Armstrong Forest Independent Forest Audit

Transcription

1 Armstrong Forest Independent Forest Audit Arbex Forest Resource Consultants Ltd. Oxford Mills, Ontario February, 2012

2 Queen s Printer for Ontario 2012

3 TABLE OF CONTENTS 1.0. EXECUTIVE SUMMARY... I 2.0. TABLE OF RECOMMENDATIONS... III 3.0. INTRODUCTION AUDIT PROCESS MANAGEMENT UNIT DESCRIPTION CURRENT ISSUES SUMMARY OF CONSULTATION AND INPUT TO THE AUDIT AUDIT FINDINGS COMMITMENT PUBLIC CONSULTATION AND ABORIGINAL INVOLVEMENT FOREST MANAGEMENT PLANNING PLAN ASSESSMENT AND IMPLEMENTATION SYSTEM SUPPORT MONITORING ACHIEVEMENT OF MANAGEMENT OBJECTIVES & FOREST SUSTAINABILITY CONTRACTUAL OBLIGATIONS CONCLUSIONS AND LICENCE EXTENSION RECOMMENDATION APPENDICES APPENDIX 1 RECOMMENDATIONS APPENDIX 2 MANAGEMENT OF OBJECTIVES TABLE APPENDIX 3 COMPLIANCE WITH CONTRACTUAL OBLIGATIONS APPENDIX 4 AUDIT PROCESS APPENDIX 5 LIST OF ACRONYMS USED APPENDIX 6 AUDIT TEAM MEMBERS AND QUALIFICATIONS APPENDIX 7 TRENDS ANALYSIS List of Tables TABLE 1. RECOMMENDATIONS... III TABLE 2. AREA SUMMARY OF MANAGED CROWN LAND BY LAND TYPE... 3 List of Figures FIGURE 1. LOCATION OF THE ARMSTRONG FOREST (MU # 444) (SOURCE: OMNR)... 2 FIGURE 2. PROPORTIONAL REPRESENTATION OF FOREST UNITS ON THE ARMSTRONG FOREST IN FIGURE AGE CLASS AREA DISTRIBUTION BY COVER TYPE.... 5

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5 1.0. Executive Summary This report presents the findings of an Independent Forest Audit (IFA) of the former Armstrong Forest (MU # 444) 1 and the amalgamated Lake Nipigon Forest (MU # 815) conducted by Arbex Forest Resource Consultants Ltd. 2 for the period of April 1, 2006 to March 31, This audit assessed the last four years of implementation of the Armstrong Forest Management Plan (MU # 444), and the development of Armstrong Forest FMP Extension and its first year of implementation. This audit also assessed the development of the Contingency Plan (CP) and the Forest Management Plan for the amalgamated Lake Nipigon Forest (MU # 815). Procedures and criteria for the IFA are specified in the 2011 Independent Forest Audit Process and Protocol (IFAPP). This audit addressed the forest management activities of the OMNR Thunder Bay District and Lake Nipigon Forest Management Inc. (LNFMI). The downturn in the forest sector economy had a significant impact on the achievement of forest management plan objectives and the achievement of the planned harvest levels on the Armstrong Forest (AF). During the audit term many of the mills receiving wood from the Forest were idled or permanently closed and the major overlapping licencee (OL) Buchanan Forest Products Ltd. (BFPL) declared bankruptcy. Whitesand Forestry Woodlands Division (a Forest Resource Licence (FRL) holder) was not operational during much of the audit term due to changes in its business structure and management challenges. As a result of these circumstances, no regular harvest operations occurred on the unit after the fall of Between 2008 and 2010 harvesting was restricted to cutting primary road right-of-way and fuel wood cutting. We found that the effective delivery of the forest management was challenged by a number of issues which, when considered in combination, pose a substantial risk to the sustainability of the Forest. We provide 14 recommendations to address our concerns including a recommendation that the OMNR must ensure that necessary silviculture and other forest management obligations are met as the on-going uncertainty with respect to OMNR s management responsibility led to many of the identified problems on the unit. 1 In this Audit Report, references to the Armstrong Forest are referring to the former Armstrong Forest (MU # 444) and unless otherwise noted, references to the Lake Nipigon Forest refer to the amalgamated Lake Nipigon Forest (MU # 815). 2 A list of audit team members and their qualifications is provided in Appendix 6. Arbex Forest Resource Consultants Ltd. i

6 The audit team concludes the management of the Armstrong Forest was not in compliance with the legislation, regulations and policies that were in effect during the term covered by the audit, and the OMNR did not fully meet its legal obligations. Forest sustainability is not being achieved, as assessed through the Independent Forest Audit Process and Protocol. The audit team identified the following reasons for this assessment: The decision to implement a reduced silviculture program in an effort to maintain the minimum balance has jeopardized the public investment in conifer renewal on some sites, stalled progress on the achievement of FMP objectives related to forest cover and may result in higher future costs for tending or the rehabilitation of conifer renewal sites where competition has become established. There is a requirement for OMNR to address the significant area requiring forest assessment and/or survey. Forest management expenditures have exceeded Forest Renewal Trust Fund (FRTF) revenues for the past two management terms. There has been a failure to adequately address the imbalance between FRTF expenditures and revenues. There is a requirement for OMNR to address the poor state of repair of a number of water crossings which potentially pose threats to the environment (e.g. erosion) and/or public safety. There was a failure to provide sufficient financial oversight on the Collins Road which resulted in exorbitant financial costs to the taxpayers of Ontario. The management oversight in the planning and development of the Lake Nipigon Forest Contingency Plan and the Lake Nipigon Forest Management Plan was inadequate. Arbex Forest Resource Consultants Ltd. ii

