Independent Forest Audit Report - Lac Seul Forest · Independent Forest Audit Report for the Lac Seul Forest for the Period April 1, 2006 to March 31, 2011 Prepared by: John Cary

Independent Forest Audit Report for the Lac Seul Forest

for the Period April 1, 2006 to March 31, 2011

Prepared by:

John Cary R.P.F.

Dr. Rob Foster

Isabel Gannon R.P.F.

Craig Robinson R.P.F.

Andy Purton R.P.F.

Matthew Hollands R.P.F., M.B.A.

© Queen’s Printer for Ontario 2012

Front cover photos of caribou habitat by:

Dr. Robert F. Foster Northern Bioscience

Thunder Bay, Ontario

Final Audit Report 2011 Lac Seul Forest Independent Forest Audit

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Contents 1.0 Executive Summary ............................................................................................................................... 5 2.0 Table of Recommendations and Best Practices .................................................................................... 7 3.0 Introduction .......................................................................................................................................... 9

3.1 Audit Process ................................................................................................................................... 10 3.2 Management Unit Description ........................................................................................................ 10 3.3 Current Issues .................................................................................................................................. 13 3.4 Summary of Consultation and Input to Audit ................................................................................. 13

4.0 Audit Findings ...................................................................................................................................... 14 4.1 Commitment ................................................................................................................................... 14 4.2 Public Consultation and Aboriginal Involvement ............................................................................ 14

4.2.1 Local Citizens Committee ......................................................................................................... 14 4.2.2 Aboriginal Involvement ............................................................................................................ 14 4.2.3 Issue Resolution and Individual Environmental Assessments ................................................. 15

4.3 Forest Management Planning ......................................................................................................... 15 4.3.1 General ..................................................................................................................................... 15 4.3.2 Planning and Species at Risk .................................................................................................... 15 4.3.3 Caribou Mosaic ......................................................................................................................... 16 4.3.4 Forest Inventory ....................................................................................................................... 17 4.3.5 Trend Analysis .......................................................................................................................... 17 4.3.6 Long-Term Management Direction .......................................................................................... 20

4.4 Plan Assessment and Implementation ............................................................................................ 20 4.4.1 Areas of Concern ...................................................................................................................... 20 4.4.2 Harvest ..................................................................................................................................... 20 4.4.3 Renewal .................................................................................................................................... 22 4.4.4 Tending and Protection ............................................................................................................ 25 4.4.5 Renewal Support ...................................................................................................................... 25 4.4.6 Access ....................................................................................................................................... 25

4.5 System Support ............................................................................................................................... 26 4.6 Monitoring ...................................................................................................................................... 26 4.7 Achievement of Management Objectives and Forest Sustainability .............................................. 27

4.7.1 RPFO and/or Year Ten Annual Reports .................................................................................... 28 4.7.2 Assessment of Objective Achievement .................................................................................... 31 4.7.3 Conclusions Regarding Sustainability of the Crown Forest ...................................................... 31

4.8 Contractual Obligations................................................................................................................... 32 4.9 Conclusions and Recommendations on Future Licence Actions .................................................... 33

Appendix 1 –Recommendations and Best Practices ................................................................................... 34 Appendix 2 – Management Objectives Table ............................................................................................. 46 Appendix 3 – Compliance with Contractual Obligations ............................................................................ 55 Appendix 4 – Audit Process ........................................................................................................................ 58

A4.1 Audit Purpose and Principles ........................................................................................................ 58 A4.2 Audit Process ................................................................................................................................ 59 A4.3 Field Sampling ............................................................................................................................... 59 A4.4 Summary of Consultations and Aboriginal Involvement .............................................................. 61

Appendix 5 – List of Acronyms .................................................................................................................... 65


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Appendix 6 – Audit Team Members and Qualifications ............................................................................. 66 A.6.1 Auditor Biographies ..................................................................................................................... 66

List of Figures Figure 1. Lac Seul Forest............................................................................................................................. 10 Figure 2. Forest unit distribution of the Lac Seul Forest as presented in the 2011-2021 Forest Management Plan. ...................................................................................................................................... 11 Figure 3. Forest age class distribution of the Lac Seul Forest. .................................................................... 12 Figure 4. Planned and actual annualized harvest area for the Lac Seul Forest between 1991 and 2011...18 Figure 5. Planned vs. actual annualized volume (m3) by planning term from 1991 to 2011...................... 18 Figure 6. Example of snag retention observed on the Lac Seul Forest. ...................................................... 21 Figure 7. Felled and bundled trees unskidded in IFA Block 11 along Root Bay after harvest. ................... 22 Figure 8. The appearance of localized rutting in IFA Block 51. ................................................................... 23 Figure 9. A heavy residual hardwood canopy that will interfere with future conifer renewal tending efforts. ......................................................................................................................................................... 24 Figure 10. Example of white birch renewal treatment risking failure due to a lack of site preparation. ... 24 Figure 11. Creosote lumber bridge abutments left in place at a demobilized and rehabiltated bridge crossing. ...................................................................................................................................................... 26 Figure 12. Changes in the southern continuous distribution line (“Caribou Line”) for application of caribou mosaic on the Lac Seul Forest for successive forest management plans in relation to OMNR Cervid Ecological Zones (CEZ). .................................................................................................................... 37 Figure 13. Lac Seul First Nation in relation to caribou mosaic Block 36 and the Lac Seul First Nation Forestry Planning Area. ............................................................................................................................... 38 Figure 14. Hazel and alder competition occupying a white birch renewal effort. ..................................... 43

List of Tables Table 1. Proportion of the actual area harvested that received a silviculture treatment between 1991 and 2011 on the Lac Seul Forest. ................................................................................................................ 19 Table 2. Proportion of natural and artificial renewal treatments on the Lac Seul Forest between 1991 and 2011 ..................................................................................................................................................... 19 Table 3. Comparison of McKenzie Forest Products Inc. and MNR compliance report status during the audit term. .................................................................................................................................................. 27 Table 4. Harvest area by forest unit for each plan term on the Lac Suel Forest....................................... 28 Table 5. Silviculture and regeneration success by forest unit on the Lac Seul Forest............................... 29 Table 6. Silviculture and regeneration success for areas of natural disturbance on the Lac Seul Forest...30 Table 7. Procedures audited by risk category.............................................................................................60 Table 8. Total area, sampling target, and actual area sampled as part of the IFA for the 2006 to 2011 forest management activities on the Lac Seul Forest. ................................................................................ 61


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1.0 Executive Summary This Independent Forest Audit Report presents the findings of the 2011 Audit of the Lac Seul Forest, which was a Sustainable Forest Licence managed by McKenzie Forest Products Inc. and administered by the Ministry of Natural Resources (MNR) Sioux Lookout District in northwestern Ontario. The audit examined planning and operational activities during the five year period from April 1st 2006 to March 31st2011.

The audit findings resulted in nine recommendations of which seven are directed at District MNR and the balance at Corporate MNR. The subjects of these recommendations are to address exceptions to standards and also include calls for support.

The District is asked to seek MNR’s science support to better manage hardwood canopies especially in the forest’s southern areas and deal with an aspect of its caribou management zone which may impact forest management and First Nations. They should develop a new strategy to manage chipper debris accumulation and evaluate and monitor decommissioned water crossings when leaving structures in place. As well, some work is required to remove and utilize harvested wood near Lac Seul and lastly to tend regenerating stands that are eligible for tending, but were not treated.

Corporate MNR is asked to provide, for forest management purposes, additional resources for the identification of species-at-risk on the Lac Seul Forest and for the urgent production of the enhanced forest resource inventory.

The auditor concludes that management of the Lac Seul Forest was in compliance with the legislation, regulations and policies that were in effect during the audit term, except for the minor variances noted in this report. The auditor also concludes that the Forest was managed in compliance with the terms and conditions of the Sustainable Forest Licence formerly held by McKenzie Forest Products. Forest sustainability is being achieved, as assessed through the Independent Forest Audit Process and Protocol.

In the light of the surrender of the Sustainable Forest Licence by McKenzie Forest Products and the subsequent actions taken by District MNR to place the Lac Seul Forest under a Forest Resource Licence, the auditor agrees that District assume responsibility for the implementation of the Forest Management Plan to ensure the Forest’s sustainability.

The auditor acknowledges that the Crown, at its discretion in the future, may use the appropriate arrangements at its disposal to delegate and assign responsibilities to third parties as part of implementation of its action plan.

The auditor recognizes and underscores that, at the time of this report; the District MNR is the sole steward with responsibility for forest management of the Lac Seul Forest.

The auditor wishes to point out that McKenzie Forest Products Inc. announced its bankruptcy April 26, 2011 and was in receivership for the duration of the audit process. The McKenzie Forest Products trustee in receivership relinquished the Sustainable Forest Licence and transferred it to the District MNR in March 2012.

In addition to this situation, TECO Natural Resource Group Limited, which was awarded the responsibility to conduct the audit, announced their bankruptcy immediately after the field site visit in

John Cary R.P.F

Lead Auditor


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September 2011. The audit responsibility was then transferred to John Cary R.P.F. by the receiver in February 2012 which then permitted the team to prepare and complete the audit report.

With the relinquishment of the SFL to the Crown and the Forest being issued a local Forest Resource Licence, MNR’s Sioux Lookout District takes on the overall responsibility for planning and operations on the Lac Seul Forest.

The auditor’s agreement with this course of action entrusts that MNR takes the necessary actions and acts as the steward of this Forest.

October 2012


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2.0 Table of Recommendations and Best Practices Conclusion and Recommendation on Future Licence Actions

The auditor concludes that management of the Lac Seul Forest was in compliance with the legislation, regulations and policies that were in effect during the audit term, except for the minor variances noted in this report. The auditor also concludes that the Forest was managed in compliance with the terms and conditions of the Sustainable Forest Licence formerly held by McKenzie Forest Products. Forest Sustainability is being achieved, as assessed through the Independent Forest Audit Process and Protocol.

In the light of the surrender of the Sustainable Forest Licence by McKenzie Forest Products and the subsequent actions taken by District MNR to place the Lac Seul Forest under a Forest Resource Licence, the audit team agrees that District MNR assume responsibility for the implementation of the Forest Management Plan to ensure the Forest’s sustainability.

The auditor recognizes that the Crown, at its discretion in the future, may use the appropriate arrangements at its disposal to delegate and assign responsibilities to third parties as part of implementation of its action plan to address the recommendations of this audit report.

The auditor also recognizes and underscores that, at the time of this report, the District MNR is the sole steward with responsibility for forest management of the Lac Seul Forest.

Best Practice

Best Practice - McKenzie Forest Products is recognized for excellence in its overall implementation of its post-harvest assessment program and its highly refined effort to prescribe and develop silvicultural ground rules best suited to the specific collection of micro-sites present within the forest complex to effectively establish appropriate conifer regeneration.

Recommendations Directed to District MNR

Recommendation 2 – District MNR should designate Block #36 as an Adaptive Management Zone block, or use another designation that permits forest management on a flexible timeline that is appropriate to support the Lac Seul First Nation community and its economic development initiatives.

Recommendation 4 - District MNR shall ensure that the skid bundles left in the Independent Forest Audit Block 11 along Root Bay are removed and the land treated silviculturally to minimize the loss of productive land and to recover Crown dues.

Recommendation 5 - District MNR shall monitor the implementation of the strategies to manage chipper debris contained in the 2011 Forest Management Plan to determine their efficacy in minimizing the loss of productive land and to ensure that effective silviculture occurs.

Recommendation 6 - District MNR shall work with appropriate science support to develop effective prescriptions to manage residual hardwood canopies that may affect forest renewal.

Recommendation 7 - District MNR shall consult the appropriate science support to develop a Silvicultural Ground Rule to regenerate white birch dominated stands and to examine the costs of an acceptable


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silvicultural treatment of these hardwood dominated sites within a conifer complex while considering their conversion in the caribou management zone.

Recommendation 8 - District MNR shall ensure that all eligible stands from 2008 onwards are tended by the end of 2013.

Recommendation 9 - District MNR should carefully evaluate long-term environmental liability when decommissioning water crossings, particularly when leaving culverts or other structures in situ.

Recommendations Directed to Corporate MNR

Recommendation 1 - Corporate MNR should provide sufficient resources to conduct additional inventory and monitoring of forest-dependent species at risk to adequately support forest management planning on the Lac Seul Forest.

Recommendation 3 – Corporate MNR should place a high priority on the completion of the new enhanced Forest Resource Inventory for the Lac Seul Forest, so that it will be available for the preparatory work and input to the 2016 forest management plan.


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3.0 Introduction This audit report presents the results of the 2011 Lac Seul Forest independent forest audit (IFA). The IFA process is guided and directed by the 2011 Independent Forest Audit Process and Protocol (IFAPP). The IFAPP document forms the basis by which the auditor assesses the conformance and compliance of the auditees in their undertaking of forest management on the Lac Seul Forest against provincial regulations and requirements. The five years of management implementation from April 1, 2006 to March 31, 2011 are of specific interest to the auditor. Additionally, the auditor is to consider the forest management planning process and development of the 2011-2021 forest management plan (FMP) for the Lac Seul Forest.

The audit preparation, its plan, and the site visit was carried out by an audit team directed by TECO Natural Resource Group Limited (TECO) (formerly Timberline) in compliance with Ontario Regulation 160/04 of the Crown Forest Sustainability Act (CFSA) and the conditions of the Class Environmental Assessment Approval for Forest Management on Crown Lands in Ontario (2003). Information on the audit team and the role of each auditor is presented in Appendix 6 of this report.

TECO declared bankruptcy on October 5, 2011, with the assets of the firm then being held by the trustee (The Bowra Group Inc.). All work by the audit team ceased at this time. Through negotiation between the trustee, Ontario Ministry of Natural Resources (MNR), and a co-lead auditor, responsibility for the audit was assigned and transferred to John Cary R.P.F. in February 2012. This action allowed the audit team to complete the analysis and reporting portion of the audit.

During the audit term, the Lac Seul Forest was managed under Sustainable Forest Licence (SFL) #542455 held by McKenzie Forest Products Inc., a subsidiary company of the Buchanan Group of companies, who operated a local sawmill at Hudson, Ontario. In support of the administration of the SFL, McKenzie Forest Products Inc. employed Green Forest Management Inc. for forest management plan development and administration. Buchanan Woodlands Inc. was also hired with responsibility for implementation of forest operations, including regeneration, maintenance, and protection activities, and ensuring delivery of wood products to McKenzie Forest Products Inc. and other area mills.

McKenzie Forest Products filed for bankruptcy protection on April 26, 2011. BDO Canada Ltd. was appointed as the trustee in receivership. In March 2012, the trustee surrendered the SFL to the MNR and MNR assumed responsibility for managing the Forest. The Lac Seul Forest shown in Figure 1 is now administered by the Sioux Lookout District of MNR’s Northwestern Region.

A Forest Resource Licence (FRL) has been issued by MNR to Obishikokaang Resource Corporation, an economic development company of the Lac Seul First Nation. The auditor understands that, through this FRL, the Lac Seul Forest FMP will be implemented. Additionally, the response to the final audit report and the preparation and implementation of the action plan will occur through this licence arrangement.

