okay, if you could.
MR. MACQUARRIE: I would just comment that the general philosophy in the system is that we've surveyed what private values are, made certain adjustments that Dan has referenced, and then adjust them every year - we do adjust them every year - based on changes in the products that the industry makes, based on the change in the price of lumber, the price of newsprint. There are formulae built in the contracts that indicate the percentage change in those things which will determine how stumpage will go up and down from year to year, and it also said that we would resurvey the private value before 2005 to establish a new base price and then index for several years - establish a base price and index. So that's
the general concept of how the prices are changed, but the point is they are changed every year.
MR. CHAIRMAN: Mr. Sampson.
MR. GERALD SAMPSON: Mr. Chairman, I also have several questions. One I wanted to focus on to begin with was the silviculture program. I look at it in two lights, it's a value-added process that increases the value of the forest that we're harvesting, which is an economic generator, and the second one is the jobs that it creates for those people who do the silviculture, and that's a direct economic generator for employment. I'm just wondering, what's the status of the silviculture program as it stands right now? I remember back, at one time it was highly promoted by the government and it employed a lot of people. It seemed to be that everywhere you turned people were doing silviculture. Now it seems to have petered off some. Can you just give me some kind of inclination of where it stands or how it's being promoted?
MR. EIDT: On Crown, it's stayed steady, and actually the funding has increased a little bit. The industry expanded and there was slightly more harvesting on Crown through the 1990s, and most of the licensees were more fully utilizing their licence agreements than they had in the past. One of the recommendations of the AGFOR report was that we parallel the sustainability regulations for private lands. Now when licensees pay stumpage, we also tack on another $3 per cubic metre on stumpage for silviculture for softwood and 60 cents per cubic metre for hardwood. The Crown licensees - that actually comes into a special account with Finance - pay it when they pay for the stumpage, and we portion that off and put it in the account.
When they do silvicultural work, and almost all of them are participating and even if one isn't participating, another licensee will often do that work for the other licensee - well, not for the other licensee but they will use the funding. We have the option to make sure that that funding gets used under that. So when they do work to standard, we will use that fund to pay for that work to standards to agreed maximums. So we are getting a supplemental amount. We are still getting appropriations from the Legislature as well and most of that is tendered. That is put up for tender usually in the Spring of the year and silviculture contractors can bid on that work and go do other work on the Crown. It's not stacked but it is other work. By that means, we are doing basically the same levels with a slight increase over what we used to do on Crown which is necessary, as I mentioned before, because there was more utilization of their licence agreements through the 1990s than there had been in the 1980s and a lot of that work is coming onstream.
The main one we do on Crown is spacing of natural regeneration. We only plant about 30 percent of the area because most of it comes back with satisfactory regeneration on its own. To go through all the steps for planting is fairly expensive so it is better to wait for that regeneration and do the spacing operation. It is much more cost-effective and you can
actually get just as good a regrowth. The spacing allows you to select for a lot of the longer-lived trees that are in there. There are plenty to select so, if the spacing is done properly, you can end up with a pretty nicely well-stocked stand.
On the private land program, Peter would know better than I, I haven't followed it as closely because I tend to be more closely connected to the forest management on Crown but on private, there were the federal/provincial agreements and then there was a dearth for a little while but there is opportunity to catch up with some of that work, as I was mentioning before, and I am not exactly sure how the dollars compare to . . .
MR. MACQUARRIE: From 1995 to 2000, the program, especially on private land, was in a state of decline as the incentive system came to an end and the province was the only government left in the game, I guess, with financing. After much public discussion and debate, the system, under the Forest Sustainability Regulations, which started I think in 2000 with fees and provisions, was phased in over three years, going after the largest producers first. We talk in terms of dollars, I guess, because it creates the system of credits where when you buy wood you incur a liability for a silviculture program of a certain value which is driven at $3 per cubic metre for softwood and 60 cents per cubic metre for hardwood. As you turn in completed wood, those liabilities are eliminated.
MR. EIDT: Completed work.
MR. MACQUARRIE: Completed work. You have to turn in completed work to honour and they are recognized at what we call credit regs. So the numbers that the department maintains are this balance of liability and completion of completed work at credit values. That program has gone up. In 2001 there was $13 million worth of credits turned in and I think it was higher last year in 2002 again. In the phase-in year there was essentially overachievement by the buyers as to what their legal requirement was and they have built up some credits in their accounts that if they wanted to, in bad years like this, back off a program, they could call in those credits to honour their obligations.
They have responded extremely well to that arrangement, saying that if you want to try to get that work accomplished, the regulations permit you to do it. They have rushed in and are getting the work accomplished. The mix of work has probably shifted over those last five or six years. There is a lot more mechanical harvesting and stuff going on in the woods. There is a lot less planting. That is only starting to turn around just now, as we see it from the demand for nursery stock but it is still less than in the past.
MR. GERALD SAMPSON: That leads me into my next question, I wanted, Mr. Chairman, to ask a question about the clear-cutting. What is the policy on it? When I look at areas that I represent, I guess to put it mildly, the word assault comes to mind. When I look at the areas that were forested and now, there is no way, shape or form, maybe a bull moose with a 10-foot rack of horns might be able to plow his way his way through but everything
is just left from the mechanical harvesting, you've got forwarders going in and putting ruts and rips and drains into areas that, I mean they're three and four feet wide, they are three and four feet deep, it looks like the land will never recover and everything that's left behind is just an atrocious mess.
[2:00 p.m.]
I see the concentration has gone from planting of trees to natural regeneration which, to me, is a cost-saving measure on behalf of the government, because it costs more to plant the trees than if you hold off and let them regenerate. But my concern is, it folds in, I look at this land and I wonder, is it ever going to be recoverable? I'm getting calls now from the industry of hunting - hunting is an industry, with the money that it puts into the province - and there are people telling me, there are no deer left, Gerald, to hunt, there's nowhere to go to hunt. There are mountains that are bald and fields that were miles and miles of trees are now just totally impassable for anybody to go in there to try to hunt.
I am wondering, what's the future? What are the best practices that are being followed or are there any best practices that you're focusing on, because it seems like somebody can go in with a machine and what they're doing down my way is they'll go in and they'll buy grannie's woodlot and they move in a machine and they flatten the area in no time at all and it's just totally impassable. Like I said, the word, assault, comes to mind when I look at the land, I think how is that ever going to recover from what they've done to the land and you're telling me that natural regeneration will take place and that will grow. But these big machines, I mean, most of the topsoil is driven two to three feet down into the soil and nothing will ever grow there, as far as I can see. What's your experience with that?
