Consultation Paper: Amendments aimed at preserving the independence of commercial inshore and coastal licence holders

Table of contents

1. Context
2. Background
3. Goal of the proposed amendments to the Atlantic Fishery Regulations
4. Scope of the regulatory proposal
5. Summary of proposed amendments
6. Complementary Policy Changes
7. Discussion questions
8. Next steps

Context

In February 2017, the Standing Committee on Fisheries and Oceans (SCOFO) recommended changes to the Fisheries Act and its implementation.Their report highlighted the value of the inshore fisheries policies to stakeholders in Atlantic Canada and Quebec.

In February 2018, Bill C-68, an Act to amend the Fisheries Act, was tabled in Parliament. It includes:

• new authorities to suspend or cancel a licence if the licence holder is in an agreement that contravenes the Act or regulations;
• considerations that the Minister may take into account for decision-making, including the preservation or promotion of independence in commercial inshore fisheries.
• clarifications on existing authorities to regulate, for example, the carrying out of social, economic or cultural objectives.

Background

• The key policies supporting the inshore fishery in Atlantic Canada and Quebec are Owner Operator and Fleet Separation.
• These policies apply to the majority of inshore and coastal licences in Atlantic Canada and Quebec, however some individuals and fleets are exempt.
• To preserve the independence of the inshore fleet, elements of the policies are proposed to be incorporated into the Atlantic Fishery Regulations.

Goal of the proposed amendments to the Atlantic Fishery Regulations

In Atlantic Canada and Quebec, an economically viable inshore fishery remains the backbone of coastal communities and an integral part of its cultural fabric.

The proposed new regulatory provisions will aim to ensure that licence holders who are granted the privilege of harvesting fishery resources under an inshore licence personally:

• carry out the activities permitted under the licence,
• retain decision-making related to their licensed fishing activities, and
• receive the benefits from their privileged access to the resource.

Scope of the regulatory proposal

• The intent is for the proposed new regulatory provisions to maintain the same scope of application as currently exists for the inshore and coastal fisheries policies.
• The new regulations would not apply:
  • outside of Atlantic Canada & Quebec
  • to Indigenous communal fisheries licenced under the Aboriginal Communal Fishing Licences Regulations which allow, among other things, Indigenous organizations to designate multiple persons to fish under a licence.
  • to corporations that were holding inshore fishing licences prior to 1979 (pre-79 corporations) and to fleets that have been provided a complete exemption from the inshore policies.
• It is proposed that all or part of the proposed new regulatory provisions not apply to individuals or fleets that have current exceptions under the inshore fisheries policies. The regulations will not provide for new exceptions.

Owner Operator

Objective

To support the independence of inshore and coastal licence holders in coastal communities and ensure that they are the people personally fishing the licence.

Fleet separation

Objective

To maintain a separation between the harvesting and processing sectors of the industry, i.e., no vertical integration.

Elements of the policy proposed to be regulated:

Inshore and coastal licences shall not be issued to corporations (except eligible wholly-owned corporations), including those involved in the processing sector.

Proposed exceptions:

Pre-89 corporations and Eastern Nova Scotia snow crab companies.

Use and Control over the Rights and Privileges of a Licence

Beyond enshrining elements of our existing policies, DFO is proposing a new regulatory measure regarding the rights and privilege under a licence.

This would replace the Preserving the Independence of the Inshore Fleet in Canada's Atlantic Fisheries (PIIFCAF) policy and apply to the same licence holders.

Objectives of proposed new regulatory measure

• Ensure that licence holders remain in control of the rights and privileges associated with the inshore fishing licence(s) issued in their name.
• Ensure licence holders hold licences on their own behalf and not for the benefit of 3rd parties
• Continue to support access to capital/financing for licence holders.

• Licences belong to the Crown and are issued at the discretion of the Minister.
• Licences provide a limited number of harvesters with privileged access to the fisheries, which is a common property resource belonging to all Canadians.
• A licence is composed of two parts: 1) the title and 2) limited rights and privileges, which include the ability to:
  • Access the resource (e.g. quota and licence conditions).
  • Make decisions related to the use of the licence (e.g., where, when, with whom, on which vessel to fish).
  • Make a request for a substitute operator.
  • Make a request to issue a replacement licence.

Regulatory provisions could be pursued to stipulate that

• Independent Core Licence holders must retain use and control over rights and privileges conveyed by the inshore licence(s) issued in their name.

There are circumstances where limited transfer of rights or privileges would be acceptable. The Minister could allow for exceptions, for example:

• Where the licence is used as collateral in a financial agreement with an approved lender; the lender, in case of default of payment or bankruptcy, would be able to use the privilege to recommend to the Minister another licence holder for a replacement licence.
• In the case of the death of the licence holder, his/her estate would be able to use and control the rights and privileges for a maximum of five years.
• Where a substitute-operator (SO) is designated under a licence, the SO would be able to use certain rights, such as access to the resource, but would not be allowed to control others, such as decisions related to the recommendation to the Minister to issue a replacement licence to another fish harvester.

Consequences of non-compliance

• The regulations will be enforceable by DFO’s Fishery Officers.
• Bill C-68 proposes to amend section 9 of the Fisheries Act to allow the Minister to suspend or cancel licences where licence holders are party to an agreement that contravenes the Act or regulations.
• The Fisheries Act provides the penalties for offences in section 78:

Summary of proposed amendments

1. Maintain the current scope of application of the inshore fisheries policies.
2. Limit the issuance of inshore and coastal licences to individuals or wholly-owned companies.
3. Require the licence holder or operator named in the licence (substitute-operator) to personally fish the licence.
4. Limit licence holders to one licence per given species.
5. Require that Independent Core Licence holders retain the use and control of the rights and privileges under the licence issued in their name.
6. Maintain current exceptions to the above restrictions, no new exceptions will be provided.

Complementary Policy Changes

Substitute Operator

Context

A Substitute Operator (SO) is an exception to the Owner-Operator policy, which requires the licence holder to personally fish the inshore commercial licence issued in his/her name.

Issue

• Application of allowances are inconsistent between regions.
• Concern that 3rd parties are using SO to assert control over certain rights and privileges conferred by the fishing licence.
• Policy changes could be pursued in conjunction with the regulatory proposal to provide clarity and consistent application of SO allowances to further strengthen the owner-operator policy.

Strengthening through potential Complementary Policy Changes

Substitute Operator

Policy changes could clarify the circumstances for the use of a Substitute Operator by:

• Clarifying how the medical SO is calculated and a strict application of the 5-year limit.
• Developing consistent guidelines for other circumstances such as estates, jury duty, etc.
• Clarifying the requirements for documentation and annual maximums for SO allowances.

Discussion questions

• Do you support the proposed scope of application and the proposed amendments to the regulations?
• Would these regulations help achieve the goal of preserving the independence of commercial inshore license holders? If not, what is missing?
• Do you have comments on who the regulations should apply to?
• How might the proposed amendments to the regulations positively or negatively affect your enterprise?
• Do you think the clarifications to the SO policy would help strengthen the independence of inshore license holders? Do you support these clarifications to the SO allowances?
• Other comments or suggestions?

Next steps

Consultations

• Ongoing until September 2018.
• Please submit comments to: DFO.Independentfishers-pecheursindependants.MPO@dfo-mpo.gc.ca

Regulations

• DFO to finalize the regulatory proposal fall 2018.
• Expected to pre-publish in Canada Gazette, Part I for public comment in late fall/early winter.
• Stakeholders will be able to provide further input then.

The regulations-making process