For the purposes of this report and despite the surrender of its SFL, McKenzie Forest Products Inc., its supporting businesses, overlapping licencees, and the Sioux Lookout District of MNR were considered as the auditees of this IFA.


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Figure 1. The Lac Seul Forest.

3.1 Audit Process The audit process involved a pre-audit meeting (May 9, 2011 in Sioux Lookout), the collection and review of supporting documentation, a week of field visits (September 12-16, 2011) in Sioux Lookout and on the Lac Seul Forest, and the preparation and submission of the audit report. Sites visited during the audit were selected as part of the pre-audit meeting. Input from stakeholders, review of documents and records, and observations of the implementation of forest management activities on the Lac Seul Forest were compiled and considered by the audit team in the preparation of preliminary findings presented at the closing meeting and incorporated into the final report.

The principles by which the audit is undertaken and the sampling results are presented in detail in Appendix 4.

3.2 Management Unit Description The Lac Seul Forest is located within the Sioux Lookout District in MNR’s Northwest Region and is a little over 1.0 million ha in size. Crown land, that may be available for forest management, accounts for 74% of this area, with the balance attributed to other Crown land which includes those lands reserved for


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provincial parks and protected areas. Water accounts for approximately one-quarter of the total area within the Lac Seul Forest. Lac Seul and its bays, fingers, and tributary waterways defines access and land use throughout the central and southwestern portions of the Forest.

The communities of Sioux Lookout and Hudson are found in the south-central portion of the Forest accessed by Highway 72 and Highway 662, respectively, and the Canadian National main rail line.

The forest landscape is dominated by conifer ecosystems. The southern portion of the Forest has experienced fire suppression and timber extraction for a longer period than the northern portion of the Forest. However, modern silviculture has only been actively applied during the past 15 to 20 years. Consequently, the southern portion of the Forest has a greater proportion of mixedwood forest units and a higher prominence of balsam fir than the northern part.

The northern portion shows two distinctive forest unit patterns. North of Sioux Lookout, the Forest is dominated by conifers with two bands of spruce-dominated forest units split through the centre by an earlier succession, jack pine-dominated forest. Other conifer, white and red pine, balsam fir, and poplar forest units are relatively minor in comparison to the conifer and mixedwood forest units. Figure 2 shows the proportion of each forest unit.

Figure 2. Forest unit distribution for the Lac Seul Forest as presented in the 2011 to 2021 forest management plan.

Source: 2011-2021 Lac Seul Forest FMP

Figure 3 presents the age class structure of all forest units combined. The age class distribution of the Forest shows a reduced area in the 21-40 year class. This gap is consistent across all forest units except COMX2 and BFDOM which reflect an area relatively equal to the next older age class. Wildfire control implemented in the region during the past 40 years has limited the extent of natural disturbance during this time. The spike in forest area in the 0-20 age class reflects the increase in forest utilization for wood products and a large forest fire in 2003.


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Figure 3. Forest age class distribution of the Lac Seul Forest.

Source: 2011-2021 Lac Seul FMP

The allowable harvest from the forest is approximately 600,000 m3 annually. Nearly 85% of this available volume is conifer. During the audit term however, the forest generated only 10% of its forecast Crown dues. The economic downturn and mill closures during the audit term had a significant impact on the amount of area and volume harvested. Deliveries to facilities in other communities, such as Dryden, became extremely important since the mill in Hudson remained closed during the last three years of the audit term.

The economic impact of the forest greatly benefited the communities of Sioux Lookout, Hudson, and Lac Seul First Nation. Prior to the shutdown of the McKenzie Forest Products Inc. mill in Hudson, it was reported that 78% of the wood harvested from the Lac Seul Forest was processed there. A number of overlapping licences are active on the Lac Seul Forest, with operators and licencees from the former Lac Seul Forest Management Agreement, Abitibi-Sioux Lookout Crown Management Unit, and the Sioux Lookout Crown Management Unit. These licences were administered by the SFL holder when the Crown management unit was amalgamated with the Lac Seul Forest several years ago.

Caribou habitat management drives forest management on the northern portion of the Forest. The Caribou Conservation Plan and redefinition of the southern extent of the area affected by caribou was introduced late in the planning term for development of the 2011-2021 FMP. Tourism is also a significant influence on forest management decision-making.


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3.3 Current Issues The IFAPP requires the auditor to consider high priority issues identified by the auditees. The following five themes were identified by the SFL holder and district MNR for investigation during the audit.

1. Application of Caribou Management: Auditees and stakeholders alike mentioned incorporation of caribou management and the caribou recovery strategy in response to requirements under the species at risk legislation as concerns affecting forest management on the Lac Seul Forest. Concerns were expressed about:

a. viability of harvest opportunities and the quality of caribou habitat several decades from now when strategies result in harvest allocations in older age classes. Probable changes in the biological function of the forest and forest succession dynamics will influence wood quality and stand structure.

b. loss of forest access

c. restriction or constrained access to local resources for economic development and community use

2. Planning Direction Processes: Concern was expressed regarding the timing of direction received during the forest management planning process. Specific impacts were experienced during plan development with planning for road decommissioning, the Caribou Conservation Plan, caribou habitat regulation, and application of the Landscape Guide.

3. Utilization: Changes in fibre demand and forest industry economic challenges resulted in a change in wood flow and the overall demand for fibre during the audit term. Concerns were expressed regarding hardwood utilization during the audit term. In addition, chipping activities increased during the audit term potentially leading to different forest monitoring and compliance issues that were previously not encountered on the Forest.

4. Issue Resolution: A few tourism agreements were finalized during the audit term; however the issue resolution process impacted or caused delay for some aspects of the forest management planning schedule for the 2011-2021 FMP.

5. First Nations: Each community within the Lac Seul Forest expressed concerns specific to their area. An operational concern was also expressed about the open-ended period for First Nation comment and the impact on the timing of operations for administrative amendment requests.

3.4 Summary of Consultation and Input to Audit Several types of media were used to consult with stakeholders and gain input to the audit. These consisted of notice letters, newspaper ads, an on-line survey on the TECO website, and direct calls to specific stakeholders. The auditor made presentations and held discussions with the Local Citizens Committee (LCC). Contact and discussion also occurred with several overlapping licencees.

Notice of the audit was also issued by the MNR Native Liaison Officer following discussion with the auditor to facilitate contact between the auditor and the two First Nations that fall within the boundaries of the Lac Seul Forest.

More detailed information concerning the consultations for the audit is presented in Appendix 4.


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4.0 Audit Findings This section of the report presents the findings of the auditor. Further details for each recommendation are found in Appendix 1.

4.1 Commitment The commitment principle was deemed to be met since the Lac Seul Forest is certified under the Sustainable Forestry Initiative (SFI) standard. The Company confirmed that the annual surveillance audits required to maintain the certification were completed.

4.2 Public Consultation and Aboriginal Involvement The public consultation process and the efforts to include First Nations in the forest management process were found to have been implemented as required. Public consultation opportunities were provided during the development of the FMP, plan amendments, and annual work schedules as per the Forest Management Planning Manual for Ontario’s Crown Forests (2009) (FMPM). Additionally, opportunities were afforded to the public to initiate the issue resolution process or request an individual environmental assessment. Public participation is discussed further in Appendix 4.

4.2.1 Local Citizens Committee

The auditor determined that the LCC functioned as required. Changes made during the audit term to address recommendations from the previous audit were considered by the Committee to have been effective. Members of the LCC believed that they were more actively involved in the planning for the Lac Seul Forest 2011-2021 FMP compared to previous FMPs.

The auditor noted that the brief statement of agreement or disagreement with the FMP from the LCC was not included in the main text on Page V of the Lac Seul Forest 2011-2021 FMP, as required in the FMPM (page B-11). The auditor acknowledges this omission but does not consider it as significant and notes that the statement was completed and included in the supplemental documentation. The active participation of the LCC was demonstrated by other means during the planning process and is discussed further in Appendix 4.

4.2.2 Aboriginal Involvement

The MNR identified five aboriginal communities (Slate Falls First Nation, Lac Seul First Nation, Cat Lake First Nation, Ojibway Nation of Saugeen, and Mishkeegogamang First Nation) with interests on, or association with, the Lac Seul Forest landbase. Two of these communities are found within the boundaries of the Forest; the communities and reserve lands of Lac Seul First Nation are located along Lac Seul, west of the community of Hudson, and the Slate Falls First Nation community and reserve are located in the northeast portion of the Forest.

A representative from both Slate Falls First Nation and Lac Seul First Nation were planning team members for the 2011-2021 FMP. The auditor determined that the FMPM requirements for Aboriginal consultation were effectively addressed and the District Manager prepared the Condition 34 Report as required. Further discussion of the participation of First Nations in the forest management process is discussed in Appendix 4.


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A recommendation arose from this audit to allow the designation of a caribou mosaic block as an Adaptive Management Zone to benefit the economic development initiatives of the Lac Seul First Nation.

4.2.3 Issue Resolution and Individual Environmental Assessments

These issues were noted as high priority during development of the Lac Seul Forest IFA audit plan. The auditor found that the public were appropriately informed of their right to initiate the issue resolution process and request an individual environmental assessment related to the 2011-2021 FMP.

Where issue resolution was applied and individual environmental assessments undertaken, the timelines and content of the process as directed by the FMPM were followed. Issues that arose during FMP development were dealt with in a timely manner and the issues were addressed in the FMP. The FMP was approved without undue delay, despite the challenges dealing with these requests posed for the planning team and the forest stakeholders. The auditor felt the process worked as designed.

4.3 Forest Management Planning 4.3.1 General The Lac Seul 2011-2021 FMP was appropriately prepared and met all the FMPM requirements. There was representation from the LCC, overlapping licensees, and Aboriginal communities on the planning team. The required analyses were conducted for forest cover, wildlife habitat, and disturbance frequency and the socio-economic description was compiled. The development of the long-term management direction contained the appropriate information (management considerations, base model development, desired forest and benefits, objectives). The three mandatory management assessments required by the Forest Resource Assessment Policy were examined in the FMP. Plan objectives and indicators were well documented. Targets and desirable levels for objectives were found to be moving towards their intended goals.

The planned operations and areas of concern (AOC) in the 2011-2021 FMP contained the appropriate information, were well documented, and included the requirements from the Forest Management Guide for Conserving Biodiversity at the Stand and Site Scales (2010) (Stand and Site Guide). Road planning was consistent with the proposed management strategy and supported the development of the Forest over time, including road decommissioning to support caribou and remote tourism strategies.

4.3.2 Planning and Species at Risk

The Lac Seul Forest 2011-2021 FMP has a comprehensive description of confirmed and potential species at risk and adequately described existing forest-dependent, threatened species and how they might be affected by forestry activities. The only species with habitat that could require protection under the provincial Endangered Species Act are woodland caribou, wolverine, and whip-poor-will. Although the list of species is complete and their basic habitat requirements are understood, the distribution of these species and their habitat on the Lac Seul Forest are not specifically known. Recommendation 1 addresses this issue.

Caribou calving areas were identified and appropriate AOC prescriptions were developed and applied. Habitat modelling was undertaken for woodland caribou, but there was inadequate survey effort to confirm actual habitat use. This may limit the effectiveness of the caribou mosaic approach in protecting critical habitats for caribou.


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No surveys were undertaken for other threatened species at risk, including wolverine and whip-poor-will, nor were specific AOC prescriptions developed for these or Special Concern, forest-dependent species.

Species at risk stewardship funding was used by McKenzie Forest Products Inc. to establish a pilot study to examine chipper and slasher debris management and road decommissioning techniques to enhance caribou habitat renewal on the Lac Seul Forest.

4.3.3 Caribou Mosaic

Since 1992, woodland caribou habitat on the Lac Seul Forest has been managed spatially using a “caribou mosaic” approach, a pattern of planned forest harvest and deferral areas intended to ensure the provision of sufficient tracts of caribou winter habitat on the landscape at all times. The southern limit of the caribou mosaic on the Lac Seul Forest has progressively moved south since 1992.This reflects an increased understanding of the existing use of the landscape by caribou rather than a southward range expansion over this time period. As a result, 89% of the Lac Seul Forest is now managed using the caribou mosaic compared to 72% in 1996 and only 37% in 1992. The southern edge of the mosaic is now largely aligned with what is believed to be the southern limit of the continuously occupied range of caribou and corresponds to the revised boundaries of the Churchill Range of the Caribou Conservation Plan. It now encompasses a one km buffer along the southern shoreline of Lac Seul, including Reserve Island adjacent to Lac Seul First Nation, designed to protected caribou calving sites on Lac Seul Islands.

The application of the caribou management program on the Forest has been identified as a high priority issue. Caribou habitat management is viewed by the auditor as driving forest management on the Lac Seul Forest. As on adjacent management units, the southern limit of the continuous distribution line (Caribou Line) was extended for woodland caribou over the past several FMPs. The MNR reported that, during this extension of the Caribou Line, managers were to apply management practices for caribou-occupied range for those portions of the range where an overlap existed. This applied to the extended management strategies associated with CEZ C into CEZ B. The broad management direction to maintain a moderate-to-high density moose population would be a lower level priority through the application of the caribou habitat management in this area.

The Caribou Conservation Plan and redefinition of the southern extent of the area affected by caribou were introduced late in the planning term for the 2011-2021 FMP. Through review of draft documents and contact with regional MNR, the planning team was able to incorporate and refine its caribou management strategies into the 2011-2021 FMP without causing a delay in plan approval.

The auditors found that 2011-2021 FMP Block 36 located northeast of the Lac Seul First Nation Reserve could have better served that community if it were designated with a more flexible harvest time horizon. The auditor believes that caribou habitat considerations may be met while accommodating economic and community use opportunities near the reserve. Recommendation 2 is presented to introduce flexibility into the application of the caribou mosaic for Block 36 adjacent to the Lac Seul First Nation Reserve.


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4.3.4 Forest Inventory

The audit team reviewed the use of the Forest Resources Inventory (FRI) in the preparation of the 2006-2011 and 2011-2021 FMPs. The state of the inventory is critical to the success of the forest modeling exercise and to the ability to implement the results of the model on the ground over the implementation of the FMP. The current Lac Seul forest inventory is from 1997. The auditors noted that the current inventory poorly reflects the density of previously insect-killed balsam fir stands in the southern portion of the Forest, and the inventory standard it was created with does not contain information attributes of the digital FRI (eFRI) under production and scheduled for delivery late 2016.

The Lac Seul Forest is highly constrained by the caribou mosaic which controls harvest opportunities in 20 year blocks. Within that timeframe, the block is to be harvested, then the block is closed to further disturbance until the next rotation. The current inventory, if used in the next FMP cycle, will inadequately address the constraints posed by the caribou blocks. Forest stands of appropriate age and yield must be available in the forest model to meet the needs of the caribou strategy and the economic requirements of the timber harvest. Errors and inaccuracies in the current inventory will reveal themselves when on the ground habitat constraints and the required timber volumes cannot be achieved because appropriate stand types were not accurately reflected in the inventory. (Recommendation 3)

4.3.5 Trend Analysis

The audit team reviewed the Trend Analysis as provided by McKenzie Forest Products Inc. in June 2011. The report author corrected an error in the yield information detected by the auditor. Following this revision, the yields from the 2006-2011 plan period were within 2% of the previous FMP period. The analysis was prepared with the required elements from Appendix C of the IFAPP. The trends identified were consistent with the observations and analyses of the auditor.

