In this newsletter:

• Capacity Idling: Different rules in different provinces may impact which plants go down Canadian forest products companies have been grappling with capacity idling decisions over the past several years. To date, such decisions have been largely based on a particular mill’s cost structure or linked to commodity pricing swings. Plants generally have been idled on a “temporary” basis. However, increasing numbers of facilities have been “indefinitely” idled. Companies are furthermore creeping towards the “permanent” shutdown of certain of their facilities.
• Aboriginal relations: The duty to consult and negotiate with Aboriginal groups can extend to blockade-related injunctions and contempt of court proceedings
  The Ontario Court of Appeal’s recent decision in Frontenac Ventures Corp. v. Ardoch Algonquin First Nation makes it clear that forest product companies must carefully assess their legal responsibilities when faced with protests and blockades by Aboriginal groups.
• Challenging the Residual Value Component of Ontario's Stumpage: An overview of the Boniferro case
  In proceedings filed with the Ontario Superior Court of Justice on August 20, 2007, Boniferro Mill Works ULC (“Boniferro”) successfully challenged the stumpage fee practice of the Ontario Ministry of Natural Resources, persuading the Court that the residual value charge (“RVC”) assessed by Her Majesty the Queen in Right of Ontario (“HMQ”) as a component of the Crown timber pricing system purportedly authorized by the Crown Forest Sustainability Act 1994, S.O., 1994, c. 25 (the “Act”) is unlawful. Boniferro convinced the Court that the RVC is a tax which HMQ has no authority to impose. Tranmer J. found that Boniferro is entitled to a complete accounting of all RVCs paid since it purchased its sawmill. HMQ appealed the Boniferro decision, which appeal was heard by the Court of Appeal on September 2, 2008. The Court of Appeal decision is expected to be released in early 2009.

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