MR. EIDT: There are examples of that out there on lands and it's not tolerated on Crown but we do have regulations on private lands on the watercourses and zones and action can be taken if that's resulting in sedimentation getting into streams.
MR. GERALD SAMPSON: Let's just stay away from the streams. I'm an operator and I'm going to make sure that I'm not silting a stream, because it will go down and run past his house and he'll be on the phone, so I'm going to stay away from that but I'm going to get whatever I can get and it just, to me, is pure greed to go in there and rip and tear, take everything you can, get in as fast as you can and get out as fast as you can with the biggest amount of product.
Is there any enforcement? You're saying this is on private land but is there any enforcement, do you have any authority to go on grannie's property and say, I'm sorry Sampson, you can't go in there and abuse that land like you're doing, you have to do (a) and (b) and leave it in a certain . . .
MR. EIDT: Yes, that's the point I was trying to get to. Unless it involves a stream, on private lands there is not a regulation to prevent or to take any authority on a landowner who permits, or a contractor for a landowner, who ruts their land. There is no regulation.
MR. MACQUARRIE: Nor is there authority in the Act to make such a regulation.
MR. GERALD SAMPSON: Is there any intent to make in the Act such a regulation or I can do what I want, whatever I want with my lands, so long as I don't silt a brook or something like that? (Interruption) It seems like you're the Department of Natural Resources and I'm taking a natural resource and abusing it and yet you have no authority to . . .
MR. EIDT: It's something that we, obviously, have never promoted or encouraged. In fact, we've done just the opposite, we don't regard that to be a good practice and we don't encourage it.
MR. GERALD SAMPSON: Yes, but regarding it is not controlling it. Do you know what I mean?
MR. EIDT: I know.
MR. GERALD SAMPSON: And I'm sure everyone around here can take you to areas that have just been obliterated and I don't see how it's ever going to come back. Anyway, one of the other things you mentioned was that all the hardwood is presently allocated. I wrote down the question, to whom is it allocated, is it small, local landowners or is it large multinationals or is it a combination of both?
MR. EIDT: It's a combination of both. The 10 western counties, for hardwood on Crown lands, it's allocated to ABT, most people know it as Canexel, the East River plant. They use a lower quality hardwood and if they're in a stand and there is any amount of higher quality hardwood, they sell it as a by-product to other mills in the area. There are two or three that they typically sell to in the western region.
Quality stands of hardwood on Crown lands in the western region are extremely rare. Most of what we own in Crown lands is the ungranted lands, the lands that weren't suitable for farming. The site class is not high, so there are very few tolerant hardwood stands. We have a few, we've treated them in the past and when they're ready for treatment again, then we basically tender those higher quality stands. ABT Canada Ltd. has done quite a bit of silviculture work in the low-quality stands that they were allowed to harvest and they are promoting some higher quality in those stands. They've done a lot on shelter woods and thinning as they go, so there will be more come on stream, but it's still a fair way down the road. It takes quite awhile to grow good hardwood quality stands.
MR. GERALD SAMPSON: One final comment, Mr. Chairman, then I'm complete. My motto on economic development always has been, develop what we have. So if we have this natural resource, given the word, assault, that I used, that's what I feel when I see the land given the situation it is, and the clear-cutting and whatnot. In your opinion, what's the future for this industry? It's renewable, it should be sustainable, but I don't know if it can be sustainable given the attacks, the way that it's being clear-cut. So what's your evaluation of the future of the industry, is it going to improve, is it going to decline or is it going to remain stable?
MR. EIDT: The forest sustainability regulations should ensure that it stays sustainable. In fact, we have more inventory out on the ground growing now than we had in the early 1900s. It's been continually increasing. There has never been a decrease except for the spruce budworm. We've made gains since then and we're bringing on more and more wood supply. It's relatively flat on private lands, it will stay constant. On the Crown, there has been a fair amount of increase, large landowners are making some increases. Anyway, that's what the wood supply analysis indicates, which is periodically reviewed and done fairly thoroughly.
MR. GERALD SAMPSON: Thank you, that's good to hear.
MR. CHAIRMAN: Mr. Epstein.
MR. EPSTEIN: Mr. Chairman, I had some questions about wilderness areas and I don't know if this comes within your areas of knowledge or not, although I did hear a reference to what were called "large withdrawals" from Crown land for wilderness areas and this was a factor that was mentioned in passing by one of you. Can you help us understand the current status of the Eigg Mountain and Gully Lake candidate wilderness areas? Do either of you have any knowledge about this?
MR. MACQUARRIE: The status, I guess, is that we understand that the Department of Environment and Labour is the agency responsible for the creation of any new area, or the alteration of the boundary in any existing area. They're preparing a socio-economic analysis, which is required under their Statute, that will be used in a public consultation process within the year to finalize the establishment of Eigg Mountain and Gully Lake.
MR. EPSTEIN: So as far as you know this is still going to take at least a year and maybe two, because that's just another step in the process, isn't it?
MR. MACQUARRIE: Within this year is our understanding.
MR. EPSTEIN: That there should be a final decision within this calendar year?
MR. MACQUARRIE: They're the lead agency and I think that's their target. It is our understanding that the bureaucrats are to have their job done within the year. (Interruption)
MR. EPSTEIN: Well, that was my point. That is one of the difficulties about not having the deputy here.
I do have another topic and I don't know if asking a question is going to be productive or not. What I want to do is signal for you a worry. I am one who is very worried about the future of our forests in Nova Scotia. We all recognize the importance of the forests in terms of employment, both direct and indirect. We recognize the importance of the forests as an economic generator through sales and through manufacturing. We recognize the importance of forests in terms of recreation. We recognize the importance of the forest as a tourist attraction. We recognize the importance of the forests because of their ecological function and how they're related to the cycles of water, air and carbon sinks; all of that is just crucial.
We are talking primarily here about the economic future of the forests, but I never want to lose sight of all these other factors and they all come into play under the general rubric of sustainability. Sustainability is our starting point, I think, in terms of the overall objective. I worry, along with those other members of the committee who have indicated concerns about the level of the harvest, never mind the technique of the harvest which is problematic itself, but the level of the harvest.