The Trend Analysis confirmed that the forest condition is moving towards the targets and desired levels to support achievement of forest objectives. The economic downturn, and the resulting lower than anticipated harvest, was provided as a reason for achievement of less than planned levels for harvest renewal and tending. The Company indicated in the document that effort was placed on establishing renewal with the conscious decision to defer tending. This is consistent with auditor observations.

Area harvested during the past four planning terms totaled 14,259 ha, or 57% of the planned harvest. The allowable area for harvest increased substantially following amalgamation of the Forest and utilization of the planned area rose to 75%. The economic decline experienced during the 2006-2011 plan term reduced utilization dramatically to 33% of the planned area (Figure 4).

The volume and area harvested similarly reflects this pattern. Figure 5 shows the increasing volume and utilization followed by the collapse in the last term due to the economic downturn of the forest industry. Volume harvested during the audit term was far less than during the previous terms.


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Figure 4. Planned and actual annualized harvest area for the Lac Seul Forest between 1991 and 2011.

Figure 5. Planned vs. actual annualized volume (m3) by planning term from 1991 to 2011.

A comparison of the actual area to receive renewal treatment in relation to the total area harvested by the end of the 20-year period from 1991 to 2011 revealed that the renewal area was greater than the area harvested within the period. Table 1 shows that renewal treatments in the 1996-2001 period were implemented on approximately half of the area harvested. Renewal efforts accelerated in the subsequent two planning terms. The effort during the 20-year term resulted in treatment of 115% of the allocated land base, reflecting treatment of ABC XYZ lands and areas of a 2003 burn that were treated with funding from the Forestry Futures Trust. The area identified that remains to be assessed is consistent with the area harvested and the lag time anticipated to achieve renewal success.

0

1000

2000

3000

4000

5000

6000

7000

8000

1991-1996 1996-2001 2001-2006 2006-2011

Planned (ha)

Actual (ha)

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1991-1996 1996-2001 2001-2006 2006-2011

Planned

Actual


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Plan Term Total

1991-1996 1996-2001 2001-2006 2006-2011

Actual Area (ha) Harvested (Trend Analysis AR 7)

2,634 3,334 5,805 2,486 14,259

Actual Area (ha) Receiving a Renewal Treatment (Trend Analysis AR 9)

2,782 1,618 8,375 3,555 16,330

% Harvested Area Receiving a Renewal Treatment

106% 49% 144% 143% 115%

% Harvested Area Reported as Successfully Regenerated (Trend Analysis AR 10)

89% 56% 4% 1%

Table 1. Proportion of the actual area harvested that received a silviculture treatment between 1991 and 2011 on the Lac Seul Forest.

Most (84%) of the area renewed over the 20-year period was treated artificially by planting, seeding, or scarification (Table 2). This ratio is relatively consistent in the first two plan terms. Renewal efforts associated with the 2003 fire and prescribed burn area increased the amount of artificial treatment during the 2001-2006 term (94%). Increased harvest of poplar-dominated forest units and a reduced demand for conifer, due to the closure of the Hudson mill, account for the reduction during the latter term (67%) and the corresponding increase in the application of natural prescriptions (33%).

Treatment Type Plan Term Total

1991-1996 1996-2001 2001-2006 2006-2011

Natural Regeneration 24% 17% 6% 33% 16%

Artificial Regeneration 76% 83% 94% 67% 84%

Table 2. Proportion of natural and artificial renewal treatments on the Lac Seul Forest between 1991 and 2011.

The Trend Analysis indicated that efforts within the caribou mosaic to achieve conifer-dominated working groups and silvicultural success were more effective than in those areas south of the Caribou Line where the forest demonstrates a gradation toward mixedwood forest units with higher levels of hardwood. Additionally, on the drier northern sites, hardwood proportions decline and fade out of sites at a younger age, allowing the stand to revert to a conifer-dominated forest unit.

With the increased average age of stands required to achieve the caribou mosaic requirements, the mid-to-later term future harvest operations will experience reduced yields and higher amounts of defect and cull material will occur due to the older age of the stands. Future planned volumes reflected this anticipated change in volume recovery.


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4.3.6 Long-Term Management Direction

The Long-Term Management Direction was found to be comprehensive and addressed the requirements of the FMPM. A delay to the Stage 2 Review was due to the late release of provincial direction for the Caribou Conservation Plan and the Stand and Site Guide. Despite this delay, the planning team demonstrated that the habitat requirements were met for each term of the analysis. Rationales were provided where areas for specific forest units exceeded maximum or minimum levels to achieve specific habitat components in another planning term. In general, the planning team demonstrated in the FMP that the forest is managed within the natural variation targets by forest unit and by forest landscape class.

The 2011-2021 FMP documented that forecast harvest volumes were less than in previous planning terms. The available volume, however, exceeded or was only slightly less than historically harvested volumes. The effort and diligence required to develop a Long Term Management Direction that satisfied the targets and objectives for habitat, forest cover, and the social and economic environment is acknowledged by the auditor.

4.4 Plan Assessment and Implementation Implementation of the 2006-2011 FMP for the Lac Seul Forest was assessed by the auditor through a review of records and sampling of activities that occurred within the Forest (see Appendix 4). Assessments by the auditor of the effectiveness of forest management implementation and observations on compliance on the Lac Seul Forest follow.

4.4.1 Areas of Concern Areas of concern were inspected for integrity and adherence to the appropriate prescription during the audit site visits. Reserve widths and confirmation of the value(s) associated with the AOC were assessed by the audit team, both in the field and in the FMP. The audit team found that timing restrictions were observed and AOC widths were suitable for the values and slopes observed. Compliance reports by MNR documented instances where infringements on AOCs occurred. The corrective actions and/or penalties assessed in these instances met the timelines and were deemed appropriate by the auditor.

4.4.2 Harvest Harvest on the Lac Seul Forest during the 2006-2011 audit term was approximately half the amount that occurred during the previous FMP terms.

4.4.2.1 Snag Management

Snag retention followed the Natural Disturbance Pattern Emulation Guide (NDPEG) with a minimum of 25 trees/ha, although requirements for large diameter conifers were difficult to achieve on some sites. Improvement in the density and consistency of snag retention (Figure 6) was observed during the last three years of plan implementation. This demonstrated the effectiveness of training and the success of a focused compliance monitoring program.


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Figure 6. Example of snag retention observed on the Lac Seul Forest.

4.4.2.2 Utilization

Utilization was identified as a high priority issue during the preparation for this audit and was generally found to be good except in the few instances noted in this report. During the audit site visits, the Company identified that it had a record of the locations where wood was left. Ministry of Natural Resources confirmed through its records, compliance reports, and interviews that it was aware of these inventories and the situation was being monitored. Mill closure, very weak hardwood market conditions, and insolvency frustrated the efforts of McKenzie Forest Products Inc. to move this timber. With the surrender of the SFL to MNR, the auditor understands that the situation is now in the hands of the District MNR.

The helicopter inspection of IFA Block 11 along Root Bay found that felled and bunched wood ready for skidding remained in the block (Figure 7). This wood was apparently left following the last mill shutdown. The Company indicated during the audit site visit that silviculture and slash management activities are scheduled for this block during the 2012-2013 annual work schedule. This area also was, and remains, a cause for concern for a tourism operator that flies customers over this area regularly. Recommendation 4 addresses this issue.

Considerable discussion occurred during the audit site visit about the impact of changing harvest methods on roadside utilization and the status of the productive forest area. This aspect of utilization was also included as a high priority issue during preparation for this audit. Full tree chipping was introduced to the Forest during the past three years. This processing method results in accumulations of bark and wood chips at landings where the wood is processed and the chips are loaded into vans. The Company informed the auditor that several different strategies were tested to determine the effectiveness in reducing or mitigating the amount of roadside chipper debris and thereby reducing the potential loss of productive forest area. Recommendation 5 addresses this situation.


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Figure 7. Felled and bundled trees unskidded in IFA Block 11 along Root Bay after harvest.

Species at risk stewardship funding was used by McKenzie Forest Products Inc. to establish a pilot study to examine chipper and slasher debris management and road decommissioning techniques to enhance caribou habitat renewal on the Lac Seul Forest. The appropriateness of using this funding to achieve forest harvesting and silvicultural objectives is debatable; however, the Company did demonstrate a link between habitat and access rehabilitation in its application. Despite these trials, the Company’s effort was seen by the auditor as insufficient to resolve concerns about changing harvesting methods.

4.4.2.3 Site Disturbance

The distribution of soil types on the Lac Seul Forest contains relatively minor areas of fine textured (7%) and organic (17%) soils. These sites are considered at risk of site disturbance if planned forestry activities are not undertaken without specific operational considerations. IFA Site inspection Block 51 had rutting present in portions of the block. Ground inspection by the audit team of this rutted area found that the disturbance was not severe or extensive (Figure 8). Despite their unsightly appearance, these areas are small and localized and will not have a mid- or long-term significant effect on site productivity or sustainability.

4.4.3 Renewal The auditor observed effective establishment of conifer renewal by the Company. Table 1 indicated that silviculture treatments were keeping pace with the harvest. Despite the harvest lag of three to four years, the Company treated an area that surpassed the amount of area harvested. This indicated that the efforts made to ensure renewal of the backlog of ABC XYZ areas, including activities funded by the Forestry Futures Trust, were effective.


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Figure 8. The appearance of localized rutting in IFA Block 51.

Company silviculture personnel demonstrated a thorough, active interest and knowledge of their land base and the status of silvicultural treatments. Each harvested area was walked and received a post harvest prescription and application of the appropriate silvicultural ground rule (SGR) from the FMP. The level of effort and attention to detail to direct and apply appropriate conifer renewal strategies was applauded by the auditor. The level of supervisory effort to implement the resulting silviculture strategies was also recognized and acknowledged as an important part of implementation of the Company`s renewal program.

Best Practice - McKenzie Forest Products Inc. is recognized for excellence in its overall implementation of its post-harvest assessment program and the highly refined effort to establish silvicultural ground rules best suited to the specific collection of micro-sites present within the forest complex to effectively establish appropriate conifer regeneration.

The auditor did, however, identify circumstances within the silviculture program where the residual hardwood component within some stands indicated additional support was required to facilitate conifer renewal (Figure 9). A renewal site where the hardwood component was retained as standing timber in excess of required snag guideline requirements was recognized by the auditor as a challenge to effective silviculture treatment of the prescribed conifer SGRs. Company personnel confirmed that the canopy interferes with conifer release efforts by intercepting the aerial application of herbicide. The challenge the residual canopy poses, from a utilization perspective due to poor hardwood market conditions, was acknowledged by MNR. Although an isolated and infrequent situation, the auditor makes Recommendation 6 to ensure that MNR will act to address this concern.

At another field stop where harvesting had taken place, the Company had applied a prescription with the objective of renewing the white birch component of the area. A review of the FMP identified that an SGR was lacking for this treatment. Ground inspection of this site found that the scarification work to facilitate conifer renewal adjacent to this patch did not continue through the area targeted for white birch regeneration. The canopy of small diameter white bitch was also relatively intact (Figure 10).


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Figure 9. A heavy residual hardwood canopy that will interfere with future conifer renewal tending efforts.

Figure 10. Example of white birch renewal treatment risking failure due to the lack of site preparation.

This small site is in an area within a much larger conifer complex and, therefore, technically met the overall existing criteria for harvest. However, MNR and the Company admitted that the criteria, required to access stands with this level of a hardwood component when hardwood markets did not exist, had not been developed. The Company also recognized the difficulty in achieving successful conifer renewal with this level of residual hardwood. While the auditor understands the Company’s intent to use


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scarification as a renewal strategy under a hardwood canopy for this site, Recommendation 7 identifies that, in the opinion of the auditor, renewal success would not be achieved.

4.4.4 Tending and Protection McKenzie Forest Products Inc. demonstrated excellent stewardship in its pre-planning and scheduling of tending sites through its renewal monitoring efforts. However, major problems in program implementation during the audit term were acknowledged by the Company and recognized by the auditor.

The auditor was informed that sufficient silviculture funding exists in the Forest Renewal Trust Account to fully support and implement the required tending program. This failure to implement effective and timely tending may negate the silvicultural investment already made in these sites for previous treatments. The auditor noted, and confirmed through onsite observations, that the stands at risk of not achieving the target SGR were those that required tending to protect and release the conifer component. The auditor anticipates that, although this will have a small impact on long-term forest yield, the untreated stands may not meet long-term SGR targets. Recommendation 8 will correct this situation. Assessed free-to-grow (FTG) stands met their target SGR when tending occurred at the appropriate time in stand development.

4.4.5 Renewal Support McKenzie Forest Products Inc. works with other local forestry managers and took the lead to maintain three of four local tree improvement areas. Two of these areas were inspected during the audit. The forest companies within the area, along with the MNR, are doing an effective job of monitoring and managing these areas.

4.4.6 Access Road construction objectives for the Forest were only partially achieved (25%) during the audit term, with 24.8 kilometres of primary road and 11.3 kilometres of branch roads constructed. Provincial funding received during the term was directed at improvements, construction, and maintenance as required. During the site visits, the auditor viewed completed construction resulting from this funding. No concerns or issues were noted and the work quality met the required standards.

Culvert and bridge installations observed conformed to the guidelines noted in the Environmental Guidelines for Access Roads and Water Crossings. It was also evident that the auditee used criteria from the Stand and Site Guide for removal of water crossings to determine the appropriate decommissioning activities based upon biological, water quality, engineering, and safety factors, as required.

Water crossings were generally installed using appropriately sized culverts; slopes were stable and at least 10% below grade. Bridge installations met the requirements of the relevant guides.

Cribbing and bridge abutments were left in place when decommissioning water crossings on the Wind Block (WI120). During decommissioning of the bridge on the Wapesi River near Wind Lake, creosote bridge abutments were left in place on the approach to the former water crossing location (Figure 11).


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Figure 11. Creosote lumber bridge abutments left in place at a demobilized and rehabiltated bridge crossing.

Greater concern for potential long-term environmental liability is noted by the auditor regarding culverts left in place along the otherwise decommissioned Wind Lake road system, particularly since no harvesting is planned in this mosaic block until 2091-2111. Eventual failure of the metal from corrosion or damming by beavers may likely result in washouts and accompanying sedimentation downstream. Regular monitoring of the culverts is complicated by decommissioning of the bridges along this road network. Recognizing the significant costs associated with culvert removal, the auditor notes that MNR remains responsible for the road and any future liability under the federal Fisheries Act.

Concern about these two aspects of roadway decommissioning led the auditor to make Recommendation 9.

4.5 System Support The Forest is certified by the Sustainable Forestry Initiative (SFI) and recently underwent its annual surveillance audit. All staff and contractor training requirements were met through conformance to the SFI program. Additionally, all planning team members had taken the appropriate FMP training.

