2015 Crown Licence 7 Report - J.D. Irving, Limited

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1 Between September 23 and October 2, 2015, a team from KPMG Performance Registrar Inc. (KPMG PRI) conducted field inspections and interviews on Crown Licence 7 in order to allow conclusions to be made specific to Crown Licence 7: on whether JD Irving, Limited (JDI) was conforming in all material aspects to the requirements of the SFI Forest Management Standard; on whether JDI was conforming in all material aspects to the requirements of the ISO 14001: 2004 standard within scope for the 2015 surveillance audit; and, on findings in relation to key performance indicators established as part of the Crown Licence 7 Licencee Performance Evaluation Criteria. This public summary report describes the scope of the audit and our findings. The Crown Licence 7 report was part of a broader audit of JD Irving, Limited's woodlands environmental management system and conformance to the Sustainable Forestry Initiative (SFI) standard across all woodlands operations which found that the Company was meeting the ISO and SFI standards in all material respects. Description of J.D. Irving, Limited s Crown Licence 7 Operations Crown Licence 7 covers approximately 1,038,000 ha of forest land spread across a number of non-contiguous land parcels in south-central New Brunswick. JDI s annual volume allocation on Crown Licence 7 is 1,574,000m 3. The licence is managed by JDI through offices in Sussex, Saint George, Doaktown and Chipman. Harvest levels have averaged below the allocated annual harvest levels in recent years on Crown Licence 7 (with the and harvest levels averaging out overall to 8% and 13% respectively below the established allowable annual levels for Crown Licence 7). Consistent with prior years, sub-licensee operators on Crown License 7 have operated under the JDI Environmental Management System (EMS) and are included within the scope of JDI s ISO and SFI certifications. Crown Licence 7 operations take place in the Central Uplands, the Valley and Eastern Lowlands, the Grand Lake and Fundy Coast ecoregions of New Brunswick. These areas are, to varying degrees, forested with stands of Spruce (red, black and white) and Fir (balsam), with smaller areas of white pine dominated forests along with cedar in the lower lying areas. There are also intermittent components of red pine, hemlock, tamarack and Jack pine. Hardwood stands are stocked most heavily with red maple and sugar maple, with components of yellow and white birch and poplar. Transitional areas often contain stands of mixed hardwood and softwood forest. Operations are managed for both hardwood and softwood timber production, with consideration for and protection of unique sites, late successional forests, deer wintering areas and mapped riparian zones. JDI carries out varied silviculture systems, including even aged, uneven aged and shelterwood silviculture regeneration systems, along with natural regeneration, tree planting, pre-commercial thinning and commercial thinning to meet its timber supply/quality and ecological objectives. Forest operations are directed by the management plan approved by the New Brunswick Department of Natural Resources (DNR). Long-term resource analyses are conducted and forest inventories for timber and non-timber values are maintained in support of long-term strategic and ongoing operational planning to meet established timber and nontimber resource objectives. Growth and yield monitoring and modeling is undertaken to Page 1