If I understood you correctly, you are suggesting that the current level is sustainable. I haven't heard you say otherwise and I thought I heard a minute ago a suggestion that the current level is sustainable, meaning that you think it can go on forever. I would just like to see if that, in fact, is what you are saying. You are saying there is no reason to think that the current level of harvest which - as you pointed out - doubled, well in advance of the prediction of the 1986-87 studies and policies that were put in place before the end of the last century, instead of the year 2025, are you still thinking that this is sustainable and are you thinking that there is going to be an increase at all in the volume of the sustainable harvest in Nova Scotia?
MR. EIDT: Well, there isn't much room for expansion of the industry using raw material. It's incumbent on the users, that are here now, of the wood to participate actively, as Peter indicated they are, in these forest sustainability regulations, so the potential is there for it to be sustainable. There is also some self-regulating that has to take place, I mean you could worry that large industry might come in and set up but on the other hand, any industry that wants to set up in this province knows now it is going to be in full competition with everybody else who is already here. Nothing ever is for certain, for certain, but the picture is not that bad. The wood supply analysis for the existing industry doing silviculture at the indicated levels, under the forest regulations, should sustain the wood supply.
MR. EPSTEIN: If I'm interpreting correctly, you're saying that perhaps it's maxed out and if not, in terms of the capacity of the land to produce, at least in terms of the economic situation of the manufacturers?
MR. EIDT: Actually, it's not maxed out, it's not even close to maxed out for sustainability of wood supply.
MR. EPSTEIN: So it does have potential to grow?
MR. EIDT: But you mentioned a whole lot of other things you wanted to provide as well.
MR. EPSTEIN: In order to extend to other factors then, is it the department's view that the level we're at now is about the desirable level into the foreseeable future?
MR. EIDT: It certainly is on Crown land, if you want to provide a whole lot of those other broad range of values. If you want to ensure they're going to be there and, in fact, we've known that for quite some time, the actual figures on Crown land have not increased, the harvest has not increased since 1991.
MR. EPSTEIN: So the big increase has been on private land?
MR. EIDT: It has been on private. On private there is still room, I believe, to meet future wood demand at current levels, and provide for those other values. The balance is important.
MR. EPSTEIN: Are there North American or European jurisdictions that do regulate the taking of wood from private land? If so, can you tell us what those laws look like?
MR. MACQUARRIE: I'm not aware of any in North America that impose that kind of sustainable harvest style of regulations. In some provinces of Canada, industrial land - like in B.C., if a company owns land, it has usually been twinned up long ago with Crown land as part of a Crown licence and they have to manage them all simultaneously and under the same principles. In many U.S. states there are permitting requirements before a harvest can occur.
[2:15 p.m.]
MR. EPSTEIN: You're talking now about private land?
MR. MACQUARRIE: Yes.
MR. EPSTEIN: What does that involve, a survey?
MR. MACQUARRIE: You have to apply to someone - whether it's your state government or county government - to get a permit to harvest. I don't know if anyone exercises any discipline and says at some point whether they issue those permits or not. I think
it's much more along a zoning land-use philosophy, perhaps, than trying to control the actual harvest. In most of the rest of Canada, of course, private land is of no consequence whatsoever. The industry is driven off Crown land and the minister is restrained from how much he can pass out, under a sustainability principle. You don't think of starting a business in another province if you haven't got authority off Crown land because you are only ever going to be a small business in that context.
I will just reference, in 1997, with the position paper that came out that was the foundation, I guess, for the changes to the Act, the message there at that point in time was no, the harvest that was going on was not sustainable, in concert with the lack of silviculture that also was not going on, unless things changed. What changed was to create the mechanism so that the silviculture program had to track the harvest and be sufficient to support the harvest. There was a bit of cause and effect built right into that binding together of the actual harvest and the actual silviculture.
That does not say that an upward trend could always fix the problem, like if the harvest kept going up continuously, and that same ratio is there - $3 a cubic metre - at some point you would reach the point where spending money on silviculture at that rate will not make that harvest sustainable, but we weren't at that point. It was possible to set a budget and say for at least the next five years we think that programs of this size would permit a foreseeable harvest.
The regulations required that the minister review the provisions of those regulations before 2005 and it was the department's intention to redo its wood supply forecast in 2004, to see if it was necessary to change.
MR. EPSTEIN: Is that still the case?
MR. MACQUARRIE: That is still our plan, yes.
MR. EPSTEIN: What accounted for the decline in the total volume in the harvest from 2001 to 2002? Your Web site shows a small decline in the harvest.
MR. MACQUARRIE: I think it's the poor conditions in the market for lumber producers. The price of lumber plummeted so they backed off a bit on their extra shifts and how far they were willing to go for wood and what kind of stand conditions, what kind of costs for the wood they were prepared to undertake and backed away from opportunities they may have had in a better year.
MR. EPSTEIN: One of the facts that seems to emerge is an increase in non-pulpwood values; that is, when we look at the total dollar value of what it is we are taking from the forests, and I think volume as well. There seems to have been an increase, so that we're not
as dependent as we once were in the 1960s and 1970s, on pulp and paper as a destination for the forest products. What accounts for that and how fragile is that, in your estimation?
MR. MACQUARRIE: I think I mentioned in my comments that the biggest driver - there were two big things, I guess, that happened simultaneously about when all of a sudden that trend appears in those charts. The sawmill industry in this province used to be either domestic or European, that was where the market was. In the European market they sold green lumber, rough dressed, it was going by ocean and freight rates weren't too sensitive as to how much it weighed. In the middle of the 1980s, Canada got frozen out of the U.S. on account of the phytosanitary dispute on pinewood nematodes, so all those producers essentially lost their market within a couple of years in Europe.
If they were going to stay in the export business, to support the capacity in the mill, what they looked at was North America, and simultaneously the market was very hot in North America; housing was way up, prices had spiked at that time. A lot of the sawmills retooled to make North American sizes, to make kiln-dried lumber, two-by-four for the building trade here, and found that everybody was making money, so they expanded.
Simultaneously with that the pulp companies started saying, we have to get our costs down on our logs. Essentially, they were pushing wood they used to buy out to sawmills, so that they could get the chips back from the sawmills. Kimberly-Clark was the first to go to 100 per cent chips; essentially all that wood procurement activity that Kimberly-Clark used to do for themselves became refocused on pushing wood to sawmills where they had chip agreements.