Document control measures used by the Company and MNR were satisfactory. Back-up processes were in place for both the MNR and the Company and obsolete documents are appropriately controlled. Documentation requested by the audit team was current and was provided in a timely manner. The audit team observed that MNR is moving to digital documents only (no paper copies) and a policy/systematic approach towards maintaining digital files.

4.6 Monitoring Surveys of post-regeneration success were conducted twice during the audit term in a timely and appropriate manner. The Company’s approach of gathering areas and surveying them every two or three years is viewed by the auditor as an efficient way to manage staff resources and workload. A formal structure and sampling methodologies were not evident from interviews with Company


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personnel. However, the auditor believes that the on-the-ground presence of Company staff and their direct involvement in the monitoring and management of the Forest, along with low turnover in key staff positions, has ensured the quality of the Company’s silviculture program.

Compliance monitoring by the Company and the MNR was undertaken as required. A good working relationship between the parties was evident. The MNR conducted periodic spot checks of the Company’s compliance reports. Review of compliance reporting during the audit term found that during periods of full production, MNR conducted 30-50% of the number of inspections performed by the Company. Inspections were roughly equal during the last three years of the audit term when there was low activity on the Forest.

The number of “not in compliance” reports declared each year was relatively equal for the Company (10%) and District MNR (17%) (Table 3). This suggests that the two parties responsible for ensuring that good forestry practices occurred on the Forest were relatively well aligned and shared an appreciation of compliance standards and conduct.

Status 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Total %MFP MNR MFP MNR MFP MNR MFP MNR MFP MNR MFP MNR MFP MNR

Not in Compliance 13 6 5 6 3 3 1 1 2 22 18 10% 17%In Compliance w ith Comments 1 8 8 4 2 2 1 24 0% 22%

In Compliance 87 21 69 21 18 10 16 10 5 4 195 66 89% 61%Total Inspections 101 35 74 35 21 17 17 13 5 8 218 108 100% 100%

Table 3. Comparison of McKenzie Forest Products Inc. and MNR compliance report status during the audit term.

“Not in compliance” findings were noted and corrective actions undertaken as required. Interviews indicated that these items were generally addressed immediately by the Company, which created a good degree of confidence and trust with MNR. No specific trends were noted when comparing findings from year to year and rarely were there repeated incidences of “not in compliance” findings. An example is the MNR’s awareness and documentation of wood left or unskidded at roadside and the monitoring of this utilization issue with the Company until the sites were appropriately cleared and rehabilitated. Another example is the Company’s training of overlapping licencees on specific instances of non-compliance. The MNR and the Company conducted this aspect of their monitoring obligations in an appropriate manner.

4.7 Achievement of Management Objectives and Forest Sustainability Twenty-one objectives were established within the 2006-2011 FMP. Information provided by the auditee indicates the achievement of twelve objectives and partial movement towards the others (see Appendix 2). All forest cover objectives (COV1 to COV5) and both silviculture objectives (SILV1 to SILV2) were achieved. Mixed success occurred with efforts to achieve the forest diversity objectives (FD1 to FD6) and the social and economic objectives (SOC1 to SOC8). Achievement of these objectives was affected by the low harvest levels that occurred during the audit term. Consequently, it will require several planning terms to move the forest structure towards specific area or age targets.


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4.7.1 RPFO and/or Year Ten Annual Reports 4.7.1.1 Analysis of Forest Disturbances The natural disturbance emulation targets were achieved for most size classes. The lower than planned harvest levels meant that the desired and forecasted target was not achieved for one size class. A new disturbance template was created for the approved 2011-2021 FMP and the allocations were planned in a manner that achieved the desired ranges for the 2011-2021 FMP. Not achieving the target for one specific size class will not impact future achievement of disturbance size objectives as projected by the 2011-2021 FMP.

4.7.1.2 Renewal Success Table 4 provides the actual area harvested for each forest unit by FMP term. Table 5 shows the results of monitoring efforts and the rates of silvicultural and regeneration success. Renewal assessments were conducted on 64% of the area harvested during the past four plan terms.

Forest

Unit

Harvest Area (ha) by Plan Term

91-96 96-01 01-06 06-11 Total

BFMX 0 0 906 194 1,100

BFPUR 189 597 436 9 1,231

COMX1 0 0 775 431 1,206

COMX2 0 0 3 198 201

HWDMX 127 156 100 162 545

OC 1 6 0 1 8

PJPUR 1,362 1,024 866 388 3,640

POPUR 63 0 47 87 197

PW_PR 4 1 4 0 9

SBLOW 158 440 794 335 1,727

SPUP 730 1,110 1,872 681 4,393

Total 2,634 3,334 5,803 2,486 14,257

Table 4. Harvest area by forest unit for each plan term on the Lac Seul Forest.

Source: Trend Analysis – Table AR-7


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Assessment of Regeneration and Silviculture Success

Forest

Unit

Projected

Forest Unit

(ha)

%

Silvicultural

Success

Other

Forest Unit

(ha)

%

Regeneration

Success

% Harvest

Area

Assessed

BFMX 234 42% 329 100% 51%

BFPUR 10 91% 1 100% 1%

COMX1 558 60% 367 100% 77%

COMX2 117 50% 119 100% 118%

HWDMX 48 47% 55 100% 19%

OC 1 20% 4 100% 63%

PJPUR 1,351 49% 1 ,396 100% 75%

POPUR 134 42% 185 100% 162%

PW_PR 48 100% - 96% 533%

SBLOW 537 48% 586 100% 65%

SPUP 1 ,151 37% 1 ,922 100% 70%

Total 4 ,189 46% 4 ,964 100% 64%

Table 5. Silviculture and regeneration success by forest unit on the Lac Seul Forest.

Source: Trend Analysis – Table AR-13

Regeneration is considered to be silviculturally successful when the assessed forest condition is determined to have achieved the intended forest unit assigned by the SGR. Different sites respond differently and the time required to meet regeneration standards for silvicultural success can vary from three to nineteen years. Silvicultural success ranged from 37% for SPUP (spruce upland) to 60% for COMX1 (conifer-dominated mixedwood). The auditee’s assessment indicated that an average of 46% of the renewal treatments achieved the intended forest unit.

The assessment of the auditee also considered 100% of the assessed harvested area to have been regenerated to an acceptable standard, if not to the intended forest unit. The achievement of the acceptable standard is defined as regeneration success.

The auditor sampled stands assessed for their FTG status as part of the audit site visits. The assessment did not cover the same time frame as that presented within the annualized figures of the Trend Analysis, focusing instead on the FTG that was assessed and reported during the audit term. The auditor’s inspection found that 4,231 ha of 4,626 ha (91%) were found to have achieved regeneration success. While the trend observed over time indicated high variability in silvicultural success of regeneration, the assessment of the most recent FTG work found good movement towards the silvicultural targets.

Similar variability was noted with regeneration results for renewal of natural disturbance areas where the desired forest unit was achieved on only 34% of the area (Table 6).


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Natural Disturbance

Forest

Unit

Projected

Forest Unit

(ha)

%

Silvicultural

Success

Other

Forest Unit

(ha)

%

Regeneration

Success

BFMX - 0% 14 100%

BFPUR 330 57% 249 100%

COMX1 44 9% 451 100%

COMX2 83 22% 294 100%

HWDMX - 0% 389 100%

OC - 0% 13 100%

PJPUR 1,097 37% 1,893 100%

POPUR 23 6% 357 100%

PW_PR - 0% - 0%

SBLOW 1,447 49% 1,495 98%

SPUP 958 26% 2,678 100%

Total 3,982 34% 7,833 99.4%

Table 6. Silviculture and regeneration success for areas of natural disturbance on the Lac Seul Forest.

The auditor’s verification of FTG status supports the assertion in the Trend Analysis that, in the caribou management portion of the Forest, conifer-dominated cover types are increasing. Field observations confirmed that those regenerating sites that were at risk of not achieving their target SGR were sites that required tending. These observations emphasize the importance of forest tending to the maintenance and achievement of forest cover objectives and the significance of the failure of the auditee to achieve an effective tending program during the audit term as addressed in Recommendation 8. The lack of tending puts the forest at a long-term risk of a shift to increased hardwood within its forest cover.

4.7.1.3 Independent Forest Audits The IFA Action Plan and Status Report indicated movement on all recommendations from the past 2001-2006 audit. The auditor found the recommendations associated with the LCC had been effectively addressed. Program changes where forest management activities were dependent on the Ministry of the Environment were effectively administered through a coordinated effort involving local, regional, and Corporate MNR, demonstrating effective movement on this prior audit finding.

Resource stewardship agreements and discussions with tourism operators both remained high priority issues during this audit term. While the direction of the prior audit finding was to Corporate MNR, during the development of the last plan the Company found the following to be an effective and helpful tool in managing relationships with area tourism interests. An operational-based, two-page memorandum of agreement, with an attached map of the area from the FMP, served to identify specific operating concerns and cooperation details that were documented and signed between the Company and the tourism operator. This proved to be an effective and useful tool to assist the Company`s operations manager with coordinating activities that may impact on area tourism operations. This simple tool may prove more responsive and effective than the more cumbersome, formal, lengthy, and


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expensive resource stewardship agreement process. The auditor acknowledges the efforts of both the Company and MNR with arriving at a practical way of managing the issue.

Efforts by MNR to obtain additional socio-economic information on remote tourism and road-based recreation were recorded as part of the preparation for the 2011-2021 FMP. The MNR also conducted studies and monitored specific areas for both compliance and the collection of land use information. Various tools were employed, including remote data logging devices and other technology, to assist with determining use. The Company took care in coordinating and validating datasets used for modelling and generation of FMP tables to ensure consistency and accuracy during plan development.

A number of prior audit findings regarding policy effectiveness were addressed by MNR through the development and implementation of the Stand and Site Guide.

The District MNR chose a balanced approach in dealing with Forest Resource Licences associated with red and white pine allocations to log home builders. The auditor agreed with this approach and felt it was appropriate in making resources available to local interests while ensuring that regulatory and environmental activities occur appropriately on the Forest.

Based on the above considerations, it is the auditor`s opinion that considerable and concerted effort occurred during the audit term to address the findings of the previous IFA.

4.7.2 Assessment of Objective Achievement

Review of progress towards the 2006-2011 FMP objectives was facilitated by the Company’s preparation of the Trend Analysis and the AR10 annual report issued March 28, 2011. Twenty-one objectives were considered. These objectives addressed forest development (6), social aspects (8), forest cover or habitat (5), and silviculture (2).

In general, the Forest was found to have met its forest cover and silvicultural objectives. Suitable habitat was maintained for moose, caribou, marten, black bear, black-backed woodpecker, and Canada lynx. Protection of fish habitat was also found to be well addressed. Regeneration was found to have met its targets and the land base was considered maintained.

Achievement of specific forest development and social targets that were affected by market demand for wood fibre were challenging during the audit term. The decline in timber harvested due to mill closures and weak market demand reduced Crown dues to 10% of that forecast by the FMP. Employment targets and development of forest access were also impacted. The reduced harvesting also affected achievement of forest unit age class and area targets and planned targets for disturbance sizes as well.

4.7.3 Conclusions Regarding Sustainability of the Crown Forest

The primary goal of the 2006-2011 FMP was to achieve a healthy, sustainable forest ecosystem. Sustainability of the forest is vital to the well-being of forest-based activities and Ontario communities. Objectives were developed in the FMP for benefits and outcomes achieved by managing forest cover.

Management objectives set for the 2006-2011 FMP were considered to be met with the exception of harvest-dependent objectives. This failure was due to market factors far beyond the control of McKenzie Forest Products Inc. Specifically, the reduced harvest during the audit term compromised the plan’s objectives.


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Additionally, the auditor identified specific recommendations to address concerns associated with the lack of effective tending (Recommendation 8) and utilization and management of the productive land base (Recommendations 4 and 5).

Under-achievement of the social and economic objectives occurred because of the severe economic downturn that resulted in the shutdown of the Hudson mill. The impacts on the mill and local and regional communities represent a significant economic change. There was a severe under-harvest during the implementation of the FMP due to the economic downturn. The auditee asserts that impacts on sustainability were mitigated by reallocating unharvested allocations in the 2011-2021 FMP.

The spatial assessment of natural disturbance targets was achieved for most size classes. Residual undisturbed patches that emulated the distribution of those associated with historical fire disturbances were implemented. Spatial caribou and marten habitat targets were also achieved. Projections in the previous FMP and in the 2011-2021 FMP indicate that caribou habitat is progressing towards desired levels.

The audit team concluded that forest sustainability was achieved on the Lac Seul Forest during the audit term with the exceptions addressed in this report.

4.8 Contractual Obligations The Company conformed to the requirements and terms of SFL #542455. The Company honoured the intent of its wood directives contained within the licence. Market issues during the audit term affected the Company’s ability to sell timber. All plans and reports were submitted as required. Salvage licences were issued to address natural disturbances during the audit term. The disturbance from a recent tornado was observed during the helicopter inspection as a narrow, tangled trail of timber over several kilometers with trees laid down in a complex spiral pattern. This suggests very limited operational potential.

Notices and protection of mining posts were observed as operating practices during the audit term.

Compliance plans were prepared and implemented. General conformance was maintained and no serious wasteful practice reports were noted. The MNR and the Company demonstrated effective monitoring and awareness of stockpiled wood on the Forest, with plans in place to remove this fibre. The Action Plan and Status report satisfactorily recorded and demonstrated effective movement towards resolution of the findings from the previous audit. Training was used to reduce compliance issues with specific overlapping licencees.

Monitoring occurred regarding the protection of the forest resource. It was determined through coordination with MNR that a jack pine budworm outbreak was minor and no treatment or additional action was necessary.

The Forest Renewal Trust Accounts were managed well during the audit term with maintenance of minimum balances and calculation, analysis and validation of the Renewal Rate. However, payments due in the latter term of the audit period were not paid and these amounts are subject to the Company’s declaration of bankruptcy.

The area sampled in support of the Specified Procedures Report was found to have received the prescribed treatment. No auditor concern resulted from this review. Work was undertaken as reported.


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Good conformance to licence conditions was demonstrated by the Company during the audit term. Specific discussion concerning contractual obligations is presented in Appendix 3.

4.9 Conclusions and Recommendations on Future Licence Actions The auditor concludes that management of the Lac Seul Forest was in compliance with the legislation, regulations, and policies that were in effect during the audit term, except for the minor variances noted in this report. The auditor also concludes that the Forest was managed in compliance with the terms and conditions of SFL #542455, formerly held by McKenzie Forest Products Inc.. Forest Sustainability is being achieved, as assessed through the IFAPP.

In light of the surrender of the SFL by McKenzie Forest Products Inc., and the subsequent actions taken by District MNR to place the Lac Seul Forest under a Forest Resource Licence issued to Obishikokaang Resource Corporation, the auditor agrees that District MNR assume responsibility for the implementation of the FMP to ensure sustainability of the Forest.

The auditor acknowledges that the Crown, at its discretion in the future, may use appropriate arrangements at its disposal to delegate and assign responsibilities to third parties as part of implementation of its action plan.


