Ontario's Tenure and Licensing System

Introduction

Tenure is the provision of long term fibre security that can be provided in many forms. In Ontario, tenure has been used as a mechanism to attract private sector investment and new industry development primarily in northern Ontario. In Ontario tenure (wood supply security) is provided in one of three ways:

1. Wood supply commitments
2. Forest Resource Licences
3. Forest Resource Processing Facility Licences (Mill Licences)

Wood Supply Commitments

Wood supply commitments are agreements between the Crown and a licensed mill (forest resource processing facility) to make available a supply of forest resources from Crown lands.

The committed supply of wood is normally described in terms of the volume, quality, location and amount volume in meters cubed. Wood supply commitments can be in the form of supply agreements, which vary from 10 to 20 years, or legacy commitments which predate the current Crown Forest Sustainability Act, but may or may not have termination dates. Wood supply commitments do not provide a licence to harvest wood. Mills with wood commitments must enter into business arrangements with forest resource licence holders to obtain the committed wood fibre.

All wood supply commitments are summarized as a condition within the applicable sustainable forest licences (which are available to the public) in one of licence sections areas:

• Section 3 of the SFL
• Appendix E of the SFL
• Appendix F of the SFL

Forest Resource Licences

The Crown Forest Sustainability Act (CFSA) provides for the granting of licences for harvesting forest resources on managed Crown forest lands. The majority of Ontario's forests are harvested by companies or individual operators that hold one of two types of forest resource licences.

1. Sustainable Forest Licences (SFLs), which are long-term in nature, are granted under Section 26 of the CFSA. They require the licensee to carry out renewal and maintenance activities necessary to provide for the sustainability of Crown forests in the area covered by the licence.
2. Forest Resource Licences (FRLs), which are short-term in nature, are granted under Section 27 of the CFSA. FRL licence holders may also enter into agreements with the Minister for renewal and maintenance activities.

Whenever Crown timber is harvested, the CFSA requires that licensees pay Crown charges for forest resources.

The CFSA provides for the establishment of a Forest Renewal Trust Fund and a Forestry Futures Trust Fund to reimburse operators for silvicultural expenses incurred in Crown forests.

Sustainable Forest Licences

Sustainable Forest Licences (SFLs) are granted for up to twenty years. SFLs are reviewed every five years and may be extended for an additional five years, providing that certain conditions are met. The licence holder must comply with the terms and conditions of the licence to the satisfaction of the Minister of Natural Resources. The Minister's consent is expressed by accepting the results of an independent forest audit that recommends renewal of the SFL. The renewal must also be approved by the Lieutenant Governor in Council.

An SFL generally governs all of the area in a management unit of Crown forest. While SFLs do not convey any rights to Crown land, they do give a licensee the right to harvest all species of trees found in a licensed area.

The rights granted by an SFL under Section 26 of the CFSA are transferable with the written consent of the Minister, and SFLs may not be sold.

SFL holders bear significant management responsibilities imposed by the Crown. These include forest management planning; gathering forest information for the Crown; conducting operations in accordance with the Crown’s Forest Operations and Silviculture Manual, which includes constructing forest roads that serve the public at large, and regenerating the forest; and compliance planning and monitoring.

Forest Resource Licences

Forest Resource Licences (FRLs) are issued for a term of up to five years. They can be extended for one additional year, but only under defined, special circumstances. While SFLs generally govern all of the area in a management unit of Crown forest, FRLs vary significantly in the area they cover. They typically cover only portions of management units and may often overlap with an area covered by an SFL. While the FRL and SFL may share portions of the same area, each licence holder will typically have the right to harvest different stands. On occasion the area covered by one FRL may also overlap with that of another. Again, different harvest rights are agreed upon by the licensees and Crown to avoid conflict.

While Forest Resource Licences do not convey any rights to Crown land, they do allow for the harvest of certain amounts and species of timber. Where FRLs overlap, the most recent licensee has preference over earlier licence holders for the species and volumes outlined in the licences.

The rights granted by an FRL are transferable with the written consent of the Minister, and FRLs may not be sold. Like other licence holders, FRL holders must comply with the Crown Forest Sustainability Act (CFSA), including the Forest Management Planning Manual, Forest Operations and Silviculture Manual, the Forest Information Manual and the Scaling Manual.

The following are some examples of activities for which the Crown issues Forest Resource Licences:

• Non-commercial uses, such as firewood and construction purposes;
• Harvest of forest resources reserved to the Crown on patent land;
• Personal use, exemptions, salvage opportunities,
• Crown forest resources on private land, and others.

Forest Resouce Processing Facility Licences (Mill Licences)

In Ontario, the logging industry is made up of both large and small contractors, as well as large, mill-owned operations. Under the CFSA, all mills consuming more than 1,000 cubic metres of timber must have a facility licence. Such licences confer the right to operate and/or construct a forest resource processing facility. There are approximately 215 licensed mills in Ontario.

Licensed mills are also required to provide the government with annual summary statistics on wood consumption and production. This information is used by the Ministry of Natural Resources to monitor forest resources and wood flow.