B.C. Reg. 278/2004, deposited June 18, 2004, pursuant to the FOREST ACT [Sections 151 and 160]. Order in Council 614/2004, approved and ordered June 17, 2004.

On the recommendation of the undersigned, the Lieutenant Governor, by and with the advice and consent of the Executive Council, orders that, effective June 21, 2004, the Timber Harvesting Contract and Subcontract Regulation, B.C. Reg. 22/96, is amended as set out in the attached Schedule.

— M. de JONG, Minister of Forests; M. COELL, Presiding Member of the Executive Council.

Schedule

1 The heading for Part 1 of the Timber Harvesting Contract and Subcontract Regulation, B.C. Reg. 22/96, is repealed and the following is substituted:

Part 1 — Interpretation, Application and Notice

2 Section 1 is amended

(a) by repealing the definition of "AAC reduction criteria" and substituting the following:

"AAC reduction criteria" means each of the following factors:

(a) achieving a contractor configuration that optimizes the effective utilization of capital within all timber harvesting operations carried out under all licences included by a licence holder in an AAC reduction proposal or a forestry revitalization proposal;

(b) achieving a contractor configuration that optimizes the efficiency of all timber harvesting operations carried out under all licences included in an AAC reduction proposal or a forestry revitalization proposal by a licence holder;

(c) the demonstrated historical operational effectiveness, ability to carry out timber harvesting operations and compliance with safety, environmental and other applicable laws of each contractor with a replaceable contract pertaining to any licences held by a licence holder;

(d) minimizing the overall need for geographic relocation by contractors and company operations to operating areas different than those they have traditionally operated in; ,

(b) by repealing paragraph (a) of the definition of "contract" and "subcontract" and substituting the following:

(a) the contract or subcontract provides that the contractor or subcontractor will carry out one or more phases of a licence holder's timber harvesting operation under

(i) a replaceable tree farm licence,

(ii) a replaceable forest licence,

(iii) a non-replaceable forest licence under which the total volume of timber to be sold under the licence, when divided by the original term of the licence in years, is more than 10 000 m³, or

(iv) a timber licence under which the total net volume of merchantable timber remaining at the time the contract is entered into is more than 30 000 m³, and ,

(c) in the definition of "fibre basket agreement" by striking out "2" and substituting "one",

(d) by repealing paragraph (c) of the definition of "person under contract" and substituting the following:

(c) a person who is a holder of the licence referred to in paragraph (a) or (b), ,

(e) by repealing the definition of "prior timber harvesting services" and substituting the following:

"prior timber harvesting services" means similar timber harvesting services provided by a contractor to a licence holder before the provision of timber harvesting services in respect of which a rate dispute has arisen; ,

(f) by repealing the definition of "seniority system" and substituting the following:

"seniority system" means a system for allocating work that describes the sequence in which contractors, or contractors and company operations, will be called upon by a licence holder to provide services that are required from time to time in respect of timber harvesting operations carried out under the licence; ,

(g) in the definition of "volume independent contract" by striking out "Part 6" and substituting "Part 5"; ,

(h) in subsection (7) (f) by adding "and non-operational terms and conditions that are not inconsistent with the requirements of this regulation" after "in the contract or subcontract being replaced" ,

(i) in subsection (8) (d) by adding "and non-operational terms and conditions that are not inconsistent with the requirements of this regulation" after "expired or terminated contract that the contract replaces" , and

(j) by adding the following definitions:

"amount of work compliance period" when used in relation to a licence means

(a) a 5 year period commencing on the date of the commencement of the cut control period of that licence in effect on January 1, 2004,

(b) any consecutive 5 year period commencing at the end of the prior amount of work compliance period, or

(c) any other period of time agreed to by the parties to a replaceable contract;

"company contract operations" means any phase of a licence holder's timber harvesting operations other than timber harvesting operations carried out either

(a) by employees of the licence holder, or

(b) under a replaceable contract;

"forestry revitalization proposal" means a proposal made under Part 5, Division 5.1 that varies the amount of work specified in a replaceable contract or terminates a replaceable contract pertaining to a licence held by the licence holder making the proposal and includes any amended proposal made under section 33.43 (1) (d) or 33.5 (5) (c) (i);

"original replaceable contract" means, for the purposes of Part 5, Division 5.2, the replaceable contract in effect between a licence holder and a contractor immediately prior to a licence transfer or to the amendment or replacement of a licence;

"peer" means an individual who is familiar with, and has operational experience with, timber harvesting operations similar to those at issue in a rate dispute, appointed under section 25 (5);

"rate proposal" means a notice in writing from a licence holder to a contractor with a replaceable contract describing all of the following:

(a) the specific services the licence holder requires the contractor to perform under the replaceable contract;

(b) the replaceable contract in respect of which the proposal is being made;

(c) the rate that the licence holder proposes to pay the contractor for those services;

(d) the estimated quantity of work the licence holder requires the contractor to perform at the proposed rate;

(e) the location where services are to be provided;

(f) the projected start date and completion date for the services;

(g) any other information that is not otherwise available to the contractor, that is in the possession of the licence holder and that is reasonably necessary for the contractor to assess the proposed rate; .

3 Section 2 is repealed and the following is substituted:

Application

2 This regulation applies to contracts and subcontracts that are

(a) in force on April 1, 1996, or

(b) made on or after April 1, 1996.

4 The following section is added to Part 1:

Giving notice

2.1 If a proposal, notice or other thing is to be delivered or given in this regulation, it must be delivered in accordance with section 8 (13) (b).

5 Section 3 (3) is amended by striking out "from the application of this section" and substituting "from the application of subsection (1)".

6 Section 4 is amended by adding the following subsections:

(3) If a licence holder or a contractor withholds consent to an assignment of a contract or subcontract, the onus is on the licence holder or contractor to show that the withholding was reasonable.

(4) If, 31 or more days after receiving a notice from a contractor or subcontractor requesting consent to the assignment of a contract or subcontract, the licence holder or contractor has not notified the contractor or subcontractor of the reasons for withholding that consent, the licence holder or contractor is deemed to have consented to the assignment.

(5) A notice from a contractor or subcontractor under subsection (4) must describe the intended assignee of the contract or subcontract.