MR. EPSTEIN: Is it acceptable to you to use the lower quality of the Crown hardwood for chips? Is that an acceptable use?
MR. EIDT: Yes, in fact, is some chips supplied from Crown land go into our pulp mills. It is not large but there is some.
MR. EPSTEIN: Hardwood chips?
MR. EIDT: Yes, red maple and poorer quality white birch. We have a lot of poor quality hardwood on Crown lands. A lot of it is underutilized.
MR. EPSTEIN: Is there anything that would encourage private owners to expand the extent of the good quality hardwoods that they have?
MR. EIDT: All through the federal-provincial agreements, we did have the incentives to do hardwood management. We produced publications, those publications are still printed and made available. Under the sustainability regulations, there is money, 60 cents per cubic
metre for hardwood, and it is supposed to go back to hardwood management. So, it still continues on.
MR. EPSTEIN: Is it working? Are we getting more hardwood development on private lands?
MR. EIDT: It's small. It's not the hot spot.
MR. EPSTEIN: I can't understand why not. I mean, it seems potentially like a high value portion of the market.
MR. EIDT: Actually, it is very highly valued by a lot of landowners to the point where industry that would actually like to buy can't even get it at any cost or price, because a lot of private landowners still view it as their backup fuel supply in case the price of oil goes through the roof.
MR. MACQUARRIE: I don't think the department has ever made an allocation.
MR. EPSTEIN: Is there any chance that they're looking at it as an investment other than for fuel; that is, are they just letting it grow and hoping that it will reach a higher value and will mature?
MR. EIDT: Yes, we have several mills that are actually dependent on the long-term supply, so there are several mills in the province that actually encourage and offer services to private landowners to manage their forests for them; many landowners do that themselves. There may be 20 per cent to 30 per cent of the landowners with good hardwood resource on their land and the other 70 per cent - this is just my opinion, my observation - they may not be participating to the extent that would be desirable but it's the landowner's choice in this province.
MR. CHAIRMAN: Mr. Hines.
MR. GARY HINES: Mr. Chairman, in this report that we had before we came in, in the section under Nova Scotia Forest Strategy, the Sustainable Forestry Fund, it gives all the good things about it - that it consists of contributions from registered buyers made as part of a wood acquisition plan - but the final statement states that less than $500 has been received currently. It doesn't state what year that statement was made as to what might be current. But it doesn't seem to me that the Sustainable Forestry Fund is working very well if you've got $500 in it and that's the contribution from the registered buyers.
Going on a little further, in your new policy that you're developing regarding hardwood, it states also that, "Licensees will contribute to the Crown Land Silviculture Fund and/or undertake silviculture work." Would I be wrong to suspect that a lot of the operators,
rather than collecting for the fund, have chosen to do reforestation and silviculturing on their own as opposed to putting it in a fund and have a third party do it?
MR. MACQUARRIE: That's a correct assumption. But to update, I think this year the level of the fund might be up to $2,000 after three years of people having the option of putting money in there. To my mind, that is successful. The regulations provided an option where the industry could find ways to do the work themselves or they could turn the money and the problem over to the government, and we hope like hell they didn't turn the problem over to the department.
MR. HINES: It's what my concern was regarding it. I got the answer that I wanted and I'm glad that that is the answer, however, this slide would be quite deceiving for somebody who's not familiar with forestry practices, they might want to stand up and voice their concerns that only $500 has been collected, is there anything being done? It would be nice if there was another slide or another piece that stated that it is being done but it's being done with the participation of the suppliers.
MR. MACQUARRIE: The unstated sentence there is probably like $500 was turned over to the government and $13 million was done by the industry.
MR. HINES: Exactly, that would be a lot more helpful to those who are unfamiliar with the forest industry.
One of the words you used in the formulation of your hardwood policy is complementary. So I'm going to go to a different area, complementary usage, and it's stated on Page 5, "Hardwood harvest will be undertaken to be complementary, as much as possible, with recreational activities, maintenance of wildlife habitat and aesthetic values."
In light of the fact that the ATV or Off-highway Vehicles Act is being looked at and we already have a report back from them. One of the concerns I have is that things that have happened to us in the past with ATV clubs, I belong to an ATV club, we set out on a bridge-building policy on our own and we appealed to the government, the Department of Environment and Labour as well as the Department of Natural Resources, in terms of what we are allowed to do and what we are not allowed to do in order to cross streams that we were presently going through, they were fish-bearing streams and so on and to avoid siltation and so on. We found that the roadblock was so tremendous that we couldn't overcome it, we had to have engineers design bridges that would, in fact, carry full-sized 4-wheel drive vehicles or we couldn't proceed with our policy to build bridges that would handle pedestrians and small ATVs.
We set out on our own to do our bridge policy and the first bridge that we put in was a 40-foot span and we spent considerable resources and so on to build it and we just got it built and then we were informed by Natural Resources that we either take it out or they
would take it out because it didn't conform. I understand why it didn't conform is because you have the liability, but something has to be done in terms of preparing this Off-highway Vehicles Act that will allow that type of thing to take place so that you don't have the liability and so that we can, in fact, recognize the desires of the clubs to cross streams rather than barrel through them because we can't afford engineered bridges.
I just wondered if that had been brought to your attention, either of you, or your department in terms of the complementary usage of the lands to allow that to happen?
MR. EIDT: I am aware that ATV users and clubs and associations seek permission to use Crown land and cross the streams. Unfortunately, we don't have the funding or the engineers to do it, but yes, we are obligated, there is a liability there or there could be a liability there, so things do have to be done to a standard. I am aware that that is an issue.
MR. HINES: That leads me to the second part of the question. We, as an ATV club, carry an insurance policy and we made the offer to Natural Resources to carry the insurance on the bridge and recognize the liability aspect of it and to post the bridge that non-club users would use it at their own risk. Is there a difficulty with that? I know you're not lawyers or I don't think you're lawyers, what would be the difficulty with that, with individuals accepting the responsibility, because at least you can protect your streams and we can do what we as responsible operators would like to do?
MR. EIDT: We do post a lot of our existing network of Crown land roads and trails, we post them now, they may be unsafe or the structures may be unsafe, because unfortunately, we have gone through a long period of funding restraint and there are structures out there that are questionable. But if we're building a new one, it has to meet a standard.
MR. HINES: I realize that, but I just wondered if work was being done to recognize a way around it so that you're not responsible for some idiot who goes over the side of the bridge and decides to sue the government because the government seems to be the first person . . .