7 2.0. Table of Recommendations TABLE 1. RECOMMENDATIONS Conclusion and Recommendation on Licence Extension The audit team concludes the management of the Armstrong Forest portion of the Lake Nipigon Forest was not in compliance with the legislation, regulations and policies that were in effect during the term covered by the audit, and the OMNR did not fully meet its legal obligations. Forest sustainability is not being achieved, as assessed through the Independent Forest Audit Process and Protocol. The audit team identifies the following reasons for this assessment: The decision to implement a reduced silviculture program in an effort to maintain the minimum balance has jeopardized the public investment in conifer renewal on some sites, stalled progress on the achievement of FMP objectives related to forest cover and may result in higher future costs for tending or the rehabilitation of conifer renewal sites where competition has become established. There is a requirement for OMNR to address the significant area requiring forest assessment and/or survey. Forest management expenditures have exceeded Forest Renewal Trust Fund revenues for the past two management terms. There has been a failure to adequately address the imbalance between FRTF expenditures and revenues. There is a requirement for OMNR to address the poor state of repair of a number of water crossings which potentially pose threats to the environment (e.g. erosion) and/or public safety. There was a failure to provide sufficient financial oversight on the Collins Road which resulted in exorbitant financial costs to the taxpayers of Ontario. The management oversight in the planning and development of the Lake Nipigon Forest Contingency Plan and the Lake Nipigon Forest Management Plan was inadequate. Recommendations Directed to the OMNR District Recommendation # 1: OMNR must fully meet its responsibilities as the forest manager of the Armstrong Forest. Arbex Forest Resource Consultants Ltd. iii

8 Recommendation # 2: In the development of future forest management plans, the FMP Steering Committee must fulfill its Terms of Reference responsibilities and provide adequate support to the FMP process. Recommendation # 3: OMNR and LNFMI should assess whether the inclusion of all non-ftg areas as available forest in Term 1 of SFMM resulted in an inappropriate increase in the area available for harvest. Recommendation # 4: OMNR should explore opportunities to benchmark yield curves in SFMM against actual harvest yields. Recommendation # 6: OMNR must ensure that conifer renewal sites are monitored and that when required tending is undertaken to ensure that conifer regeneration is consistent with the achievement of the planned future forest condition. Recommendation # 7: The OMNR must immediately implement a water crossing management strategy to reduce the potential for environmental damage and public safety hazards associated with deteriorating temporary water crossing structures. Recommendation # 9: OMNR must address the backlog in area requiring assessment of regeneration success (artificial and natural renewal) and maintain an annual regeneration assessment program approximating the annual allowable harvest area. Recommendation # 10: OMNR must complete the survey of XYZ category lands. Arbex Forest Resource Consultants Ltd. iv

9 Recommendation # 11: In the preparation of the next forest management plan, OMNR should ensure that SFMM modelling assumptions related to renewal pathways are re-assessed in light of the results of free-to-grow surveys and silvicultural effectiveness monitoring. Recommendation # 12: In its assessment of progress on the achievement of the 2011 LNF FMP s objectives in the Year 3 Annual Report, OMNR should consider alternate approaches to achieving caribou habitat objectives or alter current objectives to make them feasible to implement on the former Armstrong Forest portion of the Lake Nipigon Forest. Recommendation # 13: The District Manager must ensure that the Action Plan and Action Plan Status Report are submitted within the specified time frames. Recommendation # 14: OMNR must address the imbalance in FRTF revenues and expenditures to ensure adequate funding is available to meet planned silviculture targets and address existing backlogs. Recommendations Directed to Corporate or Regional OMNR Recommendation # 5: Corporate OMNR should investigate the possibility of modifying the current socioeconomic analysis requirements of the FMPM to enable it to be used as a decision support tool to assist in the scoping analyses to help determine the LTMD decision. Recommendation # 8: Corporate OMNR must conduct a review of the Collins Road project to account for the expenditure of all public funds, and assess the appropriateness of the financial management oversight afforded to the project. Arbex Forest Resource Consultants Ltd. v