7 Section 6 is repealed and the following is substituted:

Dispute resolution rules

6 (1) If an arbitration has been commenced under this Part or section 23, 25, 32 or 33.5, the arbitration must be conducted under rules determined by the arbitrator to be most appropriate for conducting the arbitration in a cost effective manner within the time frames allowed, including, without restriction, rules for any

(a) exchange of documents,

(b) discovery of parties,

(c) if the dispute is a rate dispute, disclosure of fair market rates by either party under section 25,

(d) if the dispute is a rate dispute, capacity for peers to provide information or opinions on fair market rates and on the considerations described in section 26.01 (2),

(e) manner in which evidence is to be tendered, including the number of witnesses from each party, the use of affidavit evidence, the use of witness statements and the amount of time each party will have to tender evidence and to examine witnesses, and

(f) other matters related to efficient and effective conduct of the arbitration.

(2) Subject to this Part and to sections 23, 25, 25.2, 32 and 33.5, the Commercial Arbitration Act applies to the arbitration of disputes arising under or in connection with a contract or subcontract, and for that purpose the Commercial Arbitration Act is adopted as part of the dispute resolution system under this Part 4.

(3) Except as otherwise provided for in subsection (1) of this section and sections 23, 25, 25.2, 32 and 33.5, the mediation and arbitration of a dispute arising under or in connection with a contract or subcontract will be conducted in accordance with the requirements of section 8.

8 Section 8 is amended

(a) in subsection (1) by striking out "Subject to sections 23 and 32, a" and substituting "A", and

(b) in subsection (12) (b) by adding ", including any rules established by an arbitrator under section 6," after "except where inconsistent with requirements of this Part".

9 Section 12 is repealed and the following is substituted:

Certain contracts must be replaceable

12 (1) The following contracts, whether or not in writing, are replaceable contracts if they were replaceable contracts and in effect immediately before June 21, 2004:

(a) a contract to carry out any phase of a licence holder's timber harvesting operations under a replaceable tree farm licence or a replaceable forest licence for the coastal area;

(b) a contract to carry out any phase of a licence holder's timber harvesting operations under a timber licence for the coastal area under which the total net volume of merchantable timber remaining at the time the contract is entered into is more than 30 000 m³;

(c) a contract to carry out any phase of a licence holder's timber harvesting operations under a replaceable tree farm licence for the interior area if, subject to section 39 (2), the contract is relied on by the licence holder to comply with the contractor clause in the tree farm licence;

(d) a contract to carry out any phase of a licence holder's timber harvesting operations under a replaceable forest licence for the interior area that

(i) has, or at the time of issue had, an AAC of more than 70 000 m³, and

(ii) subject to section 39 (2), is relied on by the licence holder to comply with the contractor clause in the forest licence.

(2) Despite subsection (1), a contract is not a replaceable contract if

(a) the parties agree in writing that the contract is not replaceable,

(b) the contract was entered into to meet a temporary need of the licence holder's operation, or

(c) the contract was entered into for the purposes of an experiment referred to in section 20.

(3) Subject to section 52, any contract listed in subsection (1) (a) to (d) entered into on or after June 21, 2004 must be a replaceable contract only if it is a contract offered to replace a replaceable contract.

(4) If a replaceable contract has been terminated by a licence holder for default by the contractor, that licence holder must enter one or more replaceable contracts with other contractors, which contracts must, in aggregate, specify an amount of work equal to or greater than the amount of work specified in the terminated contract.

10 Section 14 is amended

(a) in subsection (1) by repealing paragraphs (b) and (c) and substituting the following:

(b) move into a new operating area,

(c) comply with different specifications, or

(d) undertake any other operating change necessary to comply with a direction made by a government agency or lawful obligation imposed by any federal, provincial or municipal government. ,

(b) in subsection (2) by striking out "within 60 days" and substituting "within 15 days",

(c) in subsection (3) by striking out "within 90 days" and substituting "within 30 days" , and

(d) in subsection (4) by adding "and must be resolved in accordance with Part 5, Division 4" after "a rate dispute is deemed to exist".

11 Section 18 (9) is amended by striking out "both a licence holder for the coastal area and 2 or more contractors with volume independent contracts" and substituting "both a licence holder for the coastal area and one or more contractors with contracts".

12 Section 19 (b) is amended by striking out "specified in the other replaceable contracts" and substituting "specified in the other contracts, whether replaceable or not,".

13 Section 21 (b) is repealed and the following is substituted:

(b) the amount of work that the licence holder allocates to the contractor under each replaceable contract over each amount of work compliance period of the licence to which the contract relates is equal to or greater than 95% of the aggregate of the specific amount of work provided for under that contract during that amount of work compliance period, less the aggregate of any reductions in the amount of work imposed during that amount of work compliance period as permitted by sections 20 and 22.

14 The following section is added:

Substituting work

21.1 (1) A licence holder may, for bona fide business and operating reasons, allocate to a contractor with a replaceable contract work that pertains to timber that the licence holder is entitled to harvest outside the licence to which the contract pertains.

(2) If a licence holder allocates work to a contractor under subsection (1),

(a) the licence holder must advise the contractor that the work is being allocated in substitution for work under the licence to which the contract pertains before the contractor commences the work,

(b) the work is deemed to be allocated under the contract and all the provisions of the contract apply to the work, and

(c) there is no obligation for the licence holder to allocate any work outside the licence to the contractor at any other time.

15 Section 23 (7) is repealed.

16 The following section is added to Division 4:

Rate disputes

24.1 A replaceable contract must provide that if a licence holder and a contractor have been unable to agree on rates for work that a licence holder requires a contractor to perform under the contract, the rate dispute will be resolved in accordance with this Division.

17 Section 25 is repealed and the following is substituted:

Setting rates

25 (1) If a licence holder and a contractor have been unable to agree on rates for work that a licence holder requires a contractor to perform under a replaceable contract,

(a) the licence holder may deliver a rate proposal to the contractor, and

(b) the licence holder must, if requested by the contractor, deliver a rate proposal to the contractor within 15 days of receiving the contractor's request.