MR. EIDT: I'm not a lawyer, but I can assure you that the Department of Justice says, you know, there is a liability there, so we try to post and we try to make sure that any new structures do meet standards. That's the way we have to operate.
MR. HINES: I know the bridge that we put in would have cost us in the vicinity of $250,000 if we had it done to engineering standards. We built it for considerably less and it protected the stream and we were required to take it out, so I think there is going to be a big discussion piece . . .
[2:30 p.m.]
MR. MACQUARRIE: All our licensees are responsible for their own road construction on Crown land. If you want to build it to a truck standard across a stream, the costs can far exceed that.
MR. HINES: Exactly, but what we did was apply at the time to cover it under our insurance policy that we had through the ATV clubs, through ATV Nova Scotia, and it wasn't an acceptable practice and I wondered if that had been looked into or if that was still in existence, that particular piece. I guess that's something we will pursue in the development of an off-road vehicle strategy.
MR. MACQUARRIE: I probably shouldn't say anything but it seemed to me a while ago I was aware the Sport and Recreation Commission and our Crown lands people were talking about revisions to the Trails Act, itself, which I think in part would deal with some of that liability. If a trail became proclaimed under that Act, that it protected the owners of the land whose land the trail crossed to a certain extent, from some of that liability issue. This bridge thing sounds like a feature that would last after the club disappeared and the insurance policy lapsed and then it becomes a legacy for the landowner.
MR. HINES: That's true and that happened in another instance with a snowmobile club. When they abandoned a trail, they had to come back in and take the bridge out because they no longer carried the insurance to cover the bridge. So yes, that does happen. Thank you, Mr. Chairman.
MR. CHAIRMAN: Mr. Gaudet.
MR. WAYNE GAUDET: I want to start off by asking a question on one of the handouts that was passed around. I guess this is the numbered chart that was passed out, for employment stats for 1998-99 and 2000, there was nothing reported. Was there a reason why?
MR. MACQUARRIE: Well, I have to take the blame for that. I quickly printed this off, it was from a working sheet I had but I hadn't been maintaining those employment numbers. The APEC report, your secretary can make a copy of it, does have employment numbers much more current than this material. Mostly I was maintaining the dollar numbers in this table.
MR. GAUDET: Mr. Chairman, I want to focus my questions on the allocation agreements. Do we know how many are in place province wide?
MR. EIDT: Yes.
MR. GAUDET: Are those numbers available?
MR. EIDT: Yes, I can tell you right now.
MR. GAUDET: Is it possible to get them?
MR. EIDT: Yes.
MR. GAUDET: Are these agreements divided up by regions? You know, there is more in the western region than there should be, or are they pretty well divided up equally across the province?
MR. EIDT: No, they're not really divided up by region, that's not the origins of them. There's a major one in the eastern region, it's Stora Enso and it is a licence and management agreement. In fact, the province has essentially contracted under the statutory Act for them to do management, subject to our approval. There don't tend to be very many agreements there, there is basically one but they have entered into a few contractual arrangements - quite a number of them, actually - with sawmills, to get chips back. They supply wood, plus they have entered into arrangements with some of the hardwood mills. In the central is where the sawmills are and I think that is just a function of early on they were close to the main centres - Halifax, Truro - and they tended to stay established there and become stationary. With transportation, roads and trucks, you know they bring in their material from way out now and tend to be stationary. We have about 14 or 15 licence arrangements in the centre part of the province and there is another six or seven - I'm just guessing here, I would have to go through them in my mind - in the western region. That is kind of in proportion to the number of sawmills and where they're stationed in the province. Most of the sawmills are centrally located.
MR. GAUDET: Looking at these agreements, you made reference earlier that you were looking at a two year or five year, is that normal or are there agreements in place for a longer period of time than the normal two or five year period?
MR. EIDT: The normal licence agreement which is a volume agreement, there is basically three land bases in the province right now: Stora Enso licence and management agreement; the Kimberly-Clark licence and management agreement, which is in Halifax East; and then the third large land base is the unencumbered land base with these volume agreements on it. That's one that is directly under the management of the department and so
we can make these allocations. They tend to be for 10 years, the Crown Lands Act will allow for them to be 10 years.
We have been thinking of going to a main licensee/sublicensee arrangement that would possibly allow even a few more entrants, but it would mean that some consortiums of companies would take primary responsibility but they could, as part of the agreement, have to supply other mills; hence the licensee/sublicensee terminology. They would take on more obligation within the context of all the restrictions and limitations that the Crown would place on them. They would have to develop a forestry plan to show how they would meet their objectives and the supply for their sublicensees, plus meet all the requirements of Crown. It takes some of the planning responsibility off the department but it wouldn't alleviate us of having to monitor and inspect it to make sure it was acceptable to the provincial objectives and goals.
MR. GAUDET: I'm looking back at my area in Digby County, there are three sawmill operations: Irving; A.F. Theriault; and Comeau. I know I have been contacted in the past, I'm just wondering for anyone out there who is interested in harvesting on Crown lands, do they have to wait for a proposal to come out? Can they submit a request to DNR? I'm trying to understand the process involved here.
MR. EIDT: With the formation of the wilderness areas, there's no more. We did have some surplus supply on the western end but the largest wilderness area is the Tobeatic wilderness area. We are having difficulty supplying the mills that we have agreements with now in the western end.
MR. GAUDET: I'm just curious, do we have any allocation agreements in place with anyone outside of Nova Scotia? I'm looking at New Brunswick, for example.
MR. EIDT: That we would export logs to?
MR. GAUDET: I guess what I'm looking for is do we have any agreements in place now for harvesting with people from outside of Nova Scotia?
MR. EIDT: No. Well, they have to own and operate a mill in the province.
MR. GAUDET: So it's not just harvesting and shipping out?
MR. EIDT: No.
MR. MACQUARRIE: It may no longer be in place but I think at one time we had a bid tender sale within the last five years where the successful bidder, the high bidder was from outside the province, is that correct?
MR. EIDT: Yes, we do the occasional tender, we used to do a lot of them before the formation of the wilderness areas. Almost 20 per cent of the harvest was in tenders and with the formation of the wilderness areas that aspect pretty much dried up. On occasion, there will still be some in the western end. What we tend to do is if it was a previously treated stand that has exceptional volume next to a road, all of a sudden you are looking at a stumpage value of the trees that's higher than the normal run of things and we tend to tender those, again, they are higher value. There is a reluctance to let those go at the average stumpage value where things are remotely accessed, large construction costs and all of that.
