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The BC Supreme Court has dismissed a lawsuit from Teal Cedar Products, a forestry company, which claimed it lost millions of dollars due to new timber rules in Haida Gwaii, a remote archipelago off the West Coast. The company argued that the new regulations unfairly devalued their forest tenures.
The rule changes included reducing the amount of timber that could be harvested and implementing conservation measures. Teal, which owned forest licenses affected by the regulations, claimed these changes amounted to "constructive expropriation," meaning the government's actions took away the value of their property rights, without formally seizing the property.
Chris Tollefson, a University of Victoria law professor and public interest lawyer who represented the Haida Gwaii Management Council at the trial, said private operators need to know rules evolve based on changing values and science, and companies aren’t owed compensation “where the change is bona fide, is not being used to discriminate or target them.”
The case centred on 2011 ecosystem-based management rules introduced by the Haida Gwaii Management Council (HDMC), a intergovermental regulatory body created under the laws passed by the Haida Nation and BC government.
The HDMC reduced the archipelago’s annual allowable timber cut by half in 2012 and imposed strict protections for old-growth cedar and culturally-sensitive areas. Fifty-two per cent of Haida Gwaii is now under conservation, of which four per cent is set aside as ecosystem-based management reserves for culturally vital cedar and sensitive ecosystems.
Teal Cedar Products Ltd., part of the Teal-Jones Group, held forest tenures on Haida Gwaii since 1997 and sold them to A&A Trading Ltd., a BC-based forest company, for $5 million in 2016. However, Teal-Jones later filed a $75-million lawsuit, claiming that the rules had unfairly reduced the value of their forest tenures and violated prior commitments to ensure their commercial viability.
The lawsuit framed the issue as a violation of private property rights, arguing the changes effectively confiscated Teal-Jones’ business interests.
BC Supreme Court Justice Brenda Brown ruled that the government and HGMC were not liable for compensation because regulations aimed to protect natural and cultural resources and did not take away Teal's property rights.
Tollefson explained that the tenures granted to licensees are not considered property rights. "These are rights to have the opportunity to harvest if certain terms and conditions are met," Tollefson added.
The judgment strongly rejected Teal-Jones’ claims. The ruling states that government regulators, including those through the HGMC, have the legal authority to make regulations in the public interest, even if they harm private businesses.
Brown ruled that regulations, especially those for conservation of natural resources or reconciliation with Indigenous Peoples, don’t require compensation unless they destroy the value of a property right. In this case, since Teal-Jones was still able to sell the tenures to another company that continued timber harvesting, the court found no grounds for compensation.
She also noted the concept of "ecosystem-based management," which guided the new regulations, was not a novel idea, and Teal should not have been surprised by its implementation. The concept had been discussed for years, and similar policies were already in place in other parts of British Columbia.
Long-time island resident and forest consultant Keith Moore was a witness in the case brought in by Tollefson’s law firm, which was representing the Haida Gwaii Management Council. He says the decision reaffirmed the balance in the Haida Gwaii land use plan, which the court agreed was legal and sends a signal to corporate interests that they should not hinder efforts aimed at conservation.
"The government has come together to try to chart a new course for forest management that's way more reflective of our times, that tenures are not guarantees," he said. “They must evolve with time, and that's what we did on Haida Gwaii.”
While businesses can challenge such regulations, they will need to show that the regulation completely devalues their property, a standard the court found Teal-Jones could not meet.
The court's ruling reinforced the understanding that these rights can be adjusted over time, depending on changes in regulations and the science behind them.
"This decision doesn't change anything in terms of the way laws are passed or policies are implemented, or even what licensees understand. I think it's always been understood that forest regulation is highly dynamic," said Tollefson.
"The regulations will need to adapt to align with the best available science," Tollefson said, emphasizing that licensees need to stay flexible and adapt to changes in forest management regulations, while maintaining strong relationships with local nations.
Teal-Jones was also the company at the centre of the Fairy Creek dispute, where old-growth logging protesters blockaded access to the forestry tenures on southern Vancouver Island. It has also launched a lawsuit against 15 of those protesters. The company applied for creditor protection in 2024.
Teal-Jones did not respond to a request for comment.
Sonal Gupta / Local Journalism Initiative / Canada’s National Observer
Comments
So I wonder if that might as a precedent offer anything to environmental concerns around First Nations and partners that have environmentally unsustainable operations.
As in sauce for the gander ...