(2) A contractor who receives a rate proposal from a licence holder under subsection (1) must, within 15 days of receiving the proposal, deliver a notice in writing to the licence holder either

(a) accepting the rate proposed in the rate proposal, or

(b) rejecting the rate proposed in the rate proposal and offering a rate the contractor believes to be the fair market rate for the work described in the rate proposal.

(3) A contractor who fails to respond to a rate proposal or who responds to the proposal but fails to offer a rate for the work described in the proposal in accordance with subsection (2) is deemed to have accepted the rate proposed by the licence holder in the rate proposal.

(4) A rate dispute is deemed to exist, in respect of a replaceable contract, and the dispute must be resolved by mediation and arbitration under subsection (5) or (6), if the licence holder does not

(a) make a rate proposal under subsection (1) (b), or

(b) within 7 days of receiving a notice under subsection (2) (b) accept the rate offered by the contractor in the notice.

(5) The following applies to a rate dispute referred to in subsection (4) in respect of a replaceable contract pertaining to a licence in the coastal area:

(a) if the parties have not agreed on a mediator within 7 days of a rate dispute being deemed to exist, a party may by written notice to the other party and to the Deputy Minister of Forests request the deputy minister to appoint a mediator;

(b) within 7 days of receiving a request under paragraph (a) to appoint a mediator, the Deputy Minister of Forests or a person designated by the deputy minister must appoint a registered mediator as mediator;

(c) if requested by the mediator, or if agreed to by the parties, each party must appoint one peer to assist the mediator during the mediation process;

(d) if a party fails or refuses to appoint a peer under paragraph (c) within 7 days of the request by the mediator, the mediator may proceed without the appointment of the peer, or may appoint one;

(e) if a rate dispute is not resolved by mediation within 30 days of a mediator being agreed on by the parties or appointed under paragraph (b), or on earlier written notice by the mediator to the parties that the dispute is not likely to be resolved through mediation, a party may commence arbitration proceedings by delivering a notice of arbitration to the other party and to the mediator;

(f) unless, within 7 days of a notice of arbitration being delivered under paragraph (e), the parties agree on another person to serve as arbitrator, the person agreed to or appointed as mediator must serve as arbitrator;

(g) arbitration proceedings commenced under this Division must be conducted on an expedited basis as follows:

(i) an arbitration hearing must be completed within 30 days of a notice of arbitration being delivered under paragraph (e);

(ii) the arbitrator must deliver an award within 15 days of the arbitration hearing being completed;

(iii) the award must be 5 pages or fewer.

(6) The following apply to a rate dispute referred to in subsection (4) in respect of a replaceable contract pertaining to a licence in the interior area:

(a) if the parties have not agreed on a mediator within 7 days of a rate dispute being deemed to exist, a party may by written notice to the other party and to the Deputy Minister of Forests request the deputy minister to appoint a mediator;

(b) if the parties have not agreed on an arbitrator within 7 days of a rate dispute being deemed to exist, a party may by written notice to the other party and to the Deputy Minister of Forests request the deputy minister to appoint an arbitrator;

(c) within 7 days of receiving a request under paragraph (a) to appoint a mediator, the Deputy Minister of Forests or a person designated by the deputy minister must appoint a registered mediator as mediator;

(d) within 7 days of receiving a request under paragraph (b) to appoint an arbitrator, the Deputy Minister of Forests or a person designated by the deputy minister must appoint a registered arbitrator as arbitrator;

(e) within 7 days of the appointment of a mediator, each party must deliver to the other in writing a mediation proposal that outlines the rate for the work described in the rate proposal delivered under subsection (1) and the basis on which they believe that rate is consistent with the criteria set out in section 26.01;

(f) at any time the parties may agree that the mediation proposals required under paragraph (e) are the final offers of the parties for the purposes of paragraphs (h) and (i);

(g) if a rate dispute is not resolved by mediation within 7 days of the parties delivering the mediation proposals required under paragraph (e), or if a party fails to deliver a mediation proposal as required under paragraph (e), or on earlier written notice by the mediator to the parties that the dispute is not likely to be resolved through mediation, a party may commence arbitration proceedings by delivering a notice of arbitration to the other party and to the arbitrator;

(h) within 14 days of the delivery of a notice of arbitration under paragraph (g), each party must deliver to the other and to the arbitrator in writing a final offer that proposes a rate for the work described in the rate proposal delivered under subsection (1) and the basis on which this rate is consistent with the criteria set out in section 26.01;

(i) arbitration proceedings commenced under this Division must be conducted on an expedited basis as follows:

(i) an arbitration hearing must be completed within 7 days of the parties delivering the final offers required under paragraph (g);

(ii) each party is allowed up to one full hearing day to present its final offer;

(iii) the arbitrator must deliver an award within 7 days of the arbitration hearing being completed;

(iv) in delivering the award, the arbitrator must select one of the final offers;

(v) in determining which final offer to select, the arbitrator must select the final offer that proposes the rate the arbitrator believes best reflects the test set out in section 26.01 (1);

(vi) the award must be 5 pages or fewer.

(7) If a rate has been accepted, deemed to have been accepted, resolved or determined by arbitration, the licence holder must make the work described in the rate proposal available to the contractor to perform and the contractor must perform that work in accordance with the rate proposal at the rate that was accepted, deemed to have been accepted or determined.

18 The following sections are added:

Disclosure of market rate

25.1 At the request of a mediator or arbitrator, each party to a rate dispute must do all of the following:

(a) disclose all rates known to it and described in section 26.01 (2) (a), (b), (c) and (d);

(b) disclose any relevant information known to it that, having regard to the considerations in section 26.01 (2) (e), may be reasonably necessary to make meaningful comparisons between those rates disclosed under paragraph (a) and the rate that is subject to the rate dispute;

(c) not disclose to any third party any confidential information received under paragraph (a) or (b);

(d) not use any information received under paragraph (a) or (b) for any purpose other than the rate dispute.

Role of peers

25.2 If peers are appointed under section 25 (5) to assist the mediator in a rate dispute,

(a) the peers may provide the mediator with information or opinions with respect to the comparability of any rate as a fair market rate, and the mediator may authorize the peers to perform additional functions,

(b) any information or opinion of a peer with respect to the comparability of a rate as a fair market rate may be considered by an arbitrator in the adjudication of a rate dispute and may be given the weight determined by the arbitrator to be appropriate in the circumstances, and

(c) if the arbitrator intends to consider any information or opinion of a peer, the arbitrator must first disclose that information or opinion to the parties and permit the parties to make submissions with respect to it.