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Appendix 1 –Recommendations and Best Practices

INDEPENDENT FOREST AUDIT – RECORD OF FINDING

Best Practice

Principle: 4; Plan Assessment and Implementation

Criterion: 4.4; Renewal

Procedure(s): 4.4.1, Review and assess in the field the implementation of approved renewal operations. Include assessment whether the renewal treatment was consistent with the FOP, and the FOP consistent with the SGR.

Background Information and Summary Evidence:

• Post-harvest site inspection, recording and mapping and prescribing SGRs that reflect the best treatment for site conditions, resulting in superior allocation of stock and seed on appropriate sites

• Allocating and implementing appropriate supervisory resources to ensure implementation of a complex silvicultural program

Discussion: Conifer regeneration efforts were exceptionally well done. Company silviculture personnel demonstrated active knowledge of their land base and the status of silvicultural treatments. The exceptional practice was the demonstrated ground assessment of each harvest area. Each harvested block was walked by competent and experienced personnel to determine and document a postharvest prescription and application of the appropriate silvicultural ground rule from the FMP. The level of effort and attention to detail to direct and apply appropriate conifer renewal strategies was applauded by the auditor. The level of supervisory effort to implement the resulting silviculture strategies was also recognized as an important part of implementation of the Company`s renewal program. It is the allocation of sufficient resources to support qualified personnel applying their professional discretion to match the silviculture treatment for the specific complex of micro-sites that is recognized as the best practice.

Best Practice - McKenzie Forest Products is recognized for its excellence in its overall implementation of its post-harvest assessment program and the highly refined effort to prescribe and develop silvicultural ground rules best suited to the specific collection of micro-sites present within the forest complex to effectively establish appropriate conifer regeneration.


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Recommendation # 1

Principle: 3; Forest Management Planning

Criterion: 3.3; Management Unit Description

Procedure(s): 3.3.4.1 FMP Description of other forest resources dependent on forest cover


• Distribution, abundance, and habitat use on the Lac Seul Forest by species at risk is poorly understood

• 2011-2021 FMP: Under Objective 3 (i.e., maintain caribou habitat) and Indicator 3i (other forest- dependent species at risk)

Discussion: The Lac Seul Forest FMP has a comprehensive description of confirmed and potential species at risk. The only forest-dependent, threatened species with habitat that could require protection under the provincial Endangered Species Act are woodland caribou, wolverine, and whip-poor-will. Although the list of species is complete and their basic habitat requirements are understood, the distribution of these species and their habitat on the Lac Seul Forest is not specifically known.

The 2011-2021 plan text states that “both summer and winter use has been well documented throughout the Lac Seul Forest” for caribou, but additional information is required to better understand caribou habitat use and movement patterns on the Lac Seul Forest, particularly in the southern portion of the mosaic where, to date, there has been relatively little survey effort.

Prior to the 2011-2021 plan, only seven caribou were radio-collared in the mid-1990s on the over 1.0 million ha of the Lac Seul Forest. Another five were added more recently, most in the central portion of the FMU. As part of MNR’s caribou range assessment, aerial surveys and calf recruitment surveys have recently been conducted and 20 radio-collars have been put on caribou on the Churchill Range. As the Lac Seul Forest represents 46% of the Churchill Range, this will provide important information for understanding how caribou move through the Forest and adjacent landscapes throughout the year.

The northern portion of the Lac Seul Forest is within the core range of wolverine (a threatened species) in Ontario and most of the FMU is within the proposed Western Recovery Zone for wolverine. Wolverine distribution, abundance, and habitat use on the Lac Seul Forest are unknown, thus no AOCs were prescribed or implemented in the 2011-2021 Lac Seul Forest FMP.

Similarly, the distribution, abundance, and habitat use on the Lac Seul Forest by other forest-dependent species at risk such as olive-sided flycatcher, Canada warbler, and rusty blackbird are poorly known. Recently listed under the provincial Endangered Species Act, no targeted surveys have been undertaken for these bird species. Additional surveys are required to meet Objective 3 (maintain caribou habitat) and Indicator 3a (other forest-dependent species at risk) of the 2011-2021 FMP.

Recommendation 1 - Corporate MNR should provide sufficient resources to conduct additional inventory and monitoring of forest-dependent species at risk to adequately support forest management planning on the Lac Seul Forest.


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Recommendation # 2



Procedure(s): 3.3.4.1 FMP Description of other forest resources dependent on forest cover


• Caribou defined southern limit changed from planning term to planning term • Orientation of mosaic and proximity to Lac Seul First Nation Reserve creates opportunities for

innovative approaches to achievement of ecological and social objectives

Discussion: Since 1992, woodland caribou habitat on the Lac Seul Forest has been managed spatially using a “caribou mosaic” approach as per the 1999 draft Forest Management Guidelines for the Conservation of Woodland Caribou: A landscape approach. The caribou mosaic or dynamic caribou habitat schedule is a pattern of planned forest harvest and deferral areas intended to ensure the provision of sufficient tracts of caribou winter habitat on the landscape at all times. The southern limit of the caribou mosaic on the Lac Seul Forest has progressively moved south since 1992 (Figure 12).

In the current 2011-2021 FMP, the eastern portion of Reserve Island is an 8,057 ha “C” block (Block 36) scheduled for harvest in 2051-2071 (Figure 13). This designation would prevent Lac Seul First Nation from implementing their new forestry business plan. The FMP indicated that, during development of the Long-Term Management Direction, the community expressed support for an alternate management zone approach for this area.

In the northern portion of the Lac Seul Forest adjacent to high use summer caribou areas along the Cat River system, Block 7 (6,270 ha) is designated as an adaptive management zone (AMZ) to ensure the intent of the Caribou Conservation Plan is met while providing for educational and economic opportunities for the adjacent First Nation community of Slate Falls.

The auditor feels that caribou protection in Block 36 can be achieved while still accommodating economic opportunities for the First Nation in the near term. The auditor’s rationale is based on the use of open designation harvest blocks as applied elsewhere on the forest, the lack of known winter use of Block #36 by caribou, and the standard 1000 metre AOC prescription along the shoreline of Lac Seul. This should provide adequate spring/summer protection for calving and nursery habitat on the adjacent Lac Seul islands. Community hunting pressure should also ameliorate the impact of moose and wolf populations in this zone. Thus scheduling of the block for harvest will not impair caribou protection.

Recommendation: 2 District MNR should designate Block #36 as an Adaptive Management Zone block, or use another designation that permits forest management on a flexible timeline that is appropriate to support the Lac Seul First Nation community and economic development initiatives.


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Figure 12. Changes in the southern continuous distribution line (“Caribou Line”) for application of caribou mosaic on the Lac Seul forest for successive forest management plans in relation to OMNR Cervid Ecological Zones (CEZ).


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Figure 13. Lac Seul First Nation in relation to caribou mosaic Block 36 and the Lac Seul First Nation Forestry Planning Area.


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Recommendation # 3



Procedure(s): 3.3.2.2, Assess implications of the FRI on development of the FMP by considering land ownership, land type, provincial forest type, and age class.


• Currently using 1997 planning inventory • Two-tiered stands not captured well • Operational constraints associated with caribou mosaic • Improved FRI will result in improved operations planning

Discussion: The audit team reviewed the use of the FRI and its incorporation into the 2006 and 2011 FMPs. The inventory is a critical component of the FMP and the development of the Long-Term Management Direction since it provides the spatial detail required to model serial stages, natural disturbance regimes, and wildlife habitat as well as the anticipated yields of timber. In the forest estate modeling conducted prior to plan approval, the forest inventory reflects the current state of the forest, and then is projected in the model to predict the future forest condition by aging, disturbing, harvesting and regenerating the forest through time. In a forest such as the Lac Seul, the state of the inventory is critical to the success of the forest estate modeling exercise, and the ability to implement the results of the model on the ground over the following years of the FMP.

The Lac Seul Forest is highly constrained by the caribou mosaic which covers over 89% of the land area. Each ‘block’ in the caribou mosaic is ‘open’ for timber harvest for only 20 years at a time. Within that timeframe, the block is to be harvested, after which the block is closed to further disturbance until the next rotation. Therefore the pattern of harvest blocks and leave blocks across the forest becoming regimented through the coming decades, as the caribou mosaic strongly dictates the locale of timber harvesting. Issues arise when the inventory does not accurately reflect current ages, or current species compositions, or proper yields. When the harvest moves in the future to new ‘open’ caribou blocks, if the timber is not present in the volumes predicted, the harvest will not meet expectations and put the forest economy at risk.

In this highly constrained operating environment, where there is limited flexibility for timber harvesting, the accuracy of the inventory is paramount to successfully implementing the FMP in the future. The current Lac Seul Forest inventory is from 1997, with many disturbances currently not captured. The inventory poorly reflects the density of previously insect-killed balsam fir stands in the southern portion of the forest and the inventory standard it was created with does not contain two-tiered stands.

Recommendation 3: Corporate MNR should place a high priority on the completion of the new enhanced Forest Resource Inventory for the Lac Seul Forest, so that it will be available for the preparatory work and input to the 2016 forest management plan.


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Recommendation # 4


Criterion: 4.3; Harvest

Procedure(s): 4.3.1 Assess whether harvest and logging methods were appropriate and effective and whether wood utilization followed the scaling manual considering such items as wood left onsite.


• Harvest operations, located especially close to tourism establishments should be carefully controlled

• Utilization standards not met • Operational shutdown associated with mill closure

Discussion: Utilization was generally good, however it was noted that some tree length hardwood was left at the roadside in two blocks in the northeast portion of the Forest. The wood was left due to challenges experienced with hardwood markets as well as an early Spring break up. A second location on the Forest had conifer short wood piled on a skidway on a gravel road. The Company demonstrated that it had a record of the locations where wood was left and the MNR confirmed their knowledge of the inventory. Mill closures and weak hardwood market conditions have frustrated the Company’s efforts to move this timber.

The helicopter inspection of Block 11 along Root Bay found felled and bunched wood ready for skidding left in the block. This wood was left following the last mill shutdown. The Company indicated that silviculture and slash management activities are scheduled for this block during the 2012-2013 Annual Work Schedule. The volume of wood left in this harvest block will result in a loss of productive area and is a wasteful practice as defined by the scaling manual. This area also was, and remains, a cause for concern for a tourism stakeholder that flies customers through this area on a regular basis.

Recommendation 4 - District MNR shall ensure that the skid bundles left in the Independent Forest Audit Block 11 along Root Bay are removed and the land treated silviculturally to minimize the loss of productive land and to recover Crown dues.


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Recommendation # 5

Principle: Principle 4; Plan Assessment and Implementation

Criterion: 4.3; Harvest

Procedure(s): 4.3.1 Assess whether harvest and logging methods were appropriate and effective and whether wood utilization followed the scaling manual.


• Cumulative effect of slash and chipper debris piles occupying productive land

Discussion: Considerable discussion occurred during the audit site visits about the impact changing harvest methods were having on the accumulation of roadside and landing debris and potential loss of productive forest area. Full tree chipping was introduced to the Forest during the past three years. This processing method results in accumulations of bark and wood chips at landings where the wood is processed and the chips loaded into chip vans. The Company informed the audit team that several different strategies were tested to determine the effectiveness in reducing or mitigating the presence of roadside chipper debris and thereby reducing the potential loss of productive forest area.

The use of chippers on the forest is a relatively new operation. The Company considers chipper residue a function of the harvest operation. Mills receiving chipped wood from the Lac Seul Forest consider the residue a silviculture treatment, which means that the Company should pay for this work through its silviculture program. McKenzie Forest Products Inc. disagreed with this assertion, believing that the debris was a function of the harvest that should be dealt with as a harvest operating cost not as a transfer of the cost to the silviculture program and thus a depletion of its silvicultural fund.

Species at risk stewardship funding was used by McKenzie Forest Products Inc. to establish a pilot study to examine chipper and slasher debris management and road decommissioning techniques to enhance caribou habitat renewal on the Lac Seul Forest. The appropriateness of using this funding to achieve forest harvesting and silvicultural objectives is debateable; however, the Company did demonstrate a link between habitat and access rehabilitation in its application. Despite these trials, the Company’s effort was seen by the auditor as insufficient to resolve concerns about changing harvest methods.

Recommendation 5 - District MNR shall monitor the implementation of the strategies to manage chipper debris contained in the 2011 Forest Management Plan to determine their efficacy in minimizing the loss of productive land and to ensure that effective silviculture occurs.


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Recommendation # 6



Procedure(s): 4.4.1, Review and assess in the field the implementation of approved renewal operations. Include assessment whether the renewal treatment was consistent with the FOP, and the FOP Consistent with the SGR.


• Concern with the adequacy of regeneration in stands with high residual hardwood canopy

Discussion: A renewal site where the hardwood component was retained as standing timber in excess of required snag guideline requirements was recognized by the auditor as a challenge to effective silviculture treatment of the prescribed conifer SGRs. Company personnel confirmed that the canopy interferes with conifer release efforts by intercepting the aerial application of herbicide. The challenge the residual canopy poses, from a utilization perspective due to poor hardwood market conditions, was acknowledged by MNR.

Operations conformed to the intent of the Northwest Region’s strategy for allocations containing hardwood when markets are not viable. This strategy acknowledges the increased use and frequency of herbicide applications. It is the opinion of the auditor, and the Company concurs, that retention of the canopy in this situation is not a desired outcome.

Recommendation 6 - District MNR shall work with appropriate science support to develop effective prescriptions to manage residual hardwood canopies that may affect forest renewal.


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Recommendation # 7

Principle: Principle 4; Plan Assessment and Implementation


Procedure(s): 4.4.1, Review and assess in the field the implementation of approved renewal operations. Include assessment whether the renewal treatment was consistent with the FOP, and the FOP consistent with the SGR.


• Silvicultural ground rule to regenerate white birch in mixed conifer stand (CONMX2) was not developed

Discussion: At a field stop where harvesting had taken place, the Company had applied a prescription with the objective of renewing the white birch component of the harvested area. The site was an island of birch within a larger complex of pine-dominated conifer. A review of the FMP identified that a silvicultural ground rule was lacking for this treatment. As well, ground inspection of this site found that the scarification work to facilitate conifer renewal that surrounded this patch did not continue across the area that was targeted for white birch. The canopy over this site was also relatively undisturbed. The auditor acknowledges the intent of the company’s renewal strategy for this site. It is the auditor’s opinion that based on the strategy employed, the intended renewal would not be achieved.

Subsequent effort, including assessment and tending, will be required to regenerate this site to an acceptable renewal standard. Figure 14 shows how portions of the site have a heavy shrub layer. Site preparation would have allowed establishment of white birch that could have kept pace with the shrub layer had this treatment been applied.

Figure 14. Hazel and alder competition occupying a white birch renewal effort.

Recommendation 7 - District MNR shall consult the appropriate science support to develop a Silvicultural Ground Rule to regenerate white birch dominated stands and to examine the costs of an acceptable silvicultural treatment of these hardwood dominated sites within a conifer complex while considering their conversion in the caribou management zone.


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Recommendation # 8


Criterion: 4.5; Tending and Protection

Procedure(s): 4.5.1, Review and assess in the field the implementation of approved tending operations.