2 project future forest conditions and associated annual sustainable harvest levels for managed and natural forests. Strategic planning is supported by a land classification system, soils inventories and depth to water table information. The Crown Licence 7 forest management plan was based on the Woodstock forest management model, with the first 10 years of harvest blocks spatially identified. The plan addresses non-timber issues, particularly with respect to biodiversity conservation and water protection. Other non-timber issues addressed in the Crown Licence 7 plan include delineated special management zones for deer wintering areas, riparian and wetland buffer zones, unique sites, old forest wildlife habitat stands, old forest stands and old forest community stands as well as protected natural areas. Additional sensitive areas are identified during pre-screening, layout and operational planning and are reflected in the Geographic Information System (GIS) database. These include unmapped streams, buffers on rare/endangered plants, specific wildlife habitats, raptor/heron stick nests, visual aesthetics, historic and geologic values. Site level operational plans incorporate specific operational approaches and silviculture strategies for addressing regulatory requirements and Company Best Management Practices (BMPs). Scope of the Audit The scope of the audit included sample based assessment of JD Irving Limited s implementation of its woodlands EMS in relation to: Objectives, targets and programme(s) Operational control Monitoring and measurement Evaluation of compliance Nonconformity, corrective action & preventive action Internal audit Management review The scope of the audit also included sample based field inspections, interviews, document and record review in relation to SFI program objectives for: Forest management planning; Forest health and productivity; Protection and maintenance of water resources; Conservation of biological diversity; Management of visual quality and recreation benefits; Protection of special sites; Efficient use of fiber resources; Recognize and respect Indigenous Peoples rights; Legal and regulatory compliance; Forestry research, science and technology; Training and education; Community involvement and landowner outreach; Public land management responsibilities; Communications and public reporting, and Management review and continual improvement JD Irving, Ltd. SFI Re-certification Audit Findings Minor nonconformities from previous audits that remain open 0 New major nonconformities 0 New minor nonconformities 0 New opportunities for improvement 3 Types of audit findings Major nonconformities: Are pervasive or critical to the achievement of the SFM Objectives. Minor nonconformities: Are isolated incidents that are non-critical to the achievement of SFM Objectives. All nonconformities require the development of a corrective action plan within 30 days of the audit. Corrective action plans to address major nonconformities must be fully implemented by the operation within 3 months or certification cannot be achieved / maintained. Corrective action plans to address minor nonconformities must be fully implemented within 12 months. Opportunities for Improvement: Are not nonconformities but are comments on specific areas of the SFM System where improvements can be made. Page 2 2

3 In conducting the audit, key progress indicators associated with the Licencee Performance Evaluation Criteria for Crown Licence 7 (shown in Table 2 of this report) were also included within the scope of the assessment. The Audit Audit Objectives The objectives of the audit were to evaluate the environmental and sustainable forest management systems at J.D. Irving Limited as applied on New Brunswick Crown Licence 7 to: Determine their conformance with the requirements of ISO 14001:2004 and the SFI Forest Management Standard; Evaluate the ability of the systems to ensure that J.D. Irving Limited meets applicable regulatory requirements; Evaluate the effectiveness of the systems in ensuring that J.D. Irving Limited meets its specified objectives (including key performance indicators established as part of the Crown Licence 7 Licencee Performance Evaluation Criteria), and; Where applicable, identify opportunities for improvement. These objectives were met. Audit Team The audit team comprised Chris Ridley-Thomas, RPBio(BC), EP(EMSLA), Neil MacEachern, RPF(BC), EP(EMSLA), Clark Brander, RPF(NS) and Craig Roessler, RPF(BC), EP(EMSLA), CF(SIF), who was the team leader on the engagement. All of the team members have substantial forest certification audit experience. Site Visits The field audit involved assessments of forestry program planning, implementation and monitoring activities through site visits to Crown Land operations and interviews with staff and contractors for JDI operations in Sussex, Saint George, Doaktown and Chipman. Field Sample The work included an assessment of field activities to assess the design and implementation of the EMS and its delivery on the SFI objectives and Licencee Performance Evaluation Criteria for Crown Licence 7. Field inspections on Crown Licence 7 included visits to 28 roads, 30 harvesting units, 2 commercial thinning operations and 8 silviculture sites. J.D. Irving, Limited s SFI Program Representative Scott MacDougall served as J.D. Irving, Limited s SFI program representative during the audit. Department of Natural Resources (DNR) Observers Todd Beach-Regional Forester, Greg Simpson-Forest Audit and Operations Technician and Luc Godin-Forest Audit and Operations Forester observed the field inspections and interviews. Where operationally feasible and silviculturally appropriate, JDI maintains advanced regeneration during harvesting, such as in this picture where young spruce were effectively protected during operations (Chipman). Results The audit identified both good practices and opportunities for improvement, which are described below. In addition, the procedures assessed the extent to which opportunities for improvement identified by KPMG PRI during 2014 field inspections has been addressed by JD Irving Limited. Findings from Previous Audits Feld inspections, interviews and document and record review determined that opportunities for improvement associated with Crown land issued during KPMG PRI s 2014 SFI and ISO audit were satisfactorily addressed. Page 3 3