19 Section 26 is repealed and the following is substituted:

Provisional rates

26 If a rate dispute arises under a replaceable contract,

(a) except as otherwise provided for under this section, the parties must continue to observe their respective rights and obligations under the contract unless both parties agree otherwise,

(b) if the parties to a rate dispute are unable to agree on the amount to be paid for timber harvesting services provided under the contract from the beginning of the rate dispute until it is resolved, the contractor must be paid a provisional rate equal to the rate in effect for prior timber harvesting services provided by the contractor immediately before the rate dispute,

(c) a party to a rate dispute may apply to an arbitrator to increase or decrease the provisional rate as determined by paragraph (b) to reflect any significant change in operating conditions, operating costs or market rates relative to those encountered for prior timber harvesting services under the contract, and

(d) the rate determined by an arbitrator in a rate dispute is retroactive to the beginning of the commencement of the work in respect of which the rate dispute arose, and the award by the arbitrator must provide for repayment of any difference between the rate awarded and the provisional rate agreed to by the parties or determined by this section.

20 The following sections are added to Division 4:

Rate test

26.01 (1) If a rate dispute is referred to arbitration, the arbitrator must determine the rate according to what a willing licence holder and a willing contractor acting reasonably and at arm's length in similar circumstances would agree is a fair market rate, on the earlier of

(a) the date the rate proposal was delivered to the contractor, and

(b) the date the timber harvesting operations commenced.

(2) In determining a fair market rate under subsection (1), an arbitrator may take into consideration the following:

(a) rates agreed to by the licence holder and contractor for prior timber harvesting services;

(b) rates agreed to under another contract by either the licence holder or contractor for similar timber harvesting services;

(c) rates agreed to under another contract by either the licence holder, the contractor or another person for each phase or component of a similar timber harvesting operation;

(d) rates agreed to by other persons for similar timber harvesting services;

(e) if necessary to make meaningful comparisons to any of the rates agreed to in paragraphs (a), (b), (c) and (d) above, the impact on fair market rates likely to arise from differences between the timber harvesting operations that pertain to the rate in dispute, and the timber harvesting operations that pertain to any rate described in paragraphs (a), (b), (c) and (d), including the following:

(i) differences in operating conditions including, without limitation, differences in terrain, yarding distances, hauling distances, volume of timber per hectare;

(ii) differences in the total amount of timber processed;

(iii) differences in the required equipment configuration;

(iv) differences in required phases;

(v) differences in operating specifications;

(vi) differences in law;

(vii) differences in contractual obligations;

(viii) differences in the underlying costs of timber harvesting operations in the forest industry generally which would affect fair market rates, including changes in the cost of labour, fuel, parts and supplies;

(ix) differences in the cost of moving to a new operating area, if any;

(f) any other similar data or criteria that the arbitrator considers relevant.

(3) In determining fair market rates under subsection (1) an arbitrator must not include any consideration or goodwill associated with purchasing a replaceable contract or otherwise acquiring the right to provide timber harvesting services pursuant to a replaceable contract.

(4) In determining a fair market rate under subsection (1), an arbitrator may consider rates for timber harvesting services on land other than Crown land.

Transition

26.02 If a notice of dispute in respect of a rate dispute was delivered under section 8 (1) before the date this section comes into force, that rate dispute will be governed by sections 25 and 26 as they were immediately before that date, unless the parties agree otherwise.

21 Section 28 is amended

(a) by repealing subsection (1) (d) and substituting the following:

(d) specify how the licence holder proposes that the amount of work performed by each contractor with a replaceable contract on the one hand, and by company operations and company contract operations on the other hand, will be changed as a result of the AAC reduction, and ,

(b) by repealing subsection (2) (d) and substituting the following:

(d) the licence holder must apportion the effect of the reduction in AAC or cancellations, the expiry or the surrender of a licence to which a fibre basket agreement applies proportionately among

(i) all contractors holding replaceable contracts,

(ii) any company operations, and

(iii) any company contract operations

in respect of the licence or fibre basket agreement, and , and

(c) by adding the following subsection:

(3) Despite subsection (2) (d), as among the company operations and the company contract operations, the licence holder may determine the proportions.

22 Section 32 is amended

(a) by striking out "a dispute is deemed to exist between the licence holder and each contractor with a replaceable contract" and substituting "a single dispute is deemed to exist as of the date of referral between the licence holder and all contractors with replaceable contracts", and

(b) in paragraph (c) by striking out "amount of work".

23 The following Divisions are added:

Division 5.1 — Forestry Revitalization Act AAC Reductions

Interpretation

33.1 (1) In this Division:

"conciliator" means a person appointed as both mediator and arbitrator under section 33.5;

"group of licences" means group of licences as defined in section 1 of the Forestry Revitalization Act;

"impacted contractor" means, in respect of a forestry revitalization proposal, a contractor with a replaceable contract in which the parties have specified the amount of work

(a) as a percentage of the total amount of that type of work under the licence or fibre basket agreement to which the contract pertains, and if the licence holder proposes to reduce that percentage, or

(b) as a fixed amount and if the licence holder proposes to reduce the fixed amount of work by more than the percentage reduction under the Forestry Revitalization Act in the allowable annual cut of the licence or fibre basket agreement to which the contract pertains;

"licence holder" means all licence holders shown for a group of licences or an ungrouped licence;

"minimum replaceable contract proportion" means, at the time an order is made under section 3 of the Forestry Revitalization Act for a group of licences, or at the time the Act came into force for an ungrouped licence, the proportion of timber harvesting services to be carried out by contractors under replaceable contracts with the licence holder, compared with the aggregate amount of timber harvesting services to be performed by or on behalf of the licence holder for the group of licences or an ungrouped licence, determined in accordance with the following formula:

proportion = a/b

where

a = the average cost per year of the aggregate amount of work attributable to timber harvesting services specified in those replaceable contracts over the previous 5 years, or if there are fewer than 5 years, that lesser period;

b = the average cost per year of the aggregate amount of work performed by or on behalf of the licence holder for all timber harvesting operations under the group of licences or the ungrouped licence over the previous 5 years, or if there are fewer than 5 years, that lesser period;