• Limited tending since 2007

• Tending is not keeping pace with the planned targets

• Potentially small yield impact for short term deferral

• Stands may not meet long-term SGR targets affecting wood and habitat supply assumptions

• Lower conifer component may impact caribou objectives

Discussion: McKenzie Forest Products Inc. demonstrated excellent stewardship in its preplanning and scheduling of tending sites through its renewal monitoring efforts. This effort, however, was undermined by the lack of delivery of a tending program. For two years of the audit term no tending was carried out; in another year, when tending occurred, it was determined post-spray that the result was ineffective because the contactor conducted the aerial spray too late in the season. No aerial tending has occurred on the Forest for a period of four years. Insolvency issues of McKenzie Forest Products Inc.’s parent company during the prior two years and operational challenges during the latter two years resulted in a lack of tending on the Forest.

The auditor was informed that sufficient silviculture funding exists in the Forest Renewal Trust Account to fully support and implement the required tending program. This failure to implement effective and timely tending may negate the silvicultural investment already made in these sites for previous treatments and a potential small impact to forest yield. The auditor noted, and confirmed through onsite observations, that the stands at risk of not achieving the target silvicultural ground rule were those that required tending to protect and release the conifer component. The auditor anticipates that although this will have a small impact on long-term forest yield, the untreated stands may not meet long-term silvicultural ground rule targets. Assessed FTG stands met their silvicultural ground rule target when tending occurred at the appropriate time in stand development. At least one site that had been tended was noted by the auditor to likely achieve FTG status the year following the audit.

Recommendation: District MNR shall ensure that all eligible stands from 2008 onwards are tended by the end of 2013.


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Recommendation # 9


Criterion: 4.7; Access

Procedure(s): 4.7.1, Assess in the field the implementation of approved access activities and use management including decommissioning.


• Cribbing and bridge abutments left behind when decommissioning water crossings on the Wind block (WI120)

Discussion: Documentation of the planning of roads, including decommissioning, is presented in Supplementary Documentation 6.7.1 of the FMP. The section listed and discussed approaches to be employed when decommissioning an access point.

Cribbing and bridge abutments were left behind when decommissioning water crossings on the Wind block (e.g. WI120). If stable, bridge abutments can be left in place if there is the intent to re-use them. During decommissioning of the bridge on the Wapesi River near Wind Lake, creosote bridge abutments were left in place on the approach to the former water crossing location.

Greater concern for potential long-term environmental liability is noted by the auditor regarding culverts left in place along the otherwise decommissioned Wind Lake road system, particularly since no harvesting is planned in this mosaic block until 2091-2111. In addition to eventual failure of the metal from corrosion, culverts are prone to damming by beavers, which can result in washouts and accompanying sedimentation downstream. Regular monitoring of the culverts is complicated by the removal of the road network, as would any repair work if a washout was to occur. Where culverts have not been removed, the best management practice identified in the Stand and Site Guide is to excavate a depression in the approach where floodwater can spill over the road in the event of a culvert blockage (lining it with erosion-resistant materials if necessary). This best management practice was not undertaken on culverts left in place on the decommissioned Wind Lake Road. While recognizing the significant costs associated with culvert removal, MNR is still responsible for the road and any future liability under the federal Fisheries Act.

Recommendation: District MNR should carefully evaluate local long-term environmental liability when decommissioning water crossings, particularly when leaving culverts or other structures in situ.


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Appendix 2 – Management Objectives Table # Objective Auditor Assessment Auditor Comments

FD1 Maintain current biological diversity of the forest except where it is necessary and practical to restore natural disturbance and landscape patterns.

Source: 2011 Planning Inventory The plan start levels for 2011 were used as the 2006 FMP plan end indicators for this objective. BFMX improved between plan start and end as it decreased to within the acceptable range. BFPUR, OC and PWPR continued to exceed the desired range between 2006 and 2011. All other forest units remained within their acceptable ranges.

Objective was generally met except for small area forest units and balsam fir pure forest unit.

Company successful with maintenance of conifer dominated forest units however market conditions will prove challenging for affecting active management of hardwood and mixed forest types. AR10 recognized increased presence of balsam fir in southern areas subject to fire suppression and older harvest areas not subject to active silviculture. The importance of an active hardwood market was acknowledged to assist with maintenance of the hardwood and mixed forest units within the desired range.

The Lac Seul Forest is approximately 90% conifer dominated forest types and 10% hardwood dominated forest types. The Trend analysis reports that within the Caribou Mosaic regeneration results are achieving the desired conifer dominated forest condition. Additionally the document indicated that the longer rotation cycle will also result of the loss of the hardwood component in older forest stands due to site conditions more favourable to conifer under natural succession conditions.

Table 3 demonstrates in aggregate over the past three planning terms the presence of hardwood dominated forest types incrementally increasing on a proportional area basis.

Review of all factors suggests achievement of this objective. Recommendation 8 identified to mitigate risk of forest cover shift to more hardwood dominated forest types.

FD2 To provide an age class structure that includes old growth for all forest units, that is representative of the forest condition under a natural disturbance regime, within the bounds

The plan start levels for 2011 were used as the 2006 FMP plan end indicators for this objective. The 2011 plan start levels indicate that old BFMX, BFPUR forest units continue to increase above desired levels for old forest between plan start and plan end and this trend was projected as indicated by the medium term levels at year 2026. PJPUR remained below the acceptable range

Area within the commercially operated forest units demonstrated movement towards the natural range of variation while less commercially desirable forest units BFMX BFPUR’ SBLOW exceeded the area qualified as old growth due to a lack of active management (harvest) during the audit term.

Commercially viable forest units COMX1, COMX2, HWDMX, PJPUR,


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# Objective Auditor Assessment Auditor Comments

of natural variation. although it made considerable progress toward the desired range and this trend was also projected by the level at year 2026. SBLOW increased above the desired range between 2006 and 2011 as projected for 2026. The objective was achieved as most forest units remained within the desired range between 2006 and 2011 with the exceptions noted above. The exceptions outside of the desired ranges were forecasted to occur as age classes alteration is limited by the available planned and actual harvest levels. Actual harvest levels are much lower than planned because of a severe economic downturn that reduced harvest between 2007 and 2011 and this impacted the level of success for achieving this objective.

Forest is generally moving towards objective with some exceptions.

SPUP all moved towards achievement of the old growth objective during the audit term. SBLOW exceed the range during the audit term due the economic downturn. The Trend Analysis discussion on natural variation indicated that the excess was experienced in the 100 + age class. Small forest units POPUR, OC and PW_PR were relatively stable demonstrated little movement due to the limited active harvest occurring in these forest types. The Balsam fir forest units BFMX and BFPUR exceeded their targets.

FD3 To sustain genetic diversity through populations of naturally occurring tree species, that are adapted to local site conditions.

The target is to use the seed zone transfer guidelines to guide how the seed and stock is collected and distributed in all artificial renewal programs. This objective was achieved by using the MNR seed zone transfer guidelines to guide how the seed and stock was collected and distributed for all artificial renewal programs conducted during the implementation of the 2006-11 FMP. This objective was further achieved by tracking seed and stock movement by seed zone of origin during all artificial renewal programs.

Objective was met.

MNR seed zone guidelines followed. Company tracked seed and stock movement by seed zone of origin for artificial renewal activities.

FD4 To provide a range of harvest disturbance patches across the landscape that is consistent with size and frequency distribution created under a natural fire regime.

The achievement of the desired template cannot be made in one 5 year plan period. During plan preparation a projection was made about progress toward desired levels by the end of the 2006 FMP, in 2011. That projection was met or exceeded in all but the 261-520 size class. The 261-520 range was not met as the number of disturbances declined from 6% to 3%. This occurred because amount of actual harvest of the planned allocations was severally hampered by an economic

AR10 indicates frequency of small disturbance patches exceeds the natural template while there are too few medium to medium large disturbance areas. The forest is generally close to the natural target for the 261-520 ha disturbances and the larger disturbance areas.


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downturn and mill shutdowns. Generally, progress was made toward the desired disturbance template.

This objective was partially met.

FD5 Harvest disturbances will be applied to the landscape in patterns that emulate patterns associated with natural disturbances. Harvest blocks will include residual undisturbed patches that emulate undisturbed residual patched associated with historical fire disturbances.

The objective was achieved by the planning team during the allocation of harvest blocks, during plan preparation. All blocks over 130 hectares in size have residual achieving or exceeding guideline targets.

Residual patches were applied to all harvest blocks larger than 130 ha. Patches were evident during site inspections.

FD6 Continue to reduce balsam fir (and post-succession stand that were previously balsam fir) levels towards levels that would normally occur in the fire driven boreal forest ecosystem.

The objective was achieved as the balsam forest unit were decreased by 2306 hectares. BFMX decreased by 3,257 and BFPUR increased by 951 ha.

The balsam fir land base was reduced by 2,306 ha.

SOC1

Plan and implement forestry operations in a manner that considers the Parks and Conservation Reserves that are present on the forest.

This objective was met during the preparation and implementation of the FMP. The potential to impact parks and protected areas was very limited during the planning and implementation of the 2006 FMP because generally, operations were not planned in the vicinity of these areas. One exception is access from forest roads has the potential to impact St Raphael Park. Therefore, the 2006 FMP provided for the installation of signage to prevent unauthorized access to the park. Provincial Parks and Conservation Act Signage was planned through an amendment (#MFP06AR01) and placed

Signage installed to control access through St. Raphael Park as part of FMP. AOCs developed for activities adjacent to Park and Conservation areas. Other signage established through Provincial Parks and Conservation Act. No non compliance findings.


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during plan implementation in 2008 on the Sleen and Race Lakes Roads at their entrances from the Vermilion Road. There were no infractions from forest operations involving parks and conservation reserves during the implementation of the 2006-11 FMP.

SOC2

Supply in a cost effective manner, a continuous and predictable supply of suitable saw log material to the Hudson sawmill, and to provide other products (i.e. hardwood logs, residual by-products such as chips, sawdust, pulpwood, high value poles and cabin logs).

Short-term target SPF – 705,000, Hardwood 112,000 m3/yr

Long-term target SPF – 500,000, Hardwood 112,000 m3/yr

Based on available harvest data for the period 2006-2010 (source: AR-8) the volume objectives were not achieved. An average of 51,909 cubic metres of SPF and 26,791 cubic metres of hardwood were utilized per year. The utilization trends for 2006-2010 are well below normal because of the severe economic downturn that resulted in the Hudson Mill only running sporadically between November 2007 and the completion of the plan on March 31, 2011.

This objective was partially met.

Closure of mill and receivership of the licencee, along with Minister’s Stage II Wood Supply Offer of SPF from the forest to Domtar Dryden makes the Hudson mill portion of the objective moot in the current term. Market decline and mill shutdowns during audit term affected harvest targets. Timber was available for harvest. Allocations incorporated into the 2011 FMP, including some bridging allocations.

SOC3

Forestry operations will be planned and implemented in a manner that considered the diversity of social, cultural, and environmental values present on the forest, in order to provide all users and citizens with the opportunity to benefit

Planning and implementing prescriptions to minimize impacts on other users of the forest and by applying and implementing prescriptions in accordance with the various forest management guidelines.

This objective was largely met with some exceptions.

Planning and prescriptions developed following provincial requirements. Recommendation 4 was issued to have unskidded bundles removed from IFA Block 11 which was adjacent to a tourism lake buffer. Some disenchantment was expressed by a tourism outfitter over perceived effectiveness of road decommissioning.

Additionally MNR changes through plan amendment to prescriptions established through RSA process. IEA requests during 2011 planning term.

Recommendation 2 identifies an opportunity to align social and economic opportunities with the CCP requirements based on


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from the from the forest. specific local factors.

SOC4

Continue to provide for local employment in resource sectors that are dependent on the use of the forest resources. Continue to provide opportunities in surrounding communities for suppliers and service providers.

Significantly limited mill operations and variable off- forest markets existed during the 2006-11 FMP. The mill operated for 3 months in 2008 and for 5 months in 2010. Sales of wood from the Lac Seul Forest to other regional mills provided employment for the traditional local crown operators and related spin off activity. Economic conditions caused shutdowns of the Hudson mill.

This objective was partially achieved.

Hudson mill operations were limited during the audit term. Limited demand for other wood products was experienced. Company closed its operations, however facilitated opportunities for traditional independent operators by shutting down Company operations.

SOC5

Continue to provide for local traditional independent operators, by supporting a request from the Traditional Operators to the SFL holder for additional top-up contractual volumes from the forest for the planning period, should this extra wood become available.

The objective was achieved as areas and associated volumes as per the MOA's were made available to the crown operators. Some conifer top up volume was utilized by 2 crown operators in 2006. An amendment was approved for 2010 to provide top up poplar volume to many crown operators who marketed the additional poplar volume to other regional mills. Some operators harvested poplar volumes under MFP's SFL to feed poplar markets in 2009.

Provisions were made for additional volumes to overlapping licencees with extra capacity and plan amendments occurred to allocate poplar volumes when a market emerged.

SOC6

Provide the Ontario Government with Crown Dues for the use of Crown timber resources.

MNR records indicate that $3,716,622 was actually generated. Stumpage rates vary depending on the conditions of markets for the products generated and this contributed somewhat to the differences between planned and actual levels. The stumpage rates were low during the implementation of the 2006-11 FMP due to poor economic conditions and this contributed to lower amount of crown dues collected. The mill only ran at normal capacity during the first 19 months of the plan implementation period from April 2006 to November 2007 because of the severe global recession and the collapse of the North American Lumber market. For the duration of the implementation period from December

Approximately 10% of the plan’s forecast revenues were generated for the Crown reflecting the serious market decline experienced across North America during this period.


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2007 to March 2011 the mill ran for 5 months in 2008 and 3 months in 2010.

The objective was only partially achieved as the full allowable harvest was severely under harvested due the lengthy McKenzie mill shut down. MFP fell behind in stumpage because of a lack of revenue and a repayment plan has been negotiated with the Ontario Government. The achievement of objective SOC6 was minimal due to poor economic conditions and lower stumpage rates in response to product prices during the implementation of the 2006-11 FMP.

SOC7

Provide access to the forest for the forest industry and other resource users on the Lac Seul Forest.

The objective was partially achieved as 24.8 kilometres of primary road constructed and 11.3 km or secondary (branch) roads were constructed during the first four years of the plan (2006-2009). The Ontario government provided funding for construction and maintenance of primary and branch roads during the implementation of the 2006 FMP. The 2010 roads data when it becomes available will affirm that the objective was only partially achieved. Road construction did not achieve the target levels because of the economic downturn that resulted in the shutdown of the McKenzie mill for most of the November 2007 to March 2011 period.

The 2006-2011 FMP targets for construction of roads were 100.5 kilometres of primary road and 94.4 kilometres of secondary road for construction. Road construction did not achieve the target levels because of the economic downturn that resulted in the shutdown of the McKenzie mill for most of the November 2007 to March 2011 period.

Limited demand for forest product reduced the need to construct new roads. Provincial funding assisted with work that was implemented. Approximately 30% of the targeted construction occurred.

