Appeal Court backs Irving in dispute with wood marketing board

New Brunswick's Court of Appeal has upheld a decision by the province's Forest Products Commission in a case that puts the future of the woodlot marketing board system in doubt.

The decision involves the Southern New Brunswick Forest Products Marketing Board and J.D. Irving Ltd., which was joined by AV Nackawic and some smaller companies and contractors.

But the outcome affects all of the province's seven boards, their 41,000 members and other companies that purchase timber from private woodlots.

The court ruling fully backs a December 2017 decision by the commission that struck down an attempt by the Sussex-based SNB marketing board to reassert its authority over wood sales in its territory by issuing an order saying all wood had to be sold to the board and bought from the board.

The Forest Products Commission is an arm's length panel that oversees relationships between forestry companies and the seven marketing boards.

The case involves a dispute dating back nine years, when J.D. Irving Ltd. began bypassing the SNB marketing board and requiring landowners to negotiate wood sales on an individual basis.

In 2012, JDI stopped buying wood from the board entirely.

SNB board chair William Richards said he is disappointed by the decision.

"We are going to be looking at our options as to how we move forward on this after digesting the reality, I guess, of [the decision]," said Richards. "If you are going to have a marketing board system, you can't have a whole lot of holes in it so people can drive through and around it."

Richards says the problem could be solved if the provincial government would choose to act.

"We believe the government should enforce its own regulation and the auditor general in the 2015 report said the same thing," he said.

The woodlot marketing boards were created in the late 1970s and given power by the legislature to regulate sales from private woodlots in their territories. Mill owners negotiated timber prices with the boards, and woodlot owners sold their wood to the boards, which in turn sold the wood to the mills.

The system was designed in part to get better prices for private landholders dealing with companies that also had extensive access to wood from Crown forests.

But over the decades since the authority of the boards has been eroded by legislative amendments or by legal challenges that have kept the matter tied up for years before either the courts or the Forest Products Commission.

In a statement JDI vice-president Jason Limongelli said the Appeal Court decision shows "SNB has no legal right to this excessive control."

"Willing buyers and sellers can do business directly in good faith," said Limongelli. "It is time to move on and focus on a productive relationship."

He said private wood makes up close to 50 percent of the company's supply, totalling about $650,000 per week.

He said the company is not "against" woodlot owners or private wood producers.

MLA David Coon, leader of New Brunswick's Green Party, said successive governments have ignored their duty to step in to support the marketing board system.

'It's depressing, whether it's been Liberal or Conservatives, they refuse to stand with their own citizens against the big, huge wealthy corporations on this," said Coon.

"Marketing boards like SNB have been trying to find other ways around this, but it just keeps coming back to the fact it's on the government. They've got to enforce their own laws that were designed to ensure that marketing boards can function effectively to assure that private woodlot owners have access to the market at a good price."

UNB historian William Parenteau, who has long followed the politics and economics of forestry in the province, said the court decision effectively renders the marketing boards "powerless."

"It's a story of 20 years of frustration for them because they keep seeing more and more the province is siding with the pulp and paper industry, and now you get this ruling which actually says that Irving and other companies can pretty much do what they want."

Kevin Larlee, the AV Group vice-president for government relations, said the company is not yet ready to comment on the decision.

A spokesperson for Energy and Resource Development Minister Mike Holland referred comment to the Forest Products Commission.

Tim Fox, the executive director of the commission, said that with the court ruling, woodlot co-ops can now take a serious look at a proposed "substitute' order released by the commission as part of its December 2017 decision.

It suggests the licensing of all sellers, buyers and mill owners dealing with private woodlots in the territory of the Sussex-based SNB Marketing Board.

Woodlot owners expressed interest in that proposed order, but the matter was put on hold when the SNB group elected to appeal the commission decision.

Federation president Rick Doucett said an order composed by the commission itself would stand a better chance if appealed than a different one composed by an individual woodlot group.

He said both the commission in its 2017 ruling and the court decision this week recognize the marketing boards have authority to regulate wood sales in their territories.

The problem, he said, is that any time the boards try to exercise their authority they are taken to the commission or to the courts.

"I don't really understand how the boards are supposed to function in that environment," Doucett said.

"Being able to go outside of the board and just do other deals whatever way you want, it just undermines the whole system. There's really no conceivable way to negotiate a fair marketing situation for private woodlot owners under that scenario."