When we tender now, we do go through a three-step process where you have to obtain permission of the minister to export the material. Basically, through the process, what we're doing is, we're ensuring there isn't somebody in the province who can't use that material and if they can use it, whoever is the successful bidder, we want them to sell that material within the province. If they can't make a reasonable arrangement or get a reasonable price, then the minister does have the option to allow it to be exported.
MR. GAUDET: One last question, earlier you indicated probably later this year - I guess you were looking at 2005 - that maybe a call for proposals would be going out. In allocating this harvesting to applicants who must be registered buyers, I think I heard there is not really a need for new entrants to bother applying. I know I have been contacted in the past by individuals who were looking at harvesting some firewood off Crown land. I'm curious if you think this may create problems, I'm trying to look at a system that would be fair to all. If we're basically restricting the harvesting to people who are currently on the registered buyers list, and I suspect some of these individuals are probably not, are they automatically disqualified to apply?
MR. EIDT: Well if a company sets up and starts acquiring wood in the province they have to register, so they would get on the list, so they would get notification. What I really intended to say was that by developing this policy we weren't trying to encourage new entrants but if they're there, they will be invited to submit a proposal.
MR. GAUDET: Thank you.
MR. CHAIRMAN: Mr. Dooks.
MR. WILLIAM DOOKS: Underwater harvesting of hardwood fibre, can you give me some general comments on where we are on that issue in Nova Scotia, if we are allowing permits, or are there permits in place? I would just like to have an update on that. Do you have a handle on how much fibre would be in our inland lakes? Is there a demand for the fibre?
MR. EIDT: There is interest there. I think in the vicinity of 18 to 22 people - I'm just going from memory here - have expressed a fairly sincere interest in retrieving submerged logs. We did develop a policy in consultation with other agencies with jurisdiction. Basically there are two routes, if they know who owns those logs, they can go directly to the Nova Scotia Department of Environment and Labour, and Fisheries and Oceans and try to get permission to retrieve those logs, or at least work out an acceptable method with them to retrieve those logs that would not result in them getting charged for damaging fish habitat or affecting water quality, it's a very highly regulated area. But if no one knows the ownership of the logs then under the Crown Lands Act, by default, they are considered to be a Crown resource, they are just captured by the Crown Lands Act.
In response to all these requests, we went to the other agencies, our department kind of took the lead in trying to facilitate things. We ran into a lot of opposition, other departments were very clear that they really weren't supportive of this, in some cases they think the logs are enhancing fish habitat, they have been there long enough that they are part of the natural environment and in some cases, there is very valid concern, especially with salmonid species. Anyway, it's recognized that there may be some high value down there and worth retrieving these so we developed a policy that everybody could agree to on an experimental basis. We called for proposals and we had one successful applicant who gave us a proposal. We actually received two proposals and I think it went out to 18 people or companies at the time, that had expressed interest. One actually picked a lake where there was a rare and endangered species of mussel that I, personally, had never heard about but our IRM review picked that up, so we couldn't accept that one, so we went ahead with the other one.
We haven't completed that. To the best of my knowledge the proponent still wants to complete the experimental work but he has run into some difficulties finding sales for the logs and numerous other problems. The idea is, when it is completed, we will sit down with the other agencies, amend the policy and call for more proposals. We don't have any inventory, we do not have any sort of handle on what might be down there, what might be available and what the quality of it is. What has come up to date has not been promising.
MR. DOOKS: Historically, I guess, we understand that the logs are up to or even longer than 100 years old at the bottom of some of these lakes. There would be some of those logs that would be pre-war, very few logs were boomed out of the lakes post-war.
[2:45 p.m.]
MR. EIDT: But when the Crown lands forester saw what came up out of that particular lake he sent me a little e-mail and it said, my impression of what the forests of Nova Scotia used to look like or should have looked like has changed. It was not high-value logs that we thought might be down there.
MR. DOOKS: How is New Brunswick handling this, I think they're approving licence practices, are they not?
MR. EIDT: The last I heard it was put on moratorium. They did experiment with it for a while and then as far as I know they shut it down and they haven't restarted it. I could be wrong there. A lot of that was on the Saint John River and there are large quantities of wood in the Saint John River. I grew up there as a young boy and I saw the large booms and there was a tremendous amount of wood in the Saint John River.
MR. DOOKS: The hardwood would survive, what about the softwood? I think that would rot, would it not, or is there softwood there as well?
MR. EIDT: Once they get below the oxygen level, they do not decay but they do mineralize and become very difficult to saw and that's another problem we ran into here. Unless you have a significant amount of volume and a significant quality, the proponent explained to me that sawmillers were very reluctant to put the material through the sawmills.
MR. DOOKS: Petrified, is that the word you use?
MR. EIDT: Yes.
MR. CHAIRMAN: Mr. Dooks, do you have a short snapper?
MR. DOOKS: Is my time up that quick?
MR. CHAIRMAN: I have Mr. Langille waiting.
MR. DOOKS: Of course, thank you, Mr. Chairman.
MR. CHAIRMAN: Mr. Langille.
MR. WILLIAM LANGILLE: I live in the country, do you know where I live, Mr. Eidt?
MR. EIDT: Yes, I have been to your house.
MR. LANGILLE: You are aware of what Stora has cut beside me?
MR. EIDT: Kimberly-Clark, yes.
MR. LANGILLE: That was in behind, but Stora has cut in there too.
MR. EIDT: No, I'm not aware of what Stora is . . .
MR. LANGILLE: Highland Pulp has cut it. Anyway, another 200 acres there. I go along with Mr. Sampson's theory on that one, that runs partially the length of my property and the other property that borders my entire back property is Crown land and there are 500 acres in there. I heard through the grapevine, last Fall, that you people have given the two-year cutting rights for that property. There are a couple of things that bother me on that, not that I wasn't notified because you don't have to notify me, even through it borders my property, but one of the things that bothered me was the mountain in behind there that is very visible from the highway, it's like a Sugarloaf Mountain and that mountain was going to be cut, and this is a hardwood mountain. Now it's a select cut but it was going to be cut without anyone's knowledge. Isn't it your policy, where these hills are very visible from the highway, that they not cut hardwood?