4 Evidence of conformity with SFI Forest Management Standard Table 1 below describes the primary sources of evidence assessed to determine conformity with the SFI Forest Management Standard: SFI Forest Management Objective # 1. Forest Management Planning 2. Forest Health and Productivity Sources of Key Evidence of Conformity Forest Management Plans (FMPs), Geographic Information System (GIS) data base/map layers, inventory data, Environmental Management System (EMS), Standard Operating Procedures (SOPs) and Policies, Sustainable Forest Management (SFM) report card, Work Orders (WOs), Field inspections, Planning staff interviews, internal audits. FMPs, EMS, SOPs and Policies, SFM report card, WOs, Best Management Practices (BMPs) for Road Building, 2014 SFI Progress Report, Company inspection and audit records, Silviculture records, Research records, Field inspections, Staff and contractor interviews. 3. Protection and Maintenance of Water Resources FMPs, EMS, SOPs and Policies, SFM report card, WOs, BMPs for Road Building, Company inspection and audit records, District road and bridge maintenance inspection records and lists, Field inspections, Staff and contractor interviews. 4. Conservation of Biological Diversity FMPs, EMS, SOPs and Policies (including in regards to rare plant pre-screening, maintaining vertical structure (islands), legacy trees, vernal pools, protection of raptor and heron stick nests and late successional forests), Company forest species of concern manual, District rare and endangered plants manuals, Unique Areas GIS database/map layer, SFM report card, WOs, Company inspection and audit records, Field inspections, Staff and contractor interviews. 5. Management of Visual Quality and Recreational Benefits FMPs, EMS, SOPs, WOs, Unique Areas GIS database/map layer, Field inspections, Staff and contractor interviews. 6. Protection of Special Sites FMPs, EMS, SOPs, WOs, Unique Areas GIS database/map layer, Field inspections, Staff and contractor interviews. 7. Efficient Use of Fibre Resources Waste analyses, Utilization specifications, Biomass and residue utilization policy, EMS, SOPs, WOs, Field inspections, Staff and contractor interviews. Page 4 4

5 8. Recognize and Respect Indigenous Peoples Rights 9. Legal and Regulatory Compliance 10. Forestry Research, Science & Technology JD. Irving Ltd. s Public Advisory Committee Process document, Company and DNR stakeholder engagement process/records, FMPs, EMS, SOPs, WOs, Unique Areas GIS database/map layer, Field inspections, Staff and contractor interviews. EMS, Company inspection, monitoring, audit, nonconformity, non-compliance, incident, and action plan records, Company s Code of Business Conduct, Company inspection and audit records, Field inspections, Interviews with key staff. Research records, FMPs, JD Irving Nursery EMS, 2014 Sustainable Forestry Initiative (SFI) Progress Report, Interviews with key staff. 11. Training and Education EMS, Environmental policy, Responsible wood purchasing policy, Company training program and records, Provincial Implementation Committee (PIC) training resources/materials, Interviews with key staff and contractors. 12. Community Involvement and Landowner Outreach EMS, WOs, BMP manuals/handbooks distributed to landowners, PIC training resources/materials/websites, Regional stakeholder committee meeting minutes, Company records respecting community and stakeholder outreach, Staff interviews. JDI makes use of varied silvicultural prescriptions to meet its fiber flow needs and the ecological objectives for the sites (this picture of a commercial thinning block was taken in Doaktown, NB). 13. Public Land Management Responsibilities FMP, WOs, Company and New Brunswick Department of Natural Resources stakeholder engagement process and records, Staff interviews. 14. Communications and Public Reporting KPMG PRI SFI public summary report, 2014 SFI Progress Report and supporting records, Past SFI progress reports and supporting records. 15. Management Review and Continual Improvement EMS, Corporate and District management review records, SFM report card, Internal audit records, District inspection, monitoring and audit records. Page 5 5