SOC8

Establish and maintain road access in a manner that provides accessibility to resources for recreation and other

The objective was achieved by providing and allowing public access along most roads while restricting access to specific areas where tourism values would be impacted by access. Careful consideration was given to applying any access restrictions during the preparation

The roads strategy was modified through amendment MFP06AR01 reflecting access restriction would be developed that protected tourism values but did not necessarily impact access for other public uses. Access management considered protection of specific tourism values and long term caribou habitat. Some road decommissioning


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opportunities for the general public in areas that are managed to protect other value.

of amendment MFP06AR01. The amended sections of the FMP text stated; "protection of tourism values was balanced with keeping access unrestricted for the public use. Access restrictions were developed so that they didn’t unnecessarily impact the public use of roads for other purposes." Some road decommissioning was conducted during the plan period to protect tourism values and to contribute to long term caribou habitat.

occurred. The company declared the majority of roads were accessible for public use during the audit term.

COV1

To maintain a forest landscape that will supply suitable current and future habitat for wildlife, within the bounds of natural variation.

Targets were assigned in SFMM to bring black bear foraging above minimum levels between term 8 and term10. The other species obtained the minimum desired level without imposing minimum targets in SFMM. The selected species were reduced from 20 down to 7 between the preparation of the 2006 and 2011 FMP’s by MNR and the planning team. The 2011 plan start levels of the seven species exceeded the minimum desired levels that were selected for both FMP’s and this corroborates that objective COV1 was met.

Habitat objectives were adjusted from 20 down to 7 selected species between the 2006 and 2011 plans. Targets to achieve black bear foraging habitat above minimum levels were instituted. The habitat start levels for the 2011 Plan were above desired minimum levels indicating this objective was met.

COV2

Maintain a continuous supply of suitable, mature, year-round martin habitat distributed both geographically and temporally across the landscape within the bound of natural variation.

During the preparation of the 2006 FMP by spatially and temporally managing marten habitat on the Lac Seul Forest. The minimum desired proportion of marten habitat was achieved for all three terms; 2006-26, 2026-46 and 2046-66. The 2011 plan start proportion of suitable habitat corroborates that the objective was achieved as habitat is well above the desired minimum level.

Ample quality habitat was available for martin at the start of the 2011 plan.

COV3

Maintain a continuous supply of suitable, mature, year-round caribou habitat distributed both

This objective was assessed during the preparation of the 2006 FMP. The assessment indicated that the minimum target of 40% of suitable caribou habitat was maintained at planned start (2006) and planned end (2011) and for the medium term at 2026. However the

Modelling indicates habitat reduction in 2016 due to current forest structure however this level improve to meet targets in the medium term.


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geographically and temporally across the landscape in a manner to ensure permanent range occupancy within the bound of natural variation.

2106 projected levels fell short because of a shortage of forest in the 21-40 age class. There was a lack of harvest and natural disturbance 21-60 years ago causing the shortfall in caribou habitat.

Projections in the 2006 FMP indicate that caribou is progressing toward the desired levels and the objective is achieved and this is corroborated by the 2011 plan start levels.

Objective was achieved.

COV4

To maintain a forest landscape pattern that will supply current and future habitat for moose within the bounds of natural variation.

The objective is achieved as the minimum desired level of moose foraging and moose winter habitat have been achieved at plan start and plan end. The medium and long term projected levels also exceed the minimum desired level.

Habitat levels exceed minimum summer and winter habitat targets.

COV5

Minimize the potential effect of forest practices on fish.

The objective was achieved by assigning the AOC prescriptions and following the prescriptions during plan implementation.

Objective was achieved.

Areas of concern and buffers planned in FMP and implemented on the ground. Site inspections by auditors found generally good culvert installations with some exceptions.

SILV1

Regenerate harvested and naturally depleted areas with the appropriate silvicultural techniques.

No decrease in growing stock between 2006 FMP plan start and 2011 FMP plan start. The 2011 FMP has road decommissioning objectives when implemented will lower the declines in land base and growing stock between future planning terms.

Objective was achieved despite the noted recommendations.

Updating of the FTG and effective silviculture implementation demonstrated at end of plan that growing stock exceeding that found at the start of the plan. It also exceeded the medium and long term projected levels.

Recommendations 6, 7 and 8 were issued to address deficiencies noted in tending and stand maintenance and creation of a specific SGR for white birch renewal.

SILV2

Maintain current levels of Crown forest area available for timber production.

The 2006 FMP projected trend of available area decreases over time due to land remove for road access and the establishment of aggregate pits. However, the available area for 2011 FMP increased due to a portion of reserves for water bodies being made available through the application of the new Stand and Site

Changes in reserve along water bodies due to changes within the new stand and site guide resulted in an increase in available area.


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Guides. The guide now allows some water quality areas of concern to be harvested.

The objective was achieved since no decrease in available area between 2006 FMP plan start and 2011 FMP plan start. The 2011 FMP has road decommissioning objectives when implemented will lower the declines in land base and growing stock between future planning terms.


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Appendix 3 – Compliance with Contractual Obligations

Licence Condition Licence Holder Performance

Payment of Forestry Futures and Ontario Crown Charges

MNR Main office reported 19/05/11 indicated direct licencee stumpage owed $2.5 million and other parties owed $0.5 million for an aggregate of $3.4 million owing. This amount or any outstanding amounts owed by the company will be tied up in the bankruptcy declared April 26, 2011. Dues from other parties may be recoverable directly by the Crown.

Wood supply commitments, MOAs, sharing arrangements, special conditions

SFL Wood Commitments 1) Longlac Wood Industries Supply Agreement 536234 noted in the SFL document. No MOA established. The auditee indicated that no fibre shipped during audit term due to wood cost when the hardwood facility was operating. This facility is no longer operating making this commitment and the SFL holder’s requirement to establish an MOA redundant.

2) 20,000 m3 annually to Buchanan Northern Hardwoods Inc. A total of 1,162 m3 hardwood shipped 2006 to 2009. This facility is no longer operating and the parent company Buchanan was in Receivership during the audit term.

3) Weyerhaeuser Dryden poplar and white birch volumes annually to be made available. Volumes were delivered in 2007 and 2008 totalling 38,181 m3 of hardwood. The facility no longer accepts hardwood since the facility was acquired by Domtar Inc.

4) Up to 41,000 m3 conifer annually to be made available to Atikokan Forest Products. A total of 6,473 m3 were delivered in 2006. The facilities parent company was in Receivership during the audit term. This facility is no longer operating.

Special SFL Conditions MOA with all Overlapping licencees established for all but one listed licencee. Company and MNR officials indicated willingness to engage this individual as a licencee, however the MOA was required as part of the process for operating on the unit.


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Other Arrangements

MOA between the Buchanan Group and Bowater for a saw log for chips arrangement.

Exchange arrangements with Abitibi involved 188,000 m3 annually company wide.

During the audit term due to industry amalgamation between Bowater and Abitibi and changes in the economy almost all chips produced from the Hudson mill were shipped to Abitibi-Bowater mills in Thunder Bay satisfying the above two wood flow arrangements.

The McKenzie Conifer Business Plan documented the supply of conifer logs to Hudson mill from Lac Seul Forest.

Hardwood fibre was delivered to the Weyerhaeuser Kenora mill or a short period of time during the latter part of the audit term when markets were viable for this product.

SFL Commitments were recognized in 2011-2021 FMP

Preparation of FMP, AWS and reports; abiding by the FMP, and all other requirements of the FMPM and CFSA

FMPs, AWS, Annual Reports prepared as required and requirements of the FMPM and CFSA followed and applied as required.

Wasteful practices not committed No significant non conformances issued by MNR. Company kept MNR aware of residual wood at roadside and in the bush as a general practice. MNR monitored activity to confirm when materials removed. Crown follows process for collection of dues on wood that sits for long periods of time. Recommendation 4 issued to address one instance MNR and company were not aware of bundles not skidded.

Natural disturbance and salvage SFL conditions followed

Salvage of Fire 48 carried into early years of audit term. Company salvaged and renewed forest impacted by severe blow down event. No activity to date on timber area knocked down by tornado.

Protection of licence area from pest damage, participation in pest control programs

Company and MNR coordinated efforts during 2008 and 2009jackpine budworm outbreak determining infestation was low risk. Continued monitoring was the resultant plan.

Withdrawals from the Licence area No significant withdrawals from the Licence were noted during the audit term.

Audit action plan and status report Company and MNR prepared and completed action plan and status report. Progress was demonstrated.


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Payment of forest renewal charges for Forest Renewal Trust (FRT)

Payments were made as required until near the end of the audit term. Any amounts owing are now tied up in the bankruptcy declared April 26, 2011.

Forest Renewal Trust eligible silviculture work

Sampled work associated with the Specified Procedures Report confirmed silviculture implemented as prescribed. Sampled site during the field audit conformed the reported work was undertaken. Prior to the bankruptcy both company and MNR audited affirmed that minimum balance was maintained and stumpage was paid on a regular basis.

Forest Renewal Trust forest renewal charge analysis

Analysis completed and submitted as required. Process reviewed with plan author.

Forest Renewal Trust account minimum balance

Company and MNR confirmed minimum balance maintained each year.

Silviculture standards and assessment program

Company undertakes surveys and monitors renewal performance. Sites are tracked and scheduled for survey and monitored for tending requirements and FTG. Company practice is to conduct FTG activities in two blocks of time during an audit term to gain efficiencies of scale and manage workflow. Updates contributed to the Planning Inventory as required.

Aboriginal opportunities Company reported functional relationships with the two First Nation communities with Reserves within the forest boundaries.

Preparation of compliance plan Compliance plans prepared as required.

Internal compliance prevention/education program

Company maintained a training program supporting its Environmental Management System and meeting its SFI logger training requirements. In addition, monitoring of compliance trends indicated those overlapping Licences requiring specific training. Improve compliance performance noted during the audit term.

Compliance inspections and reporting; compliance with compliance plan

Compliance reports conducted on regular basis, received from overlapping Licences and submitted, activities in line with intent of the compliance plan.

SFL forestry operations on mining claims

Operations occur regularly on mining claims. Claim holder notified following established processes. Operators informed to protect claim posts and pickets.


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Appendix 4 – Audit Process The IFA is a regulated undertaking in Ontario. The purpose of the audit, the principles by which it is conducted, and details about its implementation are provided as follows.

A4.1 Audit Purpose and Principles Recognizing the legislative requirement of the IFA, the purpose of the audit is to:

a) assess to what extent forest management planning activities comply with the Forest Management Planning Manual and the [Crown Forest Sustainability]Act;

b) assess to what extent forest management activities comply with the Act, and with the forest management plans, the manuals approved under the Act and the applicable guides;

c) assess the effectiveness of forest management activities in meeting the forest management criteria established for the audit;

d) compare the forest management activities carried out with those that were planned;

e) assess the effectiveness of any action plans implemented to remedy shortcomings revealed by a previous audit;

f) Review and assess a licensee’s compliance with the terms and conditions of the forest resource licence.

The assessments carried out by the auditor are guided by eight principles:

1 - Commitment Commitment is reflected in vision, mission and policy statements of the company and in the Company’s adherence to legislation and policies. Vision and mission statements are intended to provide long-term guidance for the organization. Policy statements reflect how the organization’s vision and mission will be achieved. These statements must be reflected in the day-to-day operations of the organization.

2 - Public Consultation and Aboriginal Involvement

The process of sustainable forest management planning, implementation and monitoring must be conducted in an open consultative fashion, with the involvement of the Local Citizens Committee, Aboriginal communities, and other parties with an interest in the operations of the forest management unit.

3 - Forest Management Planning

The forest management planning process involves input from all members of the planning team as well as public consultation and Aboriginal involvement to describe the current forest condition, values and benefits to be obtained from the forest, the desired condition of the forest in the future, and the best methods to achieve that goal. Planning requirements have been established which must be followed by all forest management units.

4 - Plan Assessment and Implementation

Verification of the actual results of operations in the field compared to the planned assumptions and planned operations is required to be able to assess planning as well as the effective achievement of plan objectives and compliance with laws and regulations.

5 - System Support System support concerns resources and activities needed to support plan development and implementation so as to achieve the desired objectives. The organization’s human resources and information management systems must support sustainable forest management.

6 - Monitoring Monitoring programs must be developed and implemented to assess compliance and effectiveness of operations in relation to the FMP, laws and regulations. Operations must be reported regularly and reporting must examine the effectiveness of these operations in achieving management objectives.


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7 - Achievement of Management Objectives and Forest Sustainability

Periodic assessments of the forest management unit operations must be made in order to determine whether management objectives, including forest sustainability objectives, are being achieved. This includes comparing the values of the planned indicators against the actual values and assessing the reasons for any significant deviations.

8 - Contractual Obligations

The licensee must comply with the specific licence requirements. Specific requirements, when relevant to MNR, must be followed.

A4.2 Audit Process Once the contract was awarded, a pre-audit meeting was scheduled for May 9, 2011, at which time the auditor and auditees (McKenzie Forest Products Inc. and MNR) met to discuss the logistical details of the audit (including the audit plan), select sample sites, and obtain background information for the audit.

Documentation review and evaluation of the Trend Analysis report for the Forest was carried out in the time leading up to the start of the audit. There was a delay in the availability of the Trend Analysis report which was received by the auditor on June 11, 2011.

The field audit included a number of onsite activities during the week of September 12-16, 2011. Previously selected sites were visited and the majority of interviews with MNR, the Company, and stakeholders were scheduled at this time. The audit team sampled forestry activities that occurred on the Forest during the audit term sufficient to demonstrate the range and diversity of activities.

The co-lead, biologist, and silviculture auditor from the audit team were accompanied by the Company’s silviculturalist on a helicopter inspection of inaccessible areas. This view facilitated the auditors’ appreciation for the effectiveness of the management of the Forest and the landscape distribution of forest and habitat types.

The draft audit report is normally due within 60 days of the start of the field audit. However, though an audit schedule was originally completed, the bankruptcy of TECO in September 2011 resulted in a delay in the delivery of the final report. The transfer of responsibility for the audit involved postponements and delays resulting in the submission of the Draft Report on May 17, 2012 and the Draft Final Report on July 24, 2012.

The draft final report was sent out for review then the auditor met by teleconference to present and discuss the preliminary audit findings with the LCC (June 11, 2012) and with the auditees (June 12, 2012). Written comments resulting from these meetings were forwarded to the auditor to be considered for revisions.

The draft final report was reviewed by the Forestry Futures Committee and the auditees also completed their review to verify its contents and identify any significant errors. The auditor also received reviews from corporate and regional MNR offices. The final report was submitted following the auditor’s consideration of written comments.

A4.3 Field Sampling The field sampling design considers risk, rarity, year of operation, and season as factors in the selection of sites to visit during the audit field week. The object of the sampling is to capture each activity,


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ensuring that both winter and summer harvests are included. The base sample is 10%; activities that are rare or unique on the landscape will, by default, be sampled more that those activities that are common and broadly applied.

For development of the audit plan, the auditor is required to identify those criteria for the IFAPP principles that would be sampled during the audit process. The IFAPP qualifies the criteria as having a low, medium, or high risk of influencing forest sustainability. Sampling of criteria with lesser influence may be partial, but full assessment must be undertaken for those criteria considered high risk. Table 7 reflects the effort the auditor undertook to address specific IFAPP criteria during this audit.