10 3.0. Introduction This report presents the findings of an Independent Forest Audit (IFA) of the former Armstrong Forest (MU # 444) 3 and the amalgamated Lake Nipigon Forest (MU # 815) conducted by Arbex Forest Resource Consultants Ltd. 4 for the period of April 1, 2006 to March 31, This audit assessed the last four years of implementation of the Armstrong Forest Management Plan (MU # 444), and the development of Armstrong Forest FMP Extension and its first year of implementation. This audit also assessed the development of the Contingency Plan (CP) and the Forest Management Plan for the amalgamated Lake Nipigon Forest (MU # 815). The former Armstrong Forest (MU # 444) and the former Lake Nipigon Forest (MU #260) were amalgamated effective April 1, 2011 to form the Lake Nipigon Forest (MU # 815). Prior to 2007, the Armstrong and Lake Nipigon Forests were managed under Sustainable Forest Licences (SFLs) granted to Norampac Inc. The SFLs for both licences were transferred to Cascades Canada Inc. in In 2008, the Armstrong Forest was surrendered by Cascades Canada to the Crown and the SFL for the Lake Nipigon Forest was transferred to Lake Nipigon Forest Management Inc. (LNFMI). The Armstrong Forest is currently a Crown Management Unit which is administered by the OMNR Thunder Bay District with support from LNFMI via a service provider agreement. This agreement provided for support in the implementation of forest management operations and provisions for the development of the Forest Management Plan (with participation by the Thunder Bay and Nipigon OMNR) for the amalgamated Lake Nipigon Forest (MU # 815). It was originally anticipated that upon the approval of the 2011 CP that the amalgamated LNF would be managed under a cooperative SFL arrangement held by LNFMI 5. As a result of a continuing economic downturn, changes in the management structure and business model at LNFMI, the initiation of Ontario s Forest Tenure and Pricing Review and some opposition to the transfer by the Whitesand First Nation the formal transfer of the Armstrong portion to LNFMI or another SFL entity has not occurred. Due to this circumstance, and a requirement to report on each former Forest as a separate entity this IFA report deals primarily with the former Armstrong Forest (MU # 444) although our review of the development of the Contingency Plan (CP) and the Forest Management Plan for the amalgamated Lake Nipigon Forest (MU # 815) necessarily involved both the former Armstrong and Lake Nipigon portions of the amalgamated Lake Nipigon Forest. 3 In this Audit Report, references to the Armstrong Forest are referring to the former Armstrong Forest (MU # 444) and unless otherwise noted, references to the Lake Nipigon Forest refer to the amalgamated Lake Nipigon Forest (MU # 815). 4 A list of audit team members and their qualifications is provided in Appendix 6. 5 The original timeline was to expand the SFL to include the Armstrong Forest by Arbex Forest Resource Consultants Ltd. 1

11 3.1. Audit Process The Crown Forest Sustainability Act (CFSA) requires that SFLs and Crown management units be audited every five years by an independent auditor. The audit applies to the Ontario Ministry of Natural Resources (OMNR) and all overlapping licencees (OLs) on the Forest. The audit reviews the applicable forest management plan (FMP) in relation to relevant provincial legislation, policy guidelines and Forest Management Planning Manual (FMPM) requirements, including a review of field operations and required monitoring and reporting functions. The audit reviews whether actual results in the field are comparable with planned results and determines if the results were accurately reported. The procedures and criteria for the IFA are specified in the 2011 Independent Forest Audit Process and Protocol (IFAPP). A further discussion of the audit process is provided in Appendix Management Unit Description FIGURE 1. LOCATION OF THE ARMSTRONG FOREST (MU # 444) (SOURCE: OMNR) The AF is entirely within the Thunder Bay District of the Ministry of Natural Resources. The land base of the Forest is 611,860 ha of which 485,539.6 hectares (ha) is classified Arbex Forest Resource Consultants Ltd. 2

12 as Crown Managed area. Approximately 95% of the Crown managed land area is classified as Productive Forest Land (Table 2). The Forest is situated in the Boreal Forest Region. Black spruce cover types (SpC, SpL, SpM) dominate on the land base occupying approximately 50% of the forested area. Other common conifer species include white spruce, jack pine and balsam fir. Conifer species typically occur as pure stands or in mixedwood associations with hardwoods. Red pine, white pine and cedar occur infrequently. Hardwood species such as white birch and poplar occur in pure stands or mixed associations. The proportional representation of forest units is presented in Figure 2. TABLE 2. AREA SUMMARY OF MANAGED CROWN LAND BY LAND TYPE Managed Crown Land Type Area (Ha) Unsurveyed Non-Forested 45,192.8 Non-Productive Forest 36,895.2 Productive Forest Protection Forest 6 13,017.3 Production Forest 7 Forest Stands 314,489.1 Depleted 73,307.4 Barren & Scattered 1,893.4 Sub-total Productive Forest 402,707.2 Sub-total Forested: 439,602.4 Total Crown Managed: 485,539.6 Source: FMP-1 Table: Management Unit Land Summary in Hectares (2005 FMP) 6 Protection forest land is land on which forest management activities cannot normally be practiced without incurring deleterious environmental effects because of obvious physical limitations such as steep slopes and shallow soils over bedrock. 7 Production forest is land at various stages of growth, with no obvious physical limitations on the ability to practice forest management. Arbex Forest Resource Consultants Ltd. 3

13 FIGURE 2. PROPORTIONAL REPRESENTATION OF FOREST UNITS ON THE ARMSTRONG FOREST IN 2011 Source: 2011 Comparison and Trend Analysis of Planned vs. Actual Forest Operations Report Armstrong is the largest community within the boundaries of the Forest. There are three Aboriginal communities within or adjacent to the Forest; the Whitesand First Nation, Kiashke Zaaging Anishinaabek (KZA) and Namaygoosisagagun (the community of Collins). The City of Thunder Bay is situated approximately 230 km to the south of the Forest. Highway access is provided by Highway # 527. The current age class area distribution of the managed Crown forest is skewed towards older age classes as a result of a period of extensive wildfires which occurred between 1900 and 1940 followed by a period of active wildfire suppression with relatively little logging or other natural disturbances (Figure 3). There is also a significant area of overmature spruce occurring on lowland areas, which due to the poor soil drainage, were not destroyed by wildfires. An age class area imbalance also exists within the and to a lesser extent in the year age class due to the Forest s disturbance history. This imbalance poses challenges with respect to the provision of a consistent future wood supply and the provision of desired levels of certain wildlife habitats over time. Arbex Forest Resource Consultants Ltd. 4