MR. EIDT: No, but we would alter the cutting method, that's why it would be a selection cut, so only about a third of the volume would come out of the stand, and two-thirds would remain.
MR. LANGILLE: I know Mr. Epstein knows exactly where I'm talking about.
MR. EPSTEIN: I can see Bill's place or that land he's talking about from my place.
MR. EIDT: Well there's a moratorium on it now.
MR. LANGILLE: I realize that but it's how it got to be that way because you have Sugar Moon Farms and then you have this nice rounded mountain and then my property. I'm not concerned about cutting in front of it, I'm concerned about what the public sees because we are looking at tourists, we're looking at the travelling public. There is the 500 acres there but I understand the forester never went on that property, when you gave up the contract for that. Do you know anything about that?
MR. EIDT: There's no contract on that and there was not one issued.
MR. LANGILLE: There's not one issued?
MR. EIDT: No, when we were looking to find out the volume that is in this policy, 1,760 cubic metres annually that could be harvested, Gully Lake was one of the potential areas from which that volume could be sourced over time. It was considered and actually, this 1,760 cubic metres, when we know the area that will be designated for Gully Lake wilderness area, we will have to revise this policy, we will have to drop that figure.
MR. LANGILLE: I'm not talking about Gully Lake, though.
MR. EIDT: I thought that was the hill that was visible from your house that's Crown land. I remember you showing me.
MR. LANGILLE: No, this is right in behind me. I live six kilometres from Gully Lake. You can look over but this is directly behind my property lines.
MR. EIDT: Okay, I'm in the wrong location.
MR. LANGILLE: There is 500 acres in there that I believe you've given . . .
MR. EIDT: And that's a hardwood knoll as well.
MR. LANGILLE: But this is directly in behind, it's very visible.
MR. EIDT: I'm not familiar with that exact spot.
MR. LANGILLE: I know Mr. Epstein is because he has a place across the road from me. Getting to Gully Lake, I know there are a couple of leases on Gully Lake, one for Stora in Pictou County and also one for Sproule Lumber, which is owned by Irving. They have 1,200 acres, I believe, that's under lease which is coming up very shortly, and also Stora, I believe.
MR. EIDT: No, Stora's is not coming up.
MR. LANGILLE: When would Stora's be coming up?
MR. EIDT: As long as they're in compliance with the requirements under the legislation, we're required to extend it every 10 years. So it's an evergreen agreement, a perpetual agreement. It doesn't come up as long as they're in compliance with the Act, the legislation.
MR. LANGILLE: That would need a change of legislation then, you said perpetual.
MR. EIDT: Yes.
MR. LANGILLE: A perpetual lease. That's a pretty good lease, I would think.
MR. EIDT: Yes, the province invited them here at the time because of the coal mines going down, a lot of unemployed people, and the province was actually looking for a mill like Stora Enso to set up here. Stora Enso was invited here.
MR. LANGILLE: The leases that you're giving out now on Crown land, how long are they for?
MR. EIDT: Under the Crown Lands Act, they can be for 10 years with a 10-year renewable clause.
MR. LANGILLE: But no more of these long-term leases?
MR. MACQUARRIE: The Crown Lands Act sets the maximum at 10 years. It could be renewed once for another 10 years. That's the maximum term that's provided in the Act.
MR. EIDT: The only way that I know that one could be created is similar to the way that Stora Enso or Kimberly-Clark was created, by a piece of legislation or an amendment to one of the other existing Acts.
MR. MACQUARRIE: At the time those Acts were established, the maximum authority that could be given under the old Crown Lands Act was two years. That's why they needed unique legislation, because the general legislation . . .
MR. LANGILLE: I just want to touch on value added, because I know we've been hammering on value added now for the last four years. For obvious reasons, we're not getting value-added hardwood for our small industries. You seem to be zeroing in on that now, on your value added. I know as a rural MLA that's been something dear to my heart because of a couple of companies going out of business, because they're importing their logs, of course, from Maine and Quebec and couldn't get in Nova Scotia to keep them viable. I believe you're on the right track with your value added, because we have to support secondary industry in the province. You just can't have your resources going out of the province. I think we're realizing that, especially as politicians we're realizing that also.
As far as Gully Lake is concerned, I would expect to see a portion of Gully Lake protected this year. I hope it does. I don't know about the class three or whatever. When that legislation was brought in, I wasn't here. I don't particularly like the different classes, your one, two and three, because I think we ought to have a place for all Nova Scotians. I think there is land that should be select cut, and because of the legislation now it can't be. It is a renewable industry. I see you're looking at me now, are you . . .
MR. MACQUARRIE: No, I'm giving myself away. I'm puzzled, I'm trying to follow the - you say there are places where selection harvesting can't occur?
MR. LANGILLE: Well, on your class three designation, can you cut on your class three designation?
MR. MACQUARRIE: No.
MR. LANGILLE: That's where I'm going with this.
MR. MACQUARRIE: Those class three designations are by Statute, it mirrors the fact that there's been a statutory declaration specifying the use of those parcels.
MR. LANGILLE: That's where I'm going and that's what I said, I don't necessarily agree, but that legislation was brought in prior to myself being a politician.
MR. MACQUARRIE: A case in point there would be a provincial park. The regulations say what can go on in a provincial park, and they tend to say you shall not cut trees in a provincial park.
MR. EIDT: But we can, with the approval of the Parks Division. There has to be plan, but it has to be a plan suited to the park. It can't be an industrial forestry operation, it has to be a plan that's right for the park. In wilderness areas, we can't. It goes against the purpose of the Act.
MR. LANGILLE: Thank you very much.
MR. CHAIRMAN: Well, how many short snappers can I ask? (Laughter) One of the questions I have is, I heard there was someone who was proposing to build a mill in Dartmouth. Have you heard of that? (Interruption) My further question would have been, I had also heard it was just for the damage from Hurricane Juan, around Point Pleasant Park, for that lumber. I was curious about the quarantine zone. I will pursue that elsewhere, since you haven't heard of the mill.
I have a question. Mr. Eidt, you had mentioned about the $3 per cubic metre that the mills paid toward the sustainability fund. Are they at the $3, because when that initially started I think they started at 50 per cent of what they were going to pay into the fund in the first year. They paid half of that amount and then it was to be topped up to the other half, to 100 per cent, and then I think the province put them at 70 per cent contribution the next year. I'm wondering where we're at. Is everybody paying their full amount, or allocating their full amount?