6 Evidence of conformity for Key Progress indicators associated with the Licencee Performance Evaluation Criteria for Crown Licence 7 Table 2 below describes the primary sources of evidence assessed to determine conformity with the key progress indicators associated with the Licencee Performance Evaluation Criteria for Crown Licence 7: Key Progress Indicator Sources of Key Evidence of Conformity Terrestrial Biodiversity (TB) Identified Nonconformances and Opportunities for Improvement TB1 - Severity of 3 rd party audit findings for conformance to harvest standards for operating within Old Forest Communities TB2 - Severity of 3rd party audit findings for encroachment into Protected Natural Areas TB3 - Evidence of processes that enable forestry crews to recognize and conserve the function of Site Specific Habitats. TB4 - Severity of 3rd party audit findings for conformance to harvest standards for operating within Old Forest Wildlife Habitat TB5 - Severity of 3rd party audit findings for conformance to harvest standards for operating within Deer Wintering Areas harvest and road construction activities and associated work orders and maps harvest and road construction activities and associated work orders and maps Interviews with staff and contractors. Review of legacy tree program. Review of rare plant program. Field inspection of a sample of identified sites harvest and road construction activities and associated work orders and maps harvest and road construction activities and associated work orders and maps Water Quality & Aquatic Ecosystems (WQAE) WQAE1 - Severity of 3rd party audit findings for conformance to legislative framework and harvest standards for operating within buffers WQAE2 - Severity of 3rd party audit findings for conformance to legislative framework for installation of watercourse crossings WQAE3 - Evidence of progress in maintaining watercourse crossings which have been identified for repair due to environmental concerns. harvest and road construction activities and associated work orders and maps. Review of buffer standards recently installed or maintained crossings and associated crossing inspection reports Review of maintenance prioritization process and inspection of a sample of maintenance sites OFI Page 6 6

7 Key Progress Indicator Sources of Key Evidence of Conformity Identified Nonconformances and Opportunities for Improvement WQAE4 - Severity of 3rd party audit findings for conformance to legislative framework and harvest standards for operating within buffers within designated watersheds WQAE5 - Severity of 3rd party audit findings for conformance to legislative framework for operating within designated watersheds orders and maps. Review of buffer standards orders and maps. Soil (S) S1 - Severity of 3rd party audit findings for conformance to J.D. Irving's site disturbance SOP for harvest and sitepreparation of Crown forests S2 - Severity of 3rd party audit findings for conformance to J.D. Irving's fuel and oil spill SOP for avoiding, reporting, and reacting to spillage of hazardous materials. S3 - Severity of 3rd party audit findings for conformance to J.D. Irving's logging slash dispersal SOP for harvest of Crown forests orders and maps. Review of JDI nonconformance database orders and maps. Review of JDI nonconformance database chipping sites. Growing The Resource (GR) Where operationally feasible and silviculturally appropriate, JDI maintains advanced regeneration during harvesting, such as in this picture where young spruce were effectively retained during operations (Chipman). GR3 - Severity of 3rd party audit findings for conformance to the Dept. of Natural Resources' quality tolerant hardwood harvest policy GR4 - Forest area where white pine trees are dominant orders and maps orders and maps GR5 - Severity of 3rd party audit findings for conformance to J.D. Irving's Environmental Management System and associated work orders and standard operating procedures Interviews of operators, field inspections, review of JDI nonconformance database OFI Page 7 7