"proportionate reduction" means, for a licence or licences in a fibre basket agreement, the apportionment of the effect of

(a) an order of the minister under section 3 the Forestry Revitalization Act for a group of licences, or

(b) the Forestry Revitalization Act for an ungrouped licence,

proportionately among

(c) all contractors holding replaceable contracts,

(d) all company operations, and

(e) all company contract operations,

having regard to the average cost per year of the amount of work specified in each replaceable contract as compared to the average cost per year of the total amount of that work to be performed in respect of all timber harvesting operations under that licence or licences in a fibre basket agreement, where the average cost is determined over the previous 5 years, or if there are fewer than 5 years, that lesser period;

"rejection threshold", when used in relation to contractors, means objection by more than one third of all contractors with replaceable contracts that

(a) pertain to those licences held by a licence holder that are included in a forestry revitalization proposal, and

(b) have greater than one third of the aggregate amount of work specified in all full and phase contracts that pertain to the licences, where the amount of work in each contract is determined with regard to the average cost of the work over the previous 5 years, or if there are fewer than 5 years, that lesser period;

"ungrouped licence" means ungrouped licence as defined in section 1 of the Forestry Revitalization Act.

(2) Despite the definition of "proportionate reduction" in subsection (1), as among the company operations and the company contract operations, the licence holder may determine the proportions.

Forestry revitalization proposals

33.2 (1) Subject to subsection (4), after receipt of an order from the minister under section 3 of the Forestry Revitalization Act for a group of licences, or after the coming into force of this provision for an ungrouped licence, a licence holder may make one or more forestry revitalization proposals regarding the replaceable contracts pertaining to those licences to vary the amount of work specified in, or to terminate, one or more of those replaceable contracts.

(2) The minister may, by order, specify the date by which a licence holder must make a forestry revitalization proposal under subsection (1).

(3) A licence holder must not make a forestry revitalization proposal, other than an amended proposal, after the time specified in the order from the minister under subsection (2) for a licence in a group of licences and after September 1, 2004 for an ungrouped licence.

(4) A licence holder must not include a licence in a forestry revitalization proposal, other than an amendment of a proposal that included that licence, if

(a) the licence was included in a previous forestry revitalization proposal, or

(b) the licence has been subject to a proportionate reduction under section 33.6.

(5) Despite subsection (4), the licence holder may include a licence in a forestry revitalization proposal if

(a) the licence holder receives an order from the minister under section 3 of the Forestry Revitalization Act in respect of the licence, and

(b) the licence was included in a previous order under section 3 of the Act and was either included in a forestry revitalization proposal or was subject to proportionate reduction under section 33.6.

Maximum replaceable contract reduction

33.21 (1) Subject to subsection (2), the total effect of the reduction in allowable annual cut for an ungrouped licence or for a group of licences under the Forestry Revitalization Act as

(a) proposed in all forestry revitalization proposals made by the licence holder for that ungrouped licence or group of licences and accepted or deemed to be accepted under this Division,

(b) awarded under section 33.5 (4) (e), and

(c) imposed by apportionment under section 33.6,

must, in the aggregate, not be applied in a manner that results in the proportion of timber harvesting services to be provided by contractors holding replaceable contracts in respect of that ungrouped licence or group of licences to be less than the minimum replaceable contract proportion.

(2) The minister may by order permit the effect of the reduction in allowable annual cut for an ungrouped licence or a group of licences to be applied in a manner that results in the proportion of timber harvesting services to be provided by contractors holding replaceable contracts in respect of that ungrouped licence or group of licences to be less than the minimum replaceable contract proportion.

(3) If, as a result of a proportionate reduction in respect of an ungrouped licence or a group of licences, the proportion of timber harvesting services to be carried out by contractors under replaceable contracts with the licence holder is less than

(a) the minimum replaceable contract proportion, or

(b) some other proportion ordered by the minister under subsection (2),

the licence holder must either

(c) enter into one or more replaceable contracts, or

(d) increase the amount of work specified in replaceable contracts

that pertain to that ungrouped licence or group of licences such that the proportion of timber harvesting services to be carried out by contractors with replaceable contracts in respect of that ungrouped licence or group of licences is equal to or greater than

(e) the minimum replaceable contract proportion, or

(f) the other proportion ordered by the minister under subsection (2).

(4) If, within 30 days of a proportionate reduction, a licence holder has failed to comply with subsection (3), a dispute is deemed to exist between the licence holder and each contractor holding a replaceable contract who is affected by the proportionate reduction, and the dispute must be resolved by mediation and arbitration under the system established in Division 2 of Part 4.

(5) An arbitrator of a dispute under subsection (4) may make an award increasing the amount of work specified in replaceable contracts held by parties to the dispute to achieve compliance with subsection (3).

Contents and delivery of forestry revitalization proposal by a licence holder

33.22 A licence holder in making a forestry revitalization proposal must do the following:

(a) make the proposal in writing;

(b) specify the licences that are included in the proposal;

(c) list each contractor with a replaceable contract that pertains to a licence included in the forestry revitalization proposal and show the amount of work specified in each contract;

(d) specify how the licence holder proposes that the amount of work specified in each replaceable contract will be changed, if at all, as a result of the order of the minister under section 3 of the Forestry Revitalization Act for a group of licences, or as a result of that Act for an ungrouped licence;

(e) specify those replaceable contracts that will be terminated;

(f) describe how the forestry revitalization proposal takes into account the AAC reduction criteria;

(g) apply the AAC reduction criteria fairly, impartially and without regard to any past disagreements between the parties;

(h) include enough information to allow a reasonable person to determine if the licence holder is complying with the section 33;

(i) deliver the proposal to each contractor with a replaceable contract that pertains to a licence that is included in the forestry revitalization proposal.

Notice of objection

33.4 (1) If a contractor objects to a forestry revitalization proposal received from a licence holder under section 33.22, the contractor must give written notice of the objection to the licence holder within 30 days of delivery of the proposal to that contractor.