Low Risk Medium Risk High Risk

Principle

# o

f A

pp

licab

le

Cri

teri

a

# o

f Se

lect

ed

Cri

teri

a

% A

ud

ite

d

# o

f A

pp

licab

le

Cri

teri

a

# o

f Se

lect

ed

Cri

teri

a

% A

ud

ite

d

# o

f A

pp

licab

le

Cri

teri

a

(10

0%

Au

dit

ed

)

1 - Commitment 2 0 0%

2 - Public Consultation & Aboriginal Involvement

7 6 86% 2

3 - Forest Management Planning 7 7 100% 12 12 100% 42

4 - Plan Assessment & Implementation 1 1 100% 1 1 100% 10

5 - System Support 1 1 100% 1

6 - Monitoring 2 2 100% 5 5 100% 11

7 - Achievement of Management Objectives & Forest Sustainability

2 2 100% 15

8 - Contractual Obligations 7 6 86% 13

Table 7. Procedures audited by risk category.

Table 7 shows that all applicable criteria were assessed (100% of the criteria were audited) for five of the IFFAP principles.

The Lac Seul Forest was certified by the SFI standard at the time of the audit. The Commitment principle is considered satisfied when a certification is maintained by the auditee as described within IFAPP for Criteria 1 within this principle. No issues were raised during the audit to warrant further scrutiny.


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Six of the seven (86%) medium risk criteria were considered during the audit for the Public Consultation and Aboriginal Involvement principle. Both of the high risk criteria were assessed as required by IFAPP.

For the Contractual Obligations principle, 86% of the medium criteria were assessed and all high risk criteria were reviewed.

The Annual Reports for each year of the audit term were used to determine the quantity of each forest management activity, specifically harvesting, road construction and water crossing installation, renewal and tending, and FTG assessment. Review of queries from the Company’s GIS system and treatment locations on a forest-scale map were used to determine a minimum sampling. Increased sampling, based on observation in the field of a specific condition or concern, may occur during the audit site visits. The actual sample of field sites visited is presented in Table 8.

Activity or Feature Total Area (ha)

Proposed Sample Size

(ha)

Actual Sample Size

(ha)

Actual Sample

(%)

Harvest 10,559 1,056 4,279 41%

Site Preparation 7,642 764 6,891 90%

Regeneration 17,956 1,796 7,597 42%

Tending 4,642 464 1,313 28%

Free-to-grow 20,928 2,093 4,626 22%

Specified Procedures 5,903 1,449 25%

Table 8. Total area, sampling target, and actual area sampled as part of the IFA for 2006 to 2011 forest management activities on the Lac Seul Forest.

A4.4 Summary of Consultations and Aboriginal Involvement Several types of media were used to consult with stakeholders and gain input to the audit. These consisted of newspaper ads, an on-line survey on the TECO website, notice letters, and direct calls to specific stakeholders.

Ads were published in the Sioux Lookout Bulletin, Dryden Observer, Ignace Driftwood, Northern Sun News, and Wawatay News.

The TECO website provided a brief forest management opinion survey; the opportunity to provide comments and request follow-up contact from the auditor was also made available through this link.


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A letter of notice was sent to all parties that had submitted comments during the 2011-2021 FMP process, stakeholders associated with tourism on the Lac Seul Forest, and all overlapping licensees. Letters of notice were also sent out to a further 1% sample of the rest of the District MNR mailing list. In total, 350 letters were sent out.

The mailed notices and the online survey resulted in a number of callback requests and resulting input from forest stakeholders. Input to the audit process by forest stakeholders assisted with field site selection and the content of auditee interviews.

Tourism Operators Tourism outfitters had specific concerns about harvest operations around Root Bay, the impact of access controls, and the effort required to establish resource stewardship agreements.

Root Bay Concern was expressed by one tourism operator through the web survey about cut timber left adjacent to a fly-in operating area where he had specific input to keep the waterway buffer as wide as possible. He also expressed dissatisfaction that the road remediation was not sufficiently severe to provide a barrier to ATV traffic.

The Company indicated that a signed memorandum of agreement was on file for this operator. It was also noted that this operator requested an independent environmental assessment, which was later declined. During the aerial inspection of the Forest, the Company pointed out First Nations activities, potential mining interests, and other activities around the portion of the river flowing into Root Bay used by the tourist outfitter. Access and management strategies for the site were discussed. The block was one of the last areas operational prior to the last shutdown of the McKenzie Forest Product Inc. mill. The block is scheduled for slash management and silviculture treatment during the 2011-2012 Annual Work Schedule. Recommendation 4 was issued to address the unskidded timber. This site was added to the audit sample by helicopter, based on the input received.

Resource Agreements Review of resource stewardship agreements on the Lac Seul Forest identified one instance where the Company implemented measures established within the FMP to address potential concerns from a tourism operator. After contact from the tourism operator, access control measures described within the FMP were implemented by the Company. The MNR then determined that the implemented measures provided a greater than anticipated barrier to public land access and required the Company to rehabilitate the access. The MNR undertook a plan amendment that resulted in the establishment of alternate access controls, including signage under the Public Lands Act, which restricted public access to this area and then monitored access for compliance.

The Company and tourist operator were disappointed that their efforts to negotiate and establish a resource stewardship agreement, complete with an access control plan built into the FMP, were not completed. The Minister has clearly stated through policy that agreements established through a resource stewardship agreement do not bind the Crown. In their role as administrator of public land, MNR determined that less prohibitive measures could be implemented and undertook the FMP amendment to achieve this result.


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The auditor is in agreement with a statement by one of the stakeholders that the value of a resource stewardship agreement is overstated, and the cost and effort involved are not worth it. The Company and tourist operators on the Forest have evolved a memorandum of agreement that is functionally simpler and more effective.

Ontario Federation of Anglers and Hunters The Ontario Federation of Anglers and Hunters completed the online survey and sent a supplemental letter describing their concerns regarding the Province’s strategy for implementation of the caribou mosaic. The Federation would prefer a more targeted, herd-specific, population management approach rather than the broad landscape habitat approach currently being used. This information was considered by the auditor during this review.

Overlapping Licensees Several overlapping licencees were contacted prior to the audit field week to discuss and review their experiences on the Lac Seul Forest during the audit term. Overlapping licencees were initially the Traditional Operators from the former Lac Seul Crown Management Unit.

Overlapping licencees active on the Forest reported generally good relations with McKenzie Forest Products Inc., regarding the administration of overlapping licences and access to forest allocations through the FMP. The system devised for allocation of timber functioned effectively. However two licencees expressed concerns stemming from the transfer of the SFL to McKenzie Forest Products Inc.

A Traditional Operator (originally listed in Schedule F of the SFL) expressed a specific concern with how the SFL was established through the New Business Relationship during the late 1990s. Differing points of view existed on the desired business arrangement to accompany the amalgamation of forest units that created the current Lac Seul Forest boundaries and the eventual assignment by MNR of the SFL to McKenzie Forest Products Inc. The process resulted in acrimonious relationships between some parties. Interviews with the District and the licencee holder indicated that harvest opportunities would be made available to the Traditional Operator subject to the standard requirements accepted for operating on the Forest, including entering into an overlapping licence agreement and other associated obligations. The auditor is confident that, should the Traditional Operator have the capacity to sustain and satisfy today’s operating and regulatory demands, District MNR and the Forest Resource Licence holder will follow through with their obligations to make opportunities available to those operators.

The auditor recognizes that the forest regulatory and operating environments have changed dramatically and become increasingly demanding over the past 15 years. The auditor anticipates the demands and complexity of forest operations to remain challenging. The auditor acknowledges that opportunities made available may be less satisfactory, however the demands placed on logging operators appear consistent for all operators on the Forest.

First Nations Written notice from the auditor inviting First Nations participation in the Lac Seul Forest IFA was issued in late April to all First Nations noted by MNR to have an interest in the Lac Seul Forest. Following discussions with the MNR District Native Liaison Officer, that office also issued written notices to each of the First Nations to facilitate contact with the auditor.


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The First Nations notified of the audit were Cat Lake, Lac Seul, Mishkeegogamang, Ojibway Saugeen, and Slate Falls. The auditor made several attempts to contact the two First Nations that fall within the boundaries of the Lac Seul Forest.

Lac Saul First Nation community’s Resources Officer and a Band councillor responsible for the forestry portfolio met with the auditor at the OMNR district office in Sioux Lookout during the week of the site visits.

They indicated their communities objected to MNR’s increased regulation and imposition of caribou management on their traditional lands. They had prepared at their cost, and had obtained approval for, a ten-year FMP for their lands. The plan became obsolete when caribou management came into force. Recommendation 2 supports modification of the caribou mosaic strategy adjacent to the Lac Seul Reserve to support community objectives within this portion of the Forest.

Local Citizens Committee Interviews were held with half of the current LCC members and one former committee member. Different LCC members participated in the opening meeting and the field visits. The auditor was impressed with the diversity of interests on the committee. The District Manager led a review and renewal of the membership of the LCC during the audit term to address recommendations from the previous audit.

Interviews with LCC members confirmed opportunities for them to express their opinions were made available during committee meetings and the meetings were orderly and, in general, respectful of the opinions and positions of stakeholders around the table. Some LCC members expressed frustration about delays experienced in the FMP planning process due to the timing of the release of the Stand and Site Guide and the Caribou Conservation Plan. The District Manager was noted as being present at the majority of meetings.

The auditors found that the LCC was actively involved in monitoring and providing input to the District Manager on the implementation of the 2006-2011 FMP, including the review of Annual Reports, Annual Work Schedules, amendments, compliance issues, and silviculture programs. Additionally, the District Manager and Regional Director included the LCC in the issue resolution process during the development of the 2011-2021 FMP.


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Appendix 5 – List of Acronyms

AOC - Area of Concern

CEZ - Cervid Ecological Zone

CFSA - Crown Forest Sustainability Act

COV - Identifier descriptive code from FMP denoting a Forest Cover objective

eFRI - A descriptor for the digital Forest Resource Inventory adopted as the provincial standard for new forest inventories.

FD - Identifier descriptive code from FMP denoting a Forest Diversity objective

FMP - Forest management plan

FMPM - Forest Management Planning Manual for Ontario’s Crown Forests

FRI - Forest Resource Inventory

FRL – Forest Resource Licence

FSC - Forest Stewardship Council

FTG – Free-to-grow

IFA - Independent Forest Audit

IFAPP - Independent Forest Audit Process and Protocol

LCC – Local Citizens Committee

MNR - Ministry of Natural Resources

NDPEG - Natural Disturbance Pattern Emulation Guide

R.P.F. - Registered Professional Forester

SFI - Sustainable Forestry Initiative

SGR –Silvicultural Ground Rule

SILV - Identifier descriptive code from FMP denoting a Silviculture objective

SOC - Identifier descriptive code from FMP denoting a Social objective

TECO - TECO Natural Resource Group Limited


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Appendix 6 – Audit Team Members and Qualifications The audit team was comprised of six members. The role of lead auditor was initially shared between John Cary R.P.F. and Matthew Hollands R.P.F., M.B.A. Following the TECO bankruptcy and the subsequent reassignment of the audit to Mr. Cary, he assumed the lead role.

A.6.1 Auditor Biographies

Matthew F. Hollands, R.P.F., M.B.A. Mr. Hollands is a professional forester and principal consultant of Hollands Forestry Consulting. He brings years of forest operations, silviculture and forest business experience to the audit team. He provided seven years of support to the Forestry Futures Committee as an audit analyst and observing forest management practices across the province. Mr. Hollands has served several First Nations communities and many medium-to-small enterprises through his practice. He has conducted hundreds of chain of custody audits as lead auditor for the various forestry certification standards.

During the earlier days of his career, Mr. Hollands gained broad and valuable field and forestry administrative experience through employment with MNR and several forest industry companies prior to his move to the consulting field. This is Mr. Hollands first Independent Forest Audit as co-lead auditor.

John Cary R.P.F. Mr. Cary has been involved in forestry in Ontario since 1973. Throughout his career he has been involved in forestry matters in both northern and southern forests within the province, through his employment with the MNR as a senior policy office and as an independent forestry consultant. He has provided advice towards, and participated in, the formation and advancement of provincial forest policy matters and legislation for much of his career, distinguishing himself as an advocate for good forestry practices. Mr. Cary has conducted thirteen IFAs including four as lead auditor.

Isabel Gannon R.P.F. Ms. Gannon is experienced as a plan author, bringing fifteen years of forest management planning knowledge to the audit team. Ms. Gannon understands the development of background information, forest units, strategic direction, annual work schedules, annual reports, plan amendments, and contingency plans. She has experience with the review of forest inventories to support forest modelling efforts for forest and habitat simulations. Ms. Gannon has also shared information supporting forest management planning with LCCs and the general public as well as assessing socioeconomic profiles. Ms. Gannon continues to provide her expertise in forest management planning as the principal consultant of Gannon Forestry Consulting Inc.

Dr. Rob Foster (Zoology) Dr. Foster is co-founder and principal of Northern Bioscience, an ecological consulting firm offering professional consulting services supporting ecosystem management, planning, and research. He has fifteen years research and experience in northern Ontario working on a variety of projects with direct or indirect links to forest management planning. His experience includes investigating the impact of herbicides on crop trees, competing vegetation, and small mammal communities; martin and peregrine falcon habitat spatial analysis; pre-harvest surveys for rare plants and non-timber values; remote sensing of aquatic moose feedings areas and many other assessments and studies of northern terrestrial


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and aquatic ecosystems. Dr. Foster is a trained auditor under the Forest Stewardship Council (FSC) standards and has participated as an auditor in FSC, IFA, and Sustainable Forestry Initiative (SFI) audits in Ontario.

Craig Robinson R.P.F. Mr. Robinson was the Senior Analyst and Manager of TECO Natural Resource Group Limited. His twenty years experience is specialised in inventory, analysis, timber supply, GIS, database design and software development and brings the technical strength to the audit team. Mr. Robinson is familiar with timber supply modelling practices across Canada. He has conducted resource analysis and modelling to support allowable annual cut and higher-level plan decision-making using various modelling packages. He has also designed and implemented comprehensive forest inventory and sampling programs to meet planning and modelling requirements with experience in BC, Yukon, NWT and Ontario. Craig is now teaching natural resource management at Confederation College in Thunder Bay and runs his own consulting company.

Andy Purton R.P.F. Mr. Purton R.P.F. is a silviculture-focused forester experienced with Post Harvest Forest Operating Prescriptions. Andy was employed by TECO Natural Resource Group Limited as an expert silviculturalist until their bankruptcy. He has now moved on to Sumac Consulting in Thunder Bay. His extensive knowledge of forest renewal following harvest, knowledge of regeneration surveys, past role in supervising cruising for the establishment of FRI permanent sample plots, and involvement with the establishment of Ontario Forest Research Institute (OFRI) NEBIE plots, provides the audit team a valued resource for assessing silvicultural performance during the audit term.


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Documents

Independent Forest Audit Report - Lac Seul Forest · Independent Forest Audit Report for the Lac Seul Forest for the Period April 1, 2006 to March 31, 2011 Prepared by: John Cary