14 FIGURE AGE CLASS AREA DISTRIBUTION. Source: 2011 Comparison and Trend Analysis of Planned vs. Actual Forest Operations Report The AF is within the area of continuous distribution of woodland caribou habitat. The species is currently identified as threatened under the provincial Endangered Species Act (2007) and the federal Species at Risk Act. The Caribou Conservation Plan (CCP) requires the establishment of large long-term habitat tracts and provides specific direction regarding the location and harvest schedule for caribou mosaic blocks. Other common wildlife species include black bear, moose, beaver, mink, and lynx. Small game species inhabiting the Forest include snowshoe hare, ruffed grouse, spruce grouse and a variety of waterfowl Current Issues Lack of Markets and Low Harvest Levels The downturn in the forest sector economy has had a significant impact on the achievement of forest management plan objectives and the achievement of the planned harvest levels on the AF. During the audit term many of the mills receiving wood from the Forest were idled or permanently closed and the major overlapping licencee (OL) Buchanan Forest Products Ltd. (BFPL) declared bankruptcy. Whitesand Forestry Woodlands Division a Forest Resource Licence (FRL) holder was not operational during much of the audit term. As a result of these circumstances, no regular harvest operations have occurred since the fall of Between 2008 and 2010 harvesting was restricted to cutting primary road right-of-way and fuel wood cutting. Arbex Forest Resource Consultants Ltd. 5

15 The inability to achieve planned harvest levels has significant implications for the achievement of forest sustainability, planned silvicultural targets and other forest management objectives. Forest Amalgamation and Administration of the Forest Forest management planning for the amalgamated Lake Nipigon Forest was initiated in The FMP was scheduled to correspond with the expiry of the Armstrong Forest FMP however staffing changes, scheduling challenges, and the imposition of new forest management guidelines resulted in an decision to revise the plan schedule and seek a two year extension for the development of the FMP. At the time of this audit, the formal transfer of the Armstrong Forest from the OMNR to LNFMI through a Sustainable Forest Licence (SFL) had not occurred 8. From the context of the prevailing economic climate (including mill closures and the bankruptcy of the primary overlapping licencee), the geographic location of the unit relative to current wood markets, and the structural changes which have negatively affected the financial and human resource capacity of the proposed SFL holder, we question whether the expected benefits and forest management efficiencies envisioned by the amalgamation of the Armstrong and Nipigon Forests are attainable. We note that in a response to a Whitesand First Nation issue resolution request over concerns for the amalgamation of the units the OMNR Regional Director indicated that, "The MNR, in participation with Whitesand First Nation, will conduct a review of the amalgamation during the year-three annual report of the forest management plan. This review will examine the performance of the amalgamated unit and if efficiencies of the amalgamation were realized. Future direction of the management unit will depend on the results of the review, and may include returning to two separate management units." Because of this commitment, we do not provide a recommendation to review the LNF amalgamation. Implementation of the Caribou Mosaic The caribou mosaic is the overriding consideration affecting the majority of forest management decisions and long-term management objectives on the Forest. The objective of the caribou mosaic strategy is to ensure suitable and sustainable yearround caribou habitat. This requires forest planners to develop a caribou habitat mosaic which emulates natural disturbances and landscape patterns. The mosaic is applied to approximately 60% of the Forest and dictates the amount of area and locations where harvesting can occur for a particular period of time. The mosaic also 8 Factors for the delay included structural changes in the management of LNFMI (i.e. resignation of Board members due to the closure of mills and bankruptcy of the primary Overlapping Licencee), the Forest Tenure and Pricing Review, and reservations by remaining stakeholders with respect to the assumption of liabilities associated with the forest, economic uncertainty, and some opposition to the transfer by the Whitesand FN. Arbex Forest Resource Consultants Ltd. 6

16 limits the age at which forest stands may be harvested. Since much of the forest is in a mature to over mature stage, there is a strong likelihood that natural succession to younger forest stands will occur prior to harvest operations commencing in some mosaic blocks should the current forest sector downturn be prolonged. These younger stands may not be eligible for harvest when the mosaic block is accessed since they may be below an operable rotation age or contain insufficient volumes for viable harvest operations. It is also likely that extra effort and cost may be required to establish and maintain conifer species in areas where forest succession has occurred due to increased vegetative competition associated with the opening of the overstory (as dominant trees break or succumb to insects or other natural disturbances such as wind throw). While the issue of increased silvicultural costs to site prepare, renew and tend these stands can be addressed in the development of subsequent plans, silvicultural investments may not be optimized in instances where planned harvest schedules are not achieved Summary of Consultation and Input to the Audit Details on public consultation and input during the audit are provided in Appendix 4. A public notice stating the purpose of the IFA and soliciting public input in the audit process was placed in the Thunder Bay Chronicle Journal approximately two weeks prior to the field audit. This notice also directed interested individuals to contact the audit firm with comments or to complete a survey questionnaire on the forest management of the AF during the audit term on the Arbex website. A random sample of 35% of the individuals and organizations listed on the 2011 FMP mailing list were sent a letter and a survey questionnaire requesting their input to the audit process. All three Aboriginal communities and all Local Citizens Committee (LCC) members were contacted by mail and and/or telephone and invited to express their views on the management of the Forest during the audit term. Follow -up contacts were also made and interviews were held with interested respondents (i.e. tourism industry representatives, trappers, and hunters). OMNR staff and a representative from LNFMI participated in the field audit and/or were interviewed by the audit team Audit Findings 4.1. Commitment The OMNR mission, vision and policy statements reflect the Ministry s commitment to promoting healthy, sustainable ecosystems and the conservation of biodiversity. In 2008, the Armstrong Forest was surrendered by Cascades Canada to the Crown and the SFL for the Lake Nipigon Forest was transferred to Lake Nipigon Forest Management Inc. (LNFMI). The Armstrong Forest is currently a Crown Management Unit which is administered by the OMNR Thunder Bay District with support from LNFMI. Arbex Forest Resource Consultants Ltd. 7

