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REGIONAL WRAP-UP Before work starts in an area, Bennett recommends: train- ing sessions (with the names of individuals recorded), a well-de- fined and clear chain of command, pre-work and on-site meet- ings, standard defined protocol, and ongoing supervision with monitoring. A contingency plan should also be considered in the event of a mishap. Due diligence is becoming more of an issue in defending forestry companies, in part be- cause of contracting out, but also because the FRPA is a stat- ute that replaces more complex, process-oriented legislation with end-result legislation and allows companies greater flex- ibility in decision-making and planning to get to that end result. The FRPA and regulations govern licensee activities such as planning, road building, log- ging, reforestation, and grazing. It also protects environmental values including watersheds and wildlife habitat but encour- ages innovation with the licensee taking responsibility for the end result. The seminar also provided information on administrative Daniel R. Bennett penalty proceedings with a presentation by director Dan Gra- ham of the compliance and enforcement branch of B.C.'s Min- istry of Forests and Range. Graham, in outlining the process of investigation and information-gathering, said compliance and enforcement officers have a lot of power. "They can enter private land, obtain records, seize timber, chattels, hay, issue violation notices, and stop-work orders." He also outlined how companies could appeal a decision and penalty handed down by a "statutory decision maker" before the Forest Appeals Commission. The FAC is an independent tribunal established under the Forest Practices Code of British Columbia Act and the FRPA. Bennett said companies involved in an investigation should assess the risk they are being exposed to and make a decision accordingly — to engage their lawyer in the process. Bennett cautioned that lawyers and company managers in these cases tread a fine line between co-operating with compliance and enforcement officers and guarding the company's best inter- est. "Do guide the process," he suggested. He advised when in- vestigators arrive to collect information that a knowledgeable company-management representative "tag along" to ensure all their questions are answered. "You want to be co-operative but you also want to be careful," he said. Bennett also suggested companies document meetings and information from the investigative process. He said it was im- portant to begin assembling information to refute an alleged violation before the compliance and enforcement officer's final report is filed and punitive measures are handed out. This can also expedite an appeal before the FAC. — JEAN SORENSEN jean_sorensen@telus.net www. C ANADIAN mag.com M AY 2008 7 Small M&As worth big money in the oil patch B usiness lawyers in Alberta are realizing the residual impact of the federal crackdown on income trusts. While the government's announcement to intro- duce an income fund distributions tax was initially ex- pected to chill oil patch activity, resourceful junior oil and gas entrepreneurs are beginning to merge or seek other opportunities to persevere within the sector. At the time of the 2006 income-trust announcement, lawyers expected a spate of M&A work to emerge, pri- marily from the income trusts themselves. It did, but the junior companies, which used to count on selling out to income trusts, have had to revise their strategy. Unlike in other industries, deals transacted by the junior oil com- panies range in value from $10 million to $1 billion. "As the year moves on, you'll see more and more merg- ers or acquisitions in order to reduce operational costs and also to make them larger and more finance-able," says Richard Shaw, a business law partner at McCarthy Tétrault LLP's Calgary office. "The small companies — they'd grow from nothing to maybe four or five or six thousand barrels a day and expected to get taken over by income trusts. But that's not going to happen anymore, because of the changes to income trusts." He acknowledges activity slowed markedly follow- ing the federal government's announcement, then crept up to a pace of "business as usual" early in 2007. Exist- ing trusts were given a four-year transition window to 2011. So it's taken a year for the ripple effect to resonate throughout the sector. Shaw, who practised in Toronto for 10 years before moving to Alberta about the time McCarthys opened its Calgary office, attests that the business community and M&A environment, especially now, is far different than else- where in Canada. "For law- yers who practise M&A, it is slightly different work. We are seeing a lot of transactions in- volving smaller companies," Shaw says. "We're still doing a lot of finance work for exist- ing trusts, because they need to keep going, and the M&As we're seeing somewhat small- er deals with smaller entities." Those smaller entities are usually long-term clients Richard Shaw who choose their advisors by reputation, not by firm. "Calgary is a different community from Toronto because the businesses here have been grown, in many cases, by individual entrepreneurs and management teams who