(2) A notice under subsection (1) must explain why the contractor objects to the proposal, having regard to the AAC reduction criteria.

(3) A contractor may notify the licence holder that the contractor accepts the proposal and the acceptance is binding on the contractor.

(4) If a contractor does not give written notice of an objection to a forestry revitalization proposal under subsection (1) in accordance with subsection (2), the contractor is deemed to have accepted the proposal.

Acceptance of a proposal

33.41 (1) If no impacted contractor gives the licence holder written notice of an objection to a forestry revitalization proposal under section 33.4, the proposal is deemed to be accepted and each contract entered into by the licence holder with respect to the licences held by that licence holder and included in the proposal is deemed to be amended or terminated on the expiry of the 30 day period referred to in section 33.4 (1) or on a later date provided in the proposal.

(2) If a rejection threshold of contractors gives a licence holder written notice of an objection to a forestry revitalization proposal under section 33.4, and at least one of those contractors is an impacted contractor, the forestry revitalization proposal is rejected.

(3) If a forestry revitalization proposal is not rejected under subsection (2), it is deemed to be accepted.

(4) If a forestry revitalization proposal is rejected under subsection (2) or deemed to be accepted under subsection (1) or (3), the licence holder, within 7 days of the rejection or acceptance, must provide written notice of the rejection or acceptance to all contractors who received the proposal under section 33.22, which notice must list those contractors who gave written notice of objection under section 33.4.

Fairness test

33.42 (1) If an impacted contractor, who receives notice under section 33.41 (4) that a forestry revitalization proposal has been accepted or deemed accepted, and who objected to the proposal under section 33.4 (1), believes the proposal does not meet the requirements of section 33.22 (f), that contractor may give written notice of a further objection to the licence holder within 7 days of receipt of the notice under section 33.41 (4), explaining why the proposal has not met the requirements.

(2) If no impacted contractor gives the licence holder written notice of an objection to a forestry revitalization proposal in accordance with subsection (1), each replaceable contract entered into by the licence holder with respect to licences held by that licence holder and described in the proposal is deemed to be amended or terminated in accordance with the proposal on the later of

(a) the expiry of the 7 day period referred to in subsection (1),

(b) the expiry of the 30 day period referred to in section 33.4 (1), or

(c) a date provided in the proposal.

Rejection of proposal

33.43 (1) If

(a) a licence holder receives a notice of objection with respect to a forestry revitalization proposal under section 33.42 (1), or

(b) the forestry revitalization proposal is rejected under section 33.41 (2) within 30 days after the last day the proposal was delivered to a contractor,

the licence holder may, within 30 days after receipt of the last notice of objection under section 33.42 (1), or the expiry of the 30 day period under paragraph (b) of this subsection, by written notice to all contractors who received the forestry revitalization proposal,

(c) elect proportionate reduction,

(d) make an amended forestry revitalization proposal, or

(e) commence mediation and arbitration proceedings under section 8.

(2) The licence holder is deemed to have elected proportionate reduction, if the licence holder, in accordance with subsection (1), does not

(a) elect proportionate reduction,

(b) make an amended forestry revitalization proposal, or

(c) commence mediation and arbitration.

Dispute resolution proceedings for a forestry revitalization proposal

33.5 (1) If a licence holder commences mediation and arbitration under section 8 because a forestry revitalization proposal was rejected under section 33.41 (2), a single dispute is deemed to exist, as of the date of commencement, between the licence holder and all contractors with replaceable contracts that pertain to a licence included in the forestry revitalization proposal.

(2) If a licence holder commences mediation and arbitration under section 8 in respect of a notice of objection received under section 33.42 (1), a single dispute is deemed to exist, as of the date of commencement, between the licence holder and all impacted contractors who have delivered notices of objection to the licence holder under section 33.42 (1).

(3) All disputes deemed to exist under subsection (1) or (2) will be resolved by mediation and arbitration under the system established in Division 2 of Part 4 subject to the following:

(a) if the licence holder and at least two thirds of the contractors who are parties to the dispute deemed to exist under subsection (1) have not agreed on a conciliator within 14 days of the dispute being deemed to exist, any party to that dispute, by written notice to the other parties and to the Deputy Minister of Forests, may request the deputy minister to appoint a conciliator;

(b) if the parties to the dispute deemed to exist under subsection (2) have not agreed on a conciliator within 14 days of the dispute being deemed to exist under subsection (2), any party to that dispute, by written notice to the other parties and to the Deputy Minister of Forests, may request the deputy minister to appoint a conciliator;

(c) within 7 days of receiving a request under paragraph (a) or (b) to appoint a conciliator, the Deputy Minister of Forests or a person designated by the deputy minister must appoint a registered mediator or a registered arbitrator to act as conciliator;

(d) mediation and arbitration proceedings will be conducted by the conciliator agreed to under paragraph (a) or (b) or appointed under paragraph (c);

(e) the person agreed to or appointed as the conciliator in respect of a dispute deemed to exist with respect to a particular forestry revitalization proposal will act as conciliator in respect of all disputes that arise with respect to that proposal.

(4) For a dispute deemed to exist under subsection (1),

(a) a licence holder must deliver a notice of the time and place of the mediation or arbitration to each union whose members may be affected by the disposition of the dispute,

(b) a union that is entitled to receive notice under paragraph (a) may take part in the mediation or arbitration as an intervenor

(i) by making submissions, including making a proposal, and

(ii) to the extent permitted by the conciliator,

(c) at any time during the mediation or arbitration regarding the dispute, a party to the mediation or arbitration may make a proposal,

(d) a conciliator must resolve the dispute in the manner that the conciliator believes best achieves the AAC reduction criteria, and

(e) for greater certainty, in making a decision with respect to the dispute,

(i) a conciliator is not restricted to choosing among any of the various proposals made by the parties or intervenors to the arbitration, and

(ii) a conciliator may make an award that terminates one or more of the replaceable contracts, or that reduces or increases the amount of work available to any contractor with a replaceable contract in a manner that is, or is not, consistent with a proportionate reduction.