17 During the audit term, the anticipated transfer of the Armstrong Forest to LNFMI did not occur. As the forest manager, OMNR did not fully engage in the delivery of forest management operations due to a projection of a deficit in the Forest Renewal Trust Fund (FRTF), an assumption that the planned transfer of the SFL was imminent, a lack of harvesting due to the economic downturn, and unresolved legal issues associated with the bankruptcy of the primary overlapping licencee. Given the poor economic outlook for the forest sector and other circumstances specific to the AF 9 we are concerned that the planned transfer of management responsibilities from OMNR to LNFMI or another SFL entity will not likely occur for some period of time. It is our opinion that OMNR will need to accept that reality, and ensure that necessary silviculture and other forest management obligations (i.e. assessment of regeneration success) are met. We provide a recommendation to address this concern (Recommendation # 1, Appendix 1) Public Consultation and Aboriginal Involvement Local Citizens Committee The Lake Nipigon Forest is supported by two Local Citizens Committees (LCCs) which were in place prior to the amalgamation (Armstrong LCC and the Nipigon Area East LCC). It is our assessment that the both LCCs met all FMPM requirements during the audit term. The Armstrong LCC is an effective committee which was involved in a full spectrum of natural resource activities. Our review of LCC minutes and interviews indicated that members participated in the implementation of the 2005 FMP (e.g. AWS and AR reviews, amendment reviews etc.) and all aspects of the 2010 Armstrong Plan Extension, 2011 Lake Nipigon Forest Contingency Plan and 2011 FMP process (e.g. long-term management direction, information centres, issue resolution, etc.). The LCC self- assessment of its participation in the development of the 2011 FMP indicated an overall effectiveness of 78%. LCC membership included a broad spectrum of community interests as well as Aboriginal representation. Prior to the surrender of the SFL, the LCC met on a regular basis and meetings were well-attended. With the reduction in forest management activity, the Armstrong LCC became less active during the latter years of the audit term. 9 Mill closures and the bankruptcy of the primary overlapping licencee, the geographic location of the unit relative to current wood markets, and the structural changes which have negatively affected the financial and human resource capacity of the proposed SFL holder. Arbex Forest Resource Consultants Ltd. 8

18 Aboriginal Involvement All FMPM requirements for Aboriginal consultation were met. All Aboriginal communities with an interest in the Forest were fully informed of the possible opportunities for involvement in the forest management planning processes and were invited to attend information sessions, to participate on the 2011 FMP planning team and were provided with an opportunity to update their values information. An information centre was also provided to individuals living off-reserve in Thunder Bay. Aboriginal Background Information Reports and values maps were updated, or previous information was used for the development of the FMPs. OMNR produced the required annual Condition 34 Reports 10 and appropriately documented efforts to increase Aboriginal involvement in forest management. Standard Public Consultation FMPM public consultation requirements for all forest management plans developed during the audit period were met. All the constituencies contacted during the audit (tourism, trapping, LCC members, forest industry other interest groups) indicated that they had been made fully aware of the FMP process and that they were provided with opportunities to become involved and to identify values. Our sampling of OMNR s public correspondence documents indicated that correspondence was appropriately documented and timely responses were provided. The actual dates of public consultation activities for the 2011 FMP varied greatly from those in the initial Terms of Reference (TOR) due to a myriad of problems and issues. 11. We note also that a decision to delay the information centres for the Review of Proposed Operations was not made far enough in advance to prevent the placement of some of the public notices and a correction notice had to be issued. We do not make a specific recommendation related to the public consultation process as the problems that arose are associated with other issues that are addressed by a recommendation (Recommendation # 2, Appendix 1) in Section 4.3. Issue Resolution Opportunities to make a request for Issue Resolution or an Individual Environmental Assessment (IEA) were clearly identified in all the planning processes implemented during the audit term. 10 Condition 34 from the Class Environmental Assessment requires OMNR District Managers to conduct negotiations with Aboriginal peoples to identify and implement ways of achieving more equal participation in the benefits provided through forest management planning. 11 These problems and issues include the 2010 FMP planning process falling behind schedule, complexities related to a decision to change from a 2010 FMP to a 2011 FMP, the decision to produce a Extension of the 2005 FMP, the cessation of planning for approximately 3 months, and the time needed to process a 2011 Contingency Plan. Arbex Forest Resource Consultants Ltd. 9

