Section 10 of the Fisheries Act: Fish Allocation for Financing Purposes

Minister’s Statement:

As the Minister of Fisheries and Oceans, I am committed to building and strengthening the Department’s collaborative relationship with stakeholders into the future. A key part of this commitment is to ensure that we have the tools we need to achieve our shared objectives within the areas of science and fisheries management.

In 2012, the Fisheries Act was amended to provide the Minister of Fisheries and Oceans with the authority to set aside a fish allocation for the purpose of financing a science or fisheries management activity that contributes to the proper management and control of the fisheries.

Fisheries and Oceans Canada (DFO) is in the process of developing a national policy framework that shall provide a rigorous, standardized, and transparent process to guide the application of this legislative authority.

Though the policy is still being developed, some of its guidelines are already clear. For example, in using this new authority I will be guided by the following principles: that fish or fishing gear set aside to finance a scientific or fisheries management activity will be allocated to current licence-holders, and that I will only approve projects that directly relate to the management and control of the fishery and have the broad support of those involved in the fishery. Be assured, the new policy will reflect these principles.

Moving forward please be assured that as a department, we are committed to engaging fishery stakeholders in the development and implementation of this policy.

The Honourable Keith Ashfield, P.C., M.P

Background:

Until 2006, some fish surveys and other science activities were funded, in part, by fish. That is to say, Fisheries and Oceans Canada (DFO) allocated fish to industry stakeholders in exchange for their contribution to research costs and science data. These collaborative agreements were governed by joint project agreements (JPAs). DFO had pursued the “use of fish” practice with industry to achieve both shared and industry-specific fisheries management objectives.

The Federal Court of Appeal decision in Larocque (June 2006) and the Federal Court of Canada (Trial Division) decision related to the Association des Pêcheurs de Poissons de Fond de l’Acadie (APPFA) (October 2006) put an end to the collaborative practice of “use of fish”. In short, the two court decisions determined that the Minister (DFO) did not have the authority to engage in such activities.

To ensure that the most important of these science projects could continue, the government solely funded them on an interim basis; they became commonly known as the “Larocque projects”. In the intervening years, DFO worked to find an appropriate long-term solution.

On June 29, 2012, the Jobs, Growth and Long-term Prosperity Act received Royal Assent. Contained therein was a provision that amended the Fisheries Act, granting the Minister the authority to allocate fish or fishing gear for the purpose of financing a scientific or fisheries management activity, commonly referred to as “use of fish”.

With this new legislative authority, DFO and industry could once again collaborate in a manner whereby fish was used to help fund science and fisheries management activities.

A Year of Transition:

DFO determined that for 2013-14, 35 critical projects – previously funded solely by the government with “Larocque-relief funding” – would transition to an allocation of fish model. Due to tight timelines, no changes to these projects or the development of new projects would be considered.

These arrangements will continue to operate under an allocation model for one year, while a national policy framework is developed. After this time, any project (new or those that were transitioned) will need to be evaluated against the newly-developed policy framework.

We Are Seeking Your Input:

DFO has developed a DRAFT national policy to provide a rigorous, standardized, and transparent process to guide the application of this legislative authority.  And now, we need to hear from you.

Below you will find a copy of the draft national policy.  We invite you to provide us with your views, comments and questions on this draft by November 30, 2013.  You can provide your input by contacting us at:

consultations@dfo-mpo.gc.ca

Or

Policy Consultation
200 Kent Street, 8W153
Fisheries and Oceans Canada
Ottawa, ON
K1A 0E6

The feedback we receive will be taken into account as we work to finalize the policy.  Our goal is to have the policy finalized and in place in advance of the 2014 fishing season.

National Policy for Allocating Fish for Financing Purposes

Draft - (October 11, 2013)

Table of Contents

1.0 Introduction

As a Department, Fisheries and Oceans Canada (DFO) is committed to building and strengthening collaborative relationships with stakeholders in support of sustainable and economically viable marine and fisheries sectors. In order to accomplish this, several mechanisms are available for DFO to collaborate with stakeholders to help achieve our mandate, priorities and objectives. Together with stakeholders, DFO can choose the most appropriate tool to collaborate to achieve a shared objective. Collaborative tools available to the Department include memorandums of understanding (MOUs), various kinds of collaborative agreements, Government of Canada procurement contracts, grants and contribution programs as well as Centres of Expertise or Excellence.

Prior to 2006, while pursuing collaborative efforts to achieve shared fisheries management objectives, DFO partnered with some industry groups through collaborative agreements, allocating an amount of fish to industry in exchange for their financial contribution to fund fisheries management, science and research activities.