8 Key Progress Indicator OVC2 - Severity of 3rd party audit findings for conformance to the Dept. of Natural Resources' product utilization standards Sources of Key Evidence of Conformity Optimizing The Value Chain (OVC) Field inspection of completed harvest sites. Interviews with operators in relation to utilization standards Identified Nonconformances and Opportunities for Improvement OVC3 - Severity of 3rd party audit findings for conformance to the Dept. of Natural Resources' waste standards Field inspection of completed harvest sites. Interviews with operators in relation to utilization standards Access to Crown Forests (ACF) ACF1 - Evidence of progress in completing designated road maintenance and repair projects which have been identified due to safety and public access concerns. ACF2 - Severity of 3rd party audit findings for conformance to standards for operating within designated recreational buffer zones T1 - Online forest management plan and summary T2 - Online annual operating plan Review of maintenance prioritization process and inspection of a sample of maintenance sites Field inspection of completed buffer operations. Transparency (T) Review of management plan and summary on public internet site Review of spatial information on harvest activities on public internet site Depending on the management objectives established for a stand, the majority of JDI s harvested clearcut blocks are re-planted. Seedlings grown by JDI at its two nurseries located in Juniper and Sussex, NB are from improved seed stock to increase the survival and productivity of the future stands. T3 - Annual report Review of annual report content and comparison to field findings T4 - Online activity map (updated as per J.D. Irving's business rules) Review of screenshots of maps showing activities by location and review of Active Woodlands Operations User Guide. Page 8 8

9 Good Practices The following good practices were noted during the audit: SFI Forest Management (FM) Objective 1 (Forest Management Planning): Good examples of well prescribed and executed tolerant hardwood prescriptions (to grow future hardwood sawlogs) and crown release commercial thinning prescriptions (to facilitate improved stand growing stock for the next harvest entry) were observed during the field audit (identified in Sussex, St. George, Doaktown and Chipman). SFI FM Objective 1 (Forest Management Planning): Well executed shelterwood prescriptions were observed during the field inspections in the St. George district. SFI FM Objective 1 (Forest Management Planning): Sophisticated prescriptions on varied strata in a shelterwood harvest block was observed during the field audit in the Chipman district. SFI FM Objectives 1 (Forest Management Planning) and 2 (Forest Health and Productivity): Effective trail protection was observed in a harvest block in the Chipman district. SFI FM Objectives 1 (Forest Management Planning) and 3 (Protection and Maintenance of Water Resources): Well-thought out road layout occurred to avoid wet areas in a harvest block in the Sussex district. SFI FM Objectives 1 (Forest Management Planning) and 11 (Training and Education): The audit of active operations found that operator awareness levels were generally quite high with respect to operational and EMS requirements and that changes to the new version of the SOP helped address previous gaps in operator awareness (identified in Sussex/St. George). SFI FM Objective 2 Forest Health and Productivity): Vigorous natural regeneration was observed in overstory removal harvest blocks (identified in Sussex/St. George, but widely applicable). SFI FM Objective 2 Forest Health and Productivity): There is a strong public outreach component to the herbicide program (identified in Sussex/St. George, but widely applicable). SFI FM Objective 2 Forest Health and Productivity): There was generally very good planting survival observed in the planted blocks visited during the audit. SFI FM Objectives 3 (Protection and Maintenance of Water Resources), 4 (Conservation of Biological Diversity), 5 (Management of Visual Quality and Recreational Benefits) and 6 (Protection of Special Sites): Numerous field examples were observed of unique areas/ features being identified and protected (recreation, historic, rare plants, legacy trees, vernal pool, etc.), underscoring the effectiveness of JDI s established policies and associated planning, layout and training processes (identified in St. George). SFI FM Objective 4 (Conservation of Biological Diversity): A den site was found to be well protected in a harvest block in the St. George district. Page 9 9