19 One formal issue resolution request was received during the preparation of the 2011 Contingency Plan and a similar request from the same party was received for the FMP. Both requests were dealt with during the 2011 Lake Nipigon Forest FMP preparation process where the issue was resolved at the Regional Director Stage. The issue resolution process implemented was consistent with 2009 FMPM requirements. Individual Environmental Assessments No requests for an Individual Environmental Assessment were received Forest Management Planning This audit reviewed planning activities related to the: 1) Implementation of the last four years of the Armstrong Forest FMP, 2) Development of the FMP Extension of the Armstrong Forest FMP and implementation of the first year ( ) of the Extension, 3) Development of a Contingency Plan for the Lake Nipigon Forest, 4) Development of the Lake Nipigon Forest FMP. Implementation of the Armstrong Forest FMP FMP amendments met FMPM requirements. Annual Work Schedules were consistent with the 2005 FMP and met FMPM requirements. Development and Implementation of the Armstrong FMP Extension Planning for the Extension of the FMP followed 2009 FMPM requirements. The rationale for the plan extension was appropriate in that it allowed for alignment of FMP production of the Lake Nipigon Forest FMP and provided an additional year for delays in the development of the FMP. The Extension provided for the harvesting of areas that had not been completed by the end of the FMP. FMP amendments and AWS revisions met FMPM requirements. The Annual Work Schedules were consistent with the 2005 FMP and 2010 FMP Extension and met FMPM requirements. Development of a Lake Nipigon Contingency Plan (CP) The rationale for the 2011 Lake Nipigon CP was that the production of the 2011 Lake Nipigon FMP was delayed due to SFL cash flow issues and lack of available funding from OMNR, and a requirement to incorporate new science information and direction (i.e. Ontario s Woodland Caribou Conservation Plan and the Forest Management Guide Arbex Forest Resource Consultants Ltd. 10

20 for Conserving Biodiversity at the Stand and Site Scales) into the FMP. We found this rationale consistent with the 2009 FMPM direction for the preparation of a Contingency Plan. The Contingency Plan Proposal, including planned public consultation and Ministry of the Environment (MOE) endorsement, was prepared and approved as required by the 2009 FMPM. The content of the 2011 Contingency Plan was consistent with the Proposal and reflected the approved Long Term Management Direction (LTMD) of the 2011 FMP. The submission and approval of the Contingency Plan met all the FMPM requirements. Our sample of required alterations found that most were incorporated into the CP. In instances where alterations were not incorporated reasonable explanations for their exclusion were provided. We have concerns that many of the factors that contributed to the delay in preparation of the 2011 FMP and the need to prepare the CP were avoidable and we provide a recommendation to address this concern (Recommendation # 2, Appendix 1). Development of the Lake Nipigon Forest FMP The establishment of the FMP planning team met all requirements of the 2004 and 2009 FMPMs, and most of the FMPM requirements for plan production were met. The approved Lake Nipigon FMP addressed new government directions contained in the Caribou Conservation Plan and the Stand and Site Guide. However, the production of the FMP was extremely complex and was plagued by inefficiencies. The planning process involved four Plan Authors, five Project Managers and changes to the FMP Steering Committee (SC) membership. The planning process also occurred against a backdrop of staff changes (OMNR and forest industry) and the surrender of the SFL licence to the Crown. The period of plan production also included the preparation of a 2010 Plan Extension and a Contingency Plan. The planning team experienced difficulties with respect to resolving planning team issues, the revisiting of planning decisions, the withdrawal of funding for planning, chronic failure to meet planning deadlines and major delays in plan production. While some of the problems and issues associated with the planning process were unavoidable (i.e. staff changes, bankruptcies), some of the issues/problems encountered (i.e. the allocation of staff and identification of work priorities, FMP scheduling decisions and funding decisions) were more directly within the sphere of influence of MNR and forest industry managers (i.e. Cascades Canada Inc., LNFNI). The Terms of Reference for the 2011 FMP provided for a SC with responsibilities that included the provision of common objectives to the planning team, guidance and strategic direction on unresolved planning team issues, ensuring adequate financial and human resources for plan production and the monitoring of the production of the plan to Arbex Forest Resource Consultants Ltd. 11

21 ensure milestones were met and the plan was ready for approval on time. The SC did not fulfill its responsibilities to provide adequate support to the FMP process. We provide a recommendation (Recommendation # 2, Appendix 1). While the 2011 FMP listed a number of species at risk (SAR) associated with the LNF, woodland caribou is the only SAR listed for the Armstrong portion of the unit. The caribou mosaic was the fundamental consideration in shaping the LTMD on the AF. The mosaic defines the future forest structure, wildlife habitat, wood supply, access development and socio-economic benefits. It is our assessment that the planning team designed the caribou mosaic strategy in accordance with the provincial policy direction and did a good job in refining existing blocks (2006 FMP mosaics) to better balance the mosaic block sizes, wood supply and habitat through time. As such SAR requirements related to the conservation of woodland caribou were met. Silvicultural Ground Rules (SGRs 12 ) and the Silvicultural Treatment Packages 13 (STPs) were appropriate for the cover types and site conditions associated with the AF. All planned harvest, renewal and tending activities were consistent with the achievement of the LTMD. Forecast renewal activities were consistent with those projected in SFMM and supported the achievement of FMP objectives. For the preparation of the 2011 FMP the planning inventories for both the former Armstrong and Lake Nipigon Forests were updated. In comparison to previous plans the available harvest area and harvest volumes are lower in the 2011 FMP (~12% volume reduction from combined previous plans). The volume decreases were consistent with decreases in the overall available harvest area and the FMP strategy which incorporated a number of new objectives which influence harvest volumes over time (i.e. expansion of caribou habitat/refuge) and the requirement to balance diverse objectives such as long term wood supply, wildlife habitat area targets and forest composition levels. We note that numerous scoping runs were used to investigate the drop in harvest volumes (particularly for Spruce Pine Fir forest types) and to obtain the best balance of objective achievement (e.g.. wood supply, future forest condition, wildlife habitat, forest biodiversity, etc.). The planned harvest areas in the FMP were appropriately developed (based on the strategic and operational planning decisions and to some degree influenced by previous forest management operations results) and showed a balance of objective achievement over time. The projected available harvest area (for the major species groups) was maximized while achieving other desirable levels related to future wildlife habitat and old growth forest area. 12 Silvicultural Ground Rules specify the silvicultural systems and types of harvest, renewal and tending treatments that are available to manage forest cover and the type of forest that is expected to develop over time. 13 A Silvicultural Treatment Package is the path of silvicultural treatments from the current forest condition to the future forest condition. STPs include the silvicultural system, harvest and logging method(s), renewal treatments, tending treatments and regeneration standards. Arbex Forest Resource Consultants Ltd. 12