(5) For a dispute deemed to exist under subsection (2),

(a) the sole issue is whether a forestry revitalization proposal deemed to be accepted meets the requirements of section 33.22 (f) with respect to the licensee and the impacted contractors who have delivered notices of objection under section 33.42 (1),

(b) if the conciliator concludes in an award that the requirements of section 33.22 (f) are met in respect of all impacted contractors who have objected to the proposal under section 33.42 (1), the forestry revitalization proposal is deemed to be accepted and each contract entered into by the licence holder with respect to all licences held by that licence holder is deemed to be amended or terminated as provided for in the forestry revitalization proposal,

(c) if the conciliator concludes in an award that the requirements of section 33.22 (f) are not met in respect of one or more of the impacted contractors who have objected to the proposal under section 33.42 (1), the licence holder may, by written notice to all contractors who received the forestry revitalization proposal,

(i) make an amended forestry revitalization proposal, or

(ii) elect proportionate reduction, and

(d) if a licence holder has not made an amended forestry revitalization proposal, or elected proportionate reduction, within 30 days of receiving the award under paragraph (c), the licence holder is deemed to have elected proportionate reduction.

Proportionate reduction

33.6 (1) If a forestry revitalization proposal has not been accepted under section 33.41 or referred to dispute resolution under section 33.43, the licence holder may elect proportionate reduction, by written notice to all contractors holding replaceable contracts in respect of a group of licences or an ungrouped licence, at any time after

(a) receiving an order of the minister under the Forestry Revitalization Act for that group of licences, or

(b) the coming into force of this section for an ungrouped licence.

(2) Subject to subsection (1), the licence holder must implement proportionate reduction by written notice to all contractors holding replaceable contracts in respect of an ungrouped licence or group of licences, if, in respect of the ungrouped licence or group of licences, the licence holder has failed to make a forestry revitalization proposal by the time specified in section 33.2 (3).

(3) A licence holder who has elected or is deemed to have elected proportionate reduction under section 33.43 or 33.5 must give a written notice to all contractors holding replaceable contracts affected by the reduction.

(4) The notice under subsections (1) to (3) must specify the effect of the proportionate reduction on each contract to which it applies with enough information to allow a reasonable person to determine if the licensee is complying with the requirements of section 33.21.

No damages

33.7 (1) A licence holder is not liable to a contractor or subcontractor for any damages or other remedy arising directly or indirectly from a reduction in the amount of work in, or termination of, a replaceable contract, that takes place as a result of this Division.

(2) A contractor is not liable to a subcontractor for any damages or other remedy arising directly or indirectly from a reduction in the amount of work in, or termination of, a replaceable contract, that takes place as a result of this Division.

(3) A contractor or subcontractor, within 90 days of receiving notice that the amount of work under the contract or subcontract has been reduced under this Division, may terminate a replaceable contract or subcontract, by written notice to the licence holder or contractor, without incurring any liability to the other party.

Division 5.2 — Licence Transfer, Subdivision and Consolidation

Licence transfer

33.8 A replaceable contract must provide that if the licence that the contract pertains to is transferred, the licence holder must require, as a condition of such transfer, that the transferee either

(a) assume the licence holder's obligations under the contract, or

(b) offer a new replaceable contract to the contractor on substantially the same terms and conditions as the original replaceable contract.

Licence subdivision

33.9 A replaceable contract must provide that if the licence that the contract pertains to is amended with the result that the harvesting rights granted under the licence are granted under two or more licences and the replaceable contract is affected by the amendment

(a) the licence holder must offer the contractor one or more replaceable contracts that pertain to one or more of the licences arising out of the amendment,

(b) the amount of work specified in the replaceable contracts offered to the contractor under paragraph (a) must be, in the aggregate, equivalent to or greater than the amount of work specified in the original replaceable contract, and

(c) the replaceable contracts offered to the contractor under paragraph (a) must be on substantially the same terms and conditions as the original replaceable contract, except for the amount of work specified in each contract.

Licence consolidation

33.91 A replaceable contract must provide that if the licence that the contract pertains to, together with one or more other licences held by the licence holder, is replaced with a single licence,

(a) the licence holder must offer the contractor a replaceable contract that pertains to the single licence,

(b) subject to paragraphs (c) and (d), the amount of work specified in the replaceable contract offered to the contractor under paragraph (a) must be equal to

N x (O ÷ P)

where

N = the amount of work specified in the original replaceable contract,

O = the allowable annual cut of the licence that the original contract pertained to, and

P = allowable annual cut of the single licence arising out of the replacement of the licence that the original replaceable contract pertains to,

(c) if the contractor and licence holder have agreed to specify the amount of work in the original replaceable contract as a fixed quantity, the amount of work specified in the new replaceable contract offered to the contractor under paragraph (a) must be the same as the amount of work specified in the original replaceable contract,

(d) if the contractor and licence holder have agreed to specify the amount of work in the original replaceable contract in a manner other than as a percentage of the total amount of such work to be performed under the licence or as a fixed quantity, the amount of work specified in the new replaceable contract offered to the contractor under paragraph (a) must be equivalent to the amount of work in the original replaceable contract, and

(e) except as provided in paragraphs (b) and (d), a replaceable contract offered to the contractor under paragraph (a) must be on substantially the same terms and conditions as the original replaceable contract.

24 Section 34 is repealed and the following is substituted:

Replaceable subcontracts

34 A contractor who offers a person a subcontract to replace the person's replaceable subcontract must do so with a replaceable subcontract.

25 Section 35 (1) is amended by striking out "section 34" and substituting "section 34 or 37.1".

26 The following sections are added:

Licence transfer, subdivision or consolidation

37.1 A replaceable subcontract must provide that if a contract is offered to a contractor under a provision required by section 33.8, 33.9 or 33.91 in replacement for a replaceable contract to which the replaceable subcontract pertains, the contractor must offer the subcontractor one or more replaceable subcontracts to replace the subcontract.

Contract transfer

37.2 A replaceable subcontract must provide that if the replaceable contract that the subcontract pertains to is assigned, the contractor must require, as a condition of such transfer, that the transferee either

(a) assume the contractor's obligations under the subcontract, or

(b) offer a new replaceable subcontract to the subcontractor on substantially the same terms and conditions as the subcontract.