10 SFI FM Objective 5 (Management of Visual Quality and Recreational Benefits): There is strong ongoing communication with snowmobilers regarding winter activities (Sussex/St. George). SFI FM Objective 15 (Management Review and Continual Improvement): All Districts are closely tracking and reporting out on their SFM performance targets. Areas of Nonconformity No nonconformities were identified in relation to the requirements of the SFI or ISO standards or Licencee Performance Evaluation Criteria for Crown Licence 7. Opportunities for Improvement A total of 3 new opportunities for improvement were identified by our 2015 auditing procedures as follows: OFI : in relation to SFI FM Objective 1 (Forest Management Planning) and Key Progress Indicators WQAE1 And GR5: Work orders associated with the harvest blocks field reviewed were found overall to include clear and effective prescriptions well tailored to site and stand conditions, with isolated opportunities to fine-tune some of the work orders reviewed as follows: Trail spacing was found to be inconsistent in non clearcut prescriptions on 2 harvest blocks visited (Chipman and Doaktown); A snowmobile trail through a harvest block was not mentioned in the work order nor was there corresponding text to indicate that the trail should be kept clear (Sussex); A single tree selection harvest prescription was incorrectly coded as a shelterwood prescription in a work order (Sussex); Brook buffer prescriptions were not specified in the work orders for 2 St. George harvest blocks; A brook buffer prescription in a work order for a Chipman harvest block stated treat buffer to standard, however there is more than one possible approach for treating buffers and consequently the work order required further clarification on which standard was expected to be followed; Work order instructions were not clear for a St. George harvest block (i.e., stand was classified as a #8 but was treated as a #5); and A work order for a Doaktown harvest block did not indicate the retention expectations for cedar and hemlock. in relation to SFI FM Objective 9 (Legal and Other Requirements) and Key Progress Indicators WQAE1, WQAE2, WQAE3, S1, GR5 and OVC3: Field inspections of harvest blocks, roads and crossings determined that operational controls were being effectively implemented overall, with only isolated lapses observed during the field audit as follows: Brook buffers were layed out wider than specified (more than 30m) on operable ground on 2 harvest blocks (identified in Sussex and Chipman) and a small area of exposed Jack Pine was left standing on 1 harvest block (Sussex); Page 10 10

11 Transportation of Dangerous Goods (TDG) Placards required for equipment fuel storage were missing on a large diesel tank (Doaktown); Fire suppression equipment was incomplete and the fire pump would not start during a test on 1 harvest block (Doaktown); Watercourse crossings could have been improved upon as follows: (1) there were holes in the decking of a temporary crossing which lacked geotextile fill to catch debris in 1 harvest block and (2) the approaches to 3 crossings did not include the installation of sufficient measures to prevent silt from entering the brooks after heavy rains (Chipman); A few missed harvested logs were observed left behind in 1 harvest block (Chipman); A new operator was not clear on the approach to protecting regeneration and, consequently, was not attempting to protect regeneration where required (Doaktown); and While there has been progress on hardwood log recovery, continuing opportunities still exist (Sussex/St. George). OFI in relation to SFI FM Objective 8 (Recognize and Respect Indigenous People s Rights): An opportunity was identified to improve upon JDI s existing First Nation communication/outreach efforts through broadened implementation of its Public Advisory Committee Process to promote greater local First Nation representation on the committees. JDI has conducted research on the impacts of machine configurations on rutting and soil compaction. Because they distribute weight, tracks are being increasingly used to limit soil disturbance (picture taken in Doaktown, NB). Contacts: Chris Ridley-Thomas, RPBio, EP(EMSLA) (604) David Bebb, RPF, EP(EMSLA) (604) This report may only be reproduced by the intended client, Sierra Pacific Industries with the express consent of KPMG. Information in this issue is of a general nature with respect to audit findings and is not intended to be acted upon without appropriate professional advice KPMG. All rights reserved. Through KPMG PRI, KPMG s Vancouver based forestry group is accredited to register forest companies to ISO 14001, CSA-SFM, SFI and PEFC certification standards. Page 11 11