22 It is our assessment that the SFMM modelling was generally well done. Yield curves used in SFMM were reduced to reflect the damage associated with a 2001 snow-down event that reduced stand volumes due to stem breakage, windthrow and tree mortality. The validity of these volume reduction assumptions has not been tested against actual harvest volumes. Actual harvest yield data is currently insufficient to refine or test the volume assumptions since harvesting was limited and the concentration of harvest activity was in conifer-dominated forest units. We provide a recommendation (Recommendation # 4, Appendix 1) to OMNR to continue to explore opportunities to benchmark SFMM yield curves against actual harvest yields. We did identify an issue with respect to 215,571 ha that were defined as below regeneration standards but were deemed to be immediately available as harvest area/harvest volume in Term 1 of the 2011 LNF FMP. We provide a recommendation (Recommendation # 3, Appendix 1) to address this concern. With that exception, the rationale for model inputs was clear and logical. The 2011 FMP Proposed Management Strategy (PMS) was reasonable and reflected a balance between timber and non-timber objectives within the selected caribou mosaic. Resource-based values were appropriately addressed during the planning process. FMPM requirements associated with the planning of Areas of Concern (AOC) were met. AOC prescriptions for operations met the appropriate guideline requirements. While the social and economic impact assessment 14 for the 2011 FMP was conducted in a manner consistent with the 2004 and 2009 FMPM requirements 15, we are of the opinion that the assessment would be of more value if it were able to be used as a decision support tool to help determine the proposed management strategy (PMS) or the proposed long term management direction (PLTMD) as opposed to the current FMPM direction to conduct a socio-economic analysis after the PMS/PLTMD has already been determined. Its use earlier in the process of determining the LTMD would also enable resource managers and the public to better understand the socio-economic trade-offs associated with and the implications of the LTMD. We provide a recommendation (Recommendation # 5, Appendix 1). Access and road decommissioning requirements on the Armstrong Forest were traditionally associated with protection of remote tourism values; in the 2011 FMP they also strongly reflected the requirements of the caribou strategy with some modifications to accommodate stakeholder concerns (where feasible). Our review of planning team minutes and interviews indicated that the planning for forest access relative to the implementation of the caribou mosaic was challenging and involved considerable discussion within the planning team. It is our assessment that FMPM requirements associated with access planning were met. 14 The purpose of the social and economic impact assessment in FMPs is to identify the expected effects of implementing the proposed management strategy. 15 The 2011 Lake Nipigon proposed LTMD was approved under the 2004 FMPM and confirmed under the 2009 FMPM Arbex Forest Resource Consultants Ltd. 13

23 Most of the plan reviewers required alterations were incorporated into the 2011 FMP, although approximately 25% were not agreed to or partially agreed to. Where the required alterations were not fully accepted, rationale was provided. The submission and approval of the 2011 FMP met FMPM technical requirements. Our evaluation of the planned operations in the 2011 FMP indicate that they are consistent with those projected in the LTMD and that the long term sustainability of the Forest would be achieved if all plan objectives could be met Plan Assessment and Implementation Upon the surrender of the SFL to the Crown OMNR made a decision to reduce the silviculture and monitoring program in order to save money to maintain the minimum balance in the Forest Renewal Trust Fund. This decision was predicated on the intent that outstanding silviculture work would be completed once harvesting resumed and generated sufficient trust fund revenues. No analysis of the long term implications of delaying silviculture was undertaken as it was felt the transfer of the SFL back to industry was imminent and that harvesting operations would resume within a relatively short time frame. During the audit term worsening economic conditions resulted in the curtailment of normal harvest operations on the unit. We are concerned that the deferral of tending operations and monitoring has jeopardized the public investment in conifer renewal (on some sites), stalled progress on the achievement of FMP objectives related to forest cover and could result in higher future costs for tending or rehabilitation of conifer sites where competition has become established. Recommendations are provided to address our concerns with the deferral of the tending program (Recommendation # 6, Appendix 1), with a requirement to complete assessments of regeneration success (Recommendations # 9 and 10, Appendix 1) and a requirement to enhance the current level of effort in the monitoring of roads and water crossings (Recommendation # 7, Appendix 1). Harvest During the audit term full-tree harvesting was conducted using conventional harvest methods or Careful Logging around Advance Growth (CLAAG) in lowland areas under the clearcut silvicultural harvest system. Harvest operations were conducted by BFPL and Whitesand Forestry Woodlands Division. BFPL declared bankruptcy in 2009, and Whitesand Forestry was not operational during much of the audit term. As a result, no regular harvest operations have occurred since the fall of Limited road right-ofway and firewood cutting did occur between 2008 and We inspected 13% of the area harvested. All inspected sites were approved for operations in the AWS and implemented in accordance with the appropriate Silvicultural Ground Rule (SGR) and Forest Operation Prescriptions (FOP). Our review of Forest Operations Inspection Reports (FOIP) and our field site inspections revealed some issues of non-compliance associated with harvest operations. Notable noncompliances included clearing of road right-of-ways beyond the maximum area Arbex Forest Resource Consultants Ltd. 14