27 Section 38 repealed and the following is substituted:

38 Sections 22, 24.1, 25, 25.1, 25.2, 26 and 26.01 apply to replaceable subcontracts, and a reference to a licence holder or contractor or to a licence or contract in those sections, or any standard provision required by those sections, applies to a contractor or subcontractor or to a contract or subcontract as the context requires.

28 The title of Part 7 is repealed and the following is substituted:

Part 7 — Standard Provisions

29 Section 48 is repealed and the following is substituted:

Required provisions

48 To comply with the requirements of each of the sections listed below, a contract or subcontract must contain either the provision set out in the Schedule listed beside the section below, or a provision agreed to by the parties that is consistent in all material ways with the requirement represented by that section.

30 Section 50 is amended by striking out "1 to 6, 13 to 16, 19 and 20" and substituting "1 to 22".

31 Section 51 is repealed and the following is substituted:

Deadlines for amendment

51 For the purpose of section 160 of the Act, the deadline before which the parties to a contract or subcontract that does not comply with section 4 (1) or (2), 5, 13, 14, 15, 17 (2), 18 (1), (3) and (5), 20, 21, 22 (1) or (2), 24.1, 27, 33, 33.8, 33.9, 33.91, 35, 36 (2), 37 (1) or (2), 37.1 or 37.2 must amend the contract or subcontract in order to comply is

(a) June 21, 2004, for those contracts and subcontracts in effect on June 21, 2004, and

(b) the date the contract or subcontract is made, for those contracts and subcontracts entered into after June 21, 2004.

32 The following Part is added:

Part 8 — Waiver or Amendment of Requirement

Waiver or amendment of certain requirements of the regulation

52 If, on or after June 21, 2004, a licence holder and a contractor or a contractor and a subcontractor agree in writing, they may waive or amend any of the requirements of sections 6, 8 to 10, 12 to 15, 17 to 26.02, 34 to 38 and those requirements of Part 7 that relate to any of those sections.

33 Schedule 3 is repealed and the following is substituted:

Schedule 3

(Section 5)

Standard Provision — Resolution of Disputes

1 All disputes that have arisen or may arise between the parties under or in connection with this contract will be referred to mediation and, if not resolved by the parties through mediation, will be referred to arbitration in accordance with the dispute resolution systems established by the regulation.

34 Schedule 5 is amended by repealing section 1 (c) and substituting the following:

(c) comply with different operating specifications;

(d) undertake any other operating change necessary to comply with a direction made by a government agency or lawful obligation imposed by a federal, provincial or municipal government, .

35 Schedule 12 is amended by repealing paragraph (b) and substituting the following:

(b) the amount of work that the licence holder allocates to the contractor and that the contractor is required to perform under this contract over each amount of work compliance period of the licence is equal to or greater than 95% of the aggregate of the specified amount of work provided for during that amount of work compliance period, less the aggregate of any reductions in that amount of work imposed during that amount of work compliance period as permitted by a provision of this contract required or permitted by section 20 or 22 of the regulation.

36 The following Schedule is added:

Schedule 13.1

(Section 24.1)

Standard Provision — Rate Dispute

1 If a rate dispute as defined in the regulation arises, the dispute will be resolved in accordance with the provisions of this contract for dispute resolution and as required by Part 5, Division 4 of the regulation.

37 Schedule 14 is repealed.

38 The following Schedules are added:

Schedule 16.1

(Section 33.8)

Licence Transfer

1 If the licence holder transfers the licence, the licence holder will require, as a condition of the transfer of the licence, that the transferee of the licence either

(a) assume the licence holder's obligations under this contract, or

(b) offer a new contract to the contractor on substantially the same terms and conditions as the contract.

Schedule 16.2

(Section 33.9)

Licence Subdivision

1 If the licence to which this contract pertains is amended such that the harvesting rights granted under that licence are granted under two or more licences, and the contractor's rights under this contract are affected by the amendment, the licence holder will offer the contractor one or more contracts that

(a) commence on the date of amendment,

(b) terminate and replace this contract,

(c) pertain to one or more licences that arise from the subdivision,

(d) specify an amount of work that, in aggregate with all contracts offered to the contractor under this section, is equivalent to the specified amount of work in this contract, and

(e) except as otherwise provided in this section, are on substantially the same terms and conditions as this contract.

Schedule 16.3

(Section 33.91)

Licence Consolidation

1 If the licence to which this contract pertains, together with one or more other licences held by the licence holder, are replaced with a single licence, the licence holder will offer the contractor a contract that

(a) commences on the date of replacement,

(b) terminates and replaces this contract,

(c) pertains to the licence that arises from the replacement,

(d) subject to paragraphs (e) and (f), specifies an amount of work equal to

N x (O ÷ P)

where

N = the amount of work specified in the contract,

O = the allowable annual cut of the licence to which this contract pertains, and

P = the allowable annual cut of the replacement licence,

(e) specifies the same amount of work as this contract if this contract specifies the amount of work as a fixed quantity,

(f) specifies the equivalent amount of work as this contract if this contract specifies that amount of work in a manner other than as a fixed amount or a percentage, and

(g) except as otherwise provided in this section, is on substantially the same terms and conditions as this contract.

Schedule 21

(Section 37.1)

Standard Provision — Termination of Replacement Subcontract on
Licence, Transfer, Subdivision or Consolidation

1 If the contract to which this subcontract pertains is replaced with one or more replaceable contracts as a result of a provision required by section 33.8, 33.9 or 33.91 of the regulation, the contractor will enter into one or more replaceable subcontracts with the subcontractor on substantially the same terms and conditions as this subcontract, which subcontracts must specify, in the aggregate, an amount of work equivalent to or greater than the amount of work specified in this subcontract.

Schedule 22

(Section 37.2)

Standard Provision — Replacement of Subcontract
on Assignment of Contract

1 If the contract to which this subcontract pertains is assigned by the contractor, the contractor will require that person either

(a) to assume the contractor's rights and obligations under this subcontract, or

(b) to offer the subcontractor a replaceable subcontract on substantially the same terms and conditions as this subcontract.

Copyright © 2004: Queen's Printer, Victoria, British Columbia, Canada