MR. EIDT: You may be confusing private lands and Crown lands. When Crown land started, it was $3, there was no phase-in. Even Stora Enso is on an arrangement like that. They're all on an arrangement like that. They're all putting an amount in that is contributing to silviculture. Stora Enso has been doing it for years.
MR. CHAIRMAN: But on private . . .
MR. EIDT: Private, that's where those phase-ins occurred.
MR. CHAIRMAN: So where are we at, are we at 100 per cent yet?
MR. MACQUARRIE: I don't know to what extent the committee is aware, but there were some revisions to the regulations again this year. We're coping with the issue of sawmill chips and the transfer of those chips between the sawmills and the pulpmills. We would have
been at 100 per cent for the year 2000, except for those revisions. Again, to the provide transition for the new people who were being captured by those regulations because all of a sudden these chips were now part of the formula for calculating the obligation of the buyer, it was kept at 70 per cent. For 2004, the year we've just started, all buyers will be at 100 per cent liability.
MR. CHAIRMAN: To me, $13 million sounds like a lot of money for silviculture. When you talk about silviculture, you're really only talking about planting trees and that's if they need to be planted. I don't think there are a lot of other silviculture practices. My thought is, if you took $13 million and just for salaries for silviculture contractors, you should be able to hire 26,000 at $50,000 apiece. Now, silviculture contractors are going broke. As a matter of fact, they're disappearing. So I don't understand how we have $13 million that's supposed to be going into silviculture, yet the people who do the work are going broke. So I'm wondering how this work is supposedly being done. In conjunction with that, I think the province allocates $3 million of its own that supposedly goes into silviculture.
MR. EIDT: The Crown, yes. An equal amount . . .
[3:00 p.m.]
MR. CHAIRMAN: Does that money go to the companies who have the Crown leases to pay for silviculture?
MR. EIDT: Yes, it's our wood and it's our trees, and we invest in growing the trees, if you wish, and then we sell the trees to the industry.
MR. CHAIRMAN: Why aren't they paying, since we have a sustainability fund and they're harvesting the trees? If they were harvesting from a private landowner, supposedly somebody is paying $3 a cubic metre, why aren't they paying it?
MR. EIDT: There's a lot of forest value out there, and I think we would like to maintain ownership of the trees. For example, if the government decides we want to form a wilderness area, it's a little easier to do because somebody else doesn't have ownership of the trees on the land.
MR. CHAIRMAN: Yes, sure. That makes sense.
MR. EIDT: It's better for them to pay into the fund and then do the silviculture work, because they pay us, it becomes our money, and then we can use that money to compensate them for the expense of the work they do in silviculture.
MR. CHAIRMAN: In other words, they're not paying anything.
MR. EIDT: No, they're paying.
MR. CHAIRMAN: They're paying and we're giving it back to compensate them for . . .
MR. EIDT: They are paying us for the trees and they're paying fair market value for the trees, and then on top of that they're paying the $3. So they are paying.
MR. CHAIRMAN: Okay. Why are we giving it back to them?
MR. EIDT: Only if they do the work to standards, for the service. We're paying for a service.
MR. CHAIRMAN: So they're not paying then?
MR. EIDT: They are paying.
MR. CHAIRMAN: But if we're giving the money back, they're not paying.
MR. MACQUARRIE: They've incurred the costs.
MR. EIDT: They've incurred the costs.
MR. MACQUARRIE: They've incurred the costs of doing the planting or the spacing.
MR. CHAIRMAN: But you don't incur a cost if you get the money back.
MR. EIDT: They paid for the trees right at the outset.
MR. CHAIRMAN: Well, they should.
MR. EIDT: Exactly, they should. Now they're also paying for the silviculture.
MR. CHAIRMAN: They should be. That's what I thought the sustainability fund was for, but now you're saying we give them their money back. We shouldn't.
MR. EIDT: They pay it. They pay a silviculture fee for the right to cut trees, so they're paying up front for the right to cut trees. That money, when they have the work done, goes back to them, if it's done to standards.
MR. MACQUARRIE: They're not required to do the work. They could walk away.
MR. CHAIRMAN: It seems to me they have a really good deal.
MR. MACQUARRIE: The deal they have is that they've agreed to buy so much wood from the Crown, that's the only deal they have. They haven't agreed to manage any land.
MR. CHAIRMAN: I'm going to make one more point - well, I don't know if I'm going to make a point but I'm going to say something and then I think I'm going to have to let you go. Mr. Eidt, you mentioned about no discrimination between the provinces in terms of inter-provincial trade agreements, and yet it would seem to me, on the issue of chips and Kimberly-Clark that they basically have shut out private woodlot owners because they have said, no, we're not buying your wood, we only buy chips. Although, I think with the Woodlot Owners Association, they had an agreement to buy wood, and it didn't say chips, it just said wood.
It seems that we're awfully particular around issues of discrimination when it comes to large companies, but nobody said, look, you have an agreement to buy wood from this association and you're not honouring that, so we're going to put some pressure in terms of your lease that we allow you to have. So there was discrimination, certainly against small private woodlot owners in this province, with Kimberly-Clark and the chip issue, but nobody was willing to exercise any levers to kind of right that. Yet, we have this policy of no discrimination or no discrimination in the inter-provincial trade agreements with companies. I'm curious as . . .
MR. EIDT: That was an issue at one time. In the industry now, there's no difference between a piece of pulpwood and a piece of studwood unless there's rot in the log. So landowners now have the option to sell that for more money than they could ever get as pulpwood for studwood.
MR. CHAIRMAN: That's if it's good wood.
MR. EIDT: Yes.
MR. CHAIRMAN: Well, you can sell that anytime anyway.
MR. EIDT: No.
MR. CHAIRMAN: There's a market . . .
MR. EIDT: You could sell it for pulpwood at a lower price. Now you have the opportunity to sell it for studwood.
MR. CHAIRMAN: Anyway, I think I better cut myself off there. I want to say thanks very much. I really could have used an hour myself. Maybe at some point we will think about getting you fellows back.
MR. EIDT: I just wanted to add, though, I would agree with you, if you have a rotten stick of wood, it is difficult to sell now. (Laughter)
MR. MACQUARRIE: I would just like to note, for your secretary, I have a written copy of the comments I made for the record. (Interruptions)
MR. CHAIRMAN: Thank you very much.
[The committee adjourned at 3:05 p.m.]