24 identified in the FMP, wasteful practices associated with hardwood tree retention in cut blocks, the leaving of residual merchantable hardwood timber at roadside. Some minor harvest trespasses into designated AOCs were also recorded in FOIP. The inability to achieve planned harvest levels has significant implications for the achievement of forest sustainability, planned silvicultural targets and other forest management objectives, particularly those related to the planned landscape pattern and the Caribou Conservation Plan (CCP). The implementation of the CCP is premised on large scale disturbance (primarily through harvesting) occurring on the landscape. Since 2000, only 10,474 ha of the 42,490 ha (24%) of the planned harvest area in the Caribou A mosaic blocks 16 has been harvested. The inability to achieve planned harvest levels over several plan terms and the virtual certainty that harvest levels will not be achieved for the foreseeable future casts uncertainty on the viability of the planned caribou mosaic strategy. Current fire control policies impede the use of fire to help achieve caribou habitat objectives. We provide a recommendation to address this concern (Recommendation # 12, Appendix 1). The mature to over-mature age class character of the AF also raises some concern with respect to the viability of future harvesting in mosaic blocks where cutting is significantly delayed. It is possible that in older stands where harvesting is delayed, volume and product losses may occur through succession or natural disturbance. The actual area harvested was 39% of the level forecast for the period (1,381 ha vs. 3,538 annually forecast). Prior to the collapse of wood markets in 2007, harvesting focused primarily on conifer extraction, although limited harvesting of birch and poplar did occur. The collapse of the hardwood market resulted in BFPL adopting a hardwood avoidance strategy which involved the by-pass of hardwood stands and reductions in right-of-way cutting in instances where forest access was required through hardwood stands. The implementation of the strategy also resulted in difficulties with respect to operations in mixed wood stands (i.e. high levels of hardwood retention) and an overall reduction in the conifer harvest. Additionally, the lack of hardwood markets resulted in higher than desired levels of hardwood retention in some blocks which due to the persistence of hardwood seed sources may result in higher renewal costs in areas where conifer dominated forest units are desired. Limited salvage harvest to recover timber damaged by a snowdown event in 2001 occurred in FMPM requirements related to salvage operations were met. Volume utilization achieved 23% of the planned harvest volume mirroring the lower than planned normal harvest area and other factors such as damage to stands by natural disturbance events (i.e. snow damage and windthrow). We note that the yield curves in SFMM were reduced to reflect the stand damage from the 2001 snow-down event but the validity of these volume reduction assumptions has not been tested against actual harvest volumes. A recommendation (Recommendation # 4, Appendix 1) is provided to address this concern. Harvest operations tended to be focused on higher volume 16 In the caribou mosaic, blocks available for harvest within a 20 year period are identified (i.e. A blocks are scheduled for harvest in the first 20 year term, B blocks in the second, etc.). Arbex Forest Resource Consultants Ltd. 15

25 conifer stands. This practice may have future implications on future wood costs associated with the harvest of adjacent areas (i.e. lower per unit area harvest volumes resulting in higher per unit wood costs) and on the full implementation of the caribou mosaic if lower volume stands are by-passed within mosaic blocks. The collapse of the hardwood market resulted in compliance issues related to excessive amounts of hardwoods being retained in cutovers and at roadside 17. The bankruptcy of BFPL, the poor condition of roadside wood and economic factors such as chronic poor markets and long haul distances to potential markets imply that it is unlikely that this wood will be utilized. Crown dues on this timber are outstanding. We do not provide a recommendation to address the issue as we understand that OMNR is awaiting the outcome of bankruptcy proceedings or has made arrangements for the payment of the amounts due. Renewal, Tending and Protection Despite the lower than planned harvest achieved during the audit term, 64% of planned natural renewal targets were achieved. This level of accomplishment can be attributed to natural renewal being reported for areas harvested during the previous FMP term. Actual achievements associated with the artificial renewal program (planting & seeding) were well below targets forecast in the FMP largely due to the lack of harvest activity. During the field audit we inspected 24% of the area treated for renewal. Renewal activities were approved in the FMP and were in accordance with the SGRs and FOPs. Renewal sites inspected were generally well-stocked to the desired species. Site preparation treatments were well-below annual forecast levels (522 ha vs. 1,670 ha planned). No chemical site preparation or prescribed burning was conducted during the audit term. The low achievement in the area treated by mechanical site preparation reflects the higher proportional reliance on natural regeneration in the renewal program and the low level of harvest on the unit. We inspected 23% of the sites treated with mechanical site preparation. The treatments were effectively delivered and we did not observe evidence of detrimental environmental impacts arising from the operations. Tending (cleaning) operations achieved 81% of the annual target in the FMP. Reductions in the area tended reflected the underachievement of harvest targets and was also attributed in part to concerns expressed by First Nations communities and the public with respect to the use of herbicides which resulted in area reductions or the cancellation of planned treatments. These reductions in the area tended may have future implications with respect to the achievement of desired future forest condition and plan objectives associated with the provision of forest cover. A backlog exists in the area requiring tending treatment (~16,000 ha). During our site inspections we observed several sites where tending treatments were required to release crop trees and optimize growth and other sites where tending treatments had been ineffective. The ineffectiveness of ground and aerial chemical tending treatments (particularly to control 17 Roadside Wood Volume Estimate is 2,816 m 3 softwood, and 29,036 m 3 hardwood. Arbex Forest Resource Consultants Ltd. 16