These partnerships were impacted by the Federal Court of Appeal decision in Larocque (June 2006) and the Federal Court of Canada (Trial Division) decision related to the Association des Pêcheurs de Poissons de Fond Acadiens (October 2006). These rulings put an end to the collaborative practices of using fish to finance activities. To ensure the continuation of the most important of these science projects, the government solely funded them on an interim basis until an appropriate long-term solution could be found; these projects commonly became known as “Larocque projects”.

On June 29, 2012, the Jobs, Growth and Long-term Prosperity Act received Royal Assent. Contained therein was a provision that amended the Fisheries Act, granting the Minister the authority to allocate fish or fishing gear / equipment for the purpose of financing a scientific or fisheries management activity, commonly referred to as “use of fish”, through a joint project agreement (known as a Collaborative Agreement). This legislative amendment provided DFO with another means to partner with stakeholders to achieve a shared objective.

Mindful that fish are a common resource that belongs to all Canadians, the Minister must manage fisheries while taking into account the interest of the public when making allocation decisions. The Minister has the authority to set the total allowable catch (TAC) for Canadian fisheries and to allocate fish or fishing gear / equipment in support of the proper management and control of the fisheries and the conservation and protection of fish. This can include allocations under section 10 of the Fisheries Act. With the authority under section 10, the Department and stakeholders now have an additional tool to partner in the sustainable management of this important resource for the benefit of all Canadians.

2.0 Scope

The scope of this policy is national and it applies to all commercial, recreational, and Aboriginal fisheries licensed and/or managed by DFO under the Fisheries Act. Section 10 of the Fisheries Act provides the Minister with the authority to allocate fish or fishing gear / equipment for the purpose of financing collaborative science or fisheries management activities that contribute to the proper management and control of the fisheries. These activities are described through a collaborative agreement (i.e., a joint project agreement under section 10 of the Fisheries Act) that the Department has entered into with a partner. The Fisheries Act is worded as follows:

FISH ALLOCATION FOR FINANCING PURPOSES

Allocation of Fish

10.(1) For the proper management and control of fisheries and the conservation and protection of fish, the Minister may determine a quantity of fish or of fishing gear and equipment that may be allocated for the purpose of financing scientific and fisheries management activities that are described in a joint project agreement entered into with any person or body, or any federal or provincial minister, department or agency.

Quantity in licence

10.(2) The Minister may specify, in a licence issued under this Act, a quantity of fish or of fishing gear and equipment allocated for the purpose of financing those activities.

3.0 Purpose

This policy aims to define standardized, rigorous, and transparent criteria and processes when using fish or fishing gear / equipment to finance activities, to ensure a clear and consistent application of section 10 of the Fisheries Act.

The policy is supported by Operational GuidelinesFootnote 1 that provide more detailed guidance for the application of section 10 of the Fisheries Act.

4.0 Eligibility

The Minister of Fisheries and Oceans has the authority to set the TAC for Canadian fisheries in support of the proper management and control of fisheries and the conservation and protection of fish. Section 10 of the Fisheries Act provides the Minister with the ability to allocate some of this fish to help finance certain joint activities with stakeholders.

Although the Minister can enter into a collaborative agreement pertaining to scientific or fisheries management activities with any person, federal or provincial minister, department, or agency, eligibility criteria will help guide DFO in determining:

  1. The persons or entities eligible to propose projects and enter into a collaborative agreement with DFO;
  2. The types of projects that can be funded using an allocation of fish or fishing gear / equipment; and,
  3. The persons or entities eligible to receive an allocation of fish or fishing gear / equipment equipment to finance collaborative agreements with DFO.

4.1 Participant Eligibility

DFO will consider entering into collaborative agreements pertaining to scientific or fisheries management activities with any person, federal or provincial minister, department or agency. However, these collaborative agreements must include a representative that is:

  1. A licensed harvester, which includes commercial, recreational, and Aboriginal harvesters in a fishery where a project is proposed, or those that receive an allocation of fish or fishing gear / equipment;
  2. A harvesters’ organization representing a licensed harvester referred to in (a); or,
  3. Any other legal entity that will represent the interests of the harvesters involved in the fishery for which the activity will be proposed.

4.2 Project Eligibility

DFO will consider funding activities through an allocation of fish or fishing gear / equipment that:

  1. Contributes to the proper management and control of a fishery, including the conservation and protection of fish;
  2. Does not compromise the conservation of the resource;
  3. Does not impact Food, Social and Ceremonial (FSC) fisheries (except under section 8.3), fish allocated under Comprehensive Land Claims Agreements, and international sharing agreements (except under 8.1(b));
  4. Are consistent with current sharing arrangements, where established;
  5. Includes a true contribution (defined in section 6) proposed by all parties entering into the collaborative agreement;
  6. Are consistent with the DFO’s mandate and support an element of DFO’s Program Alignment Architecture;
  7. Both the allocation and the project proposal are supported by a significant majority of harvesters or their representative organizations who are directly affected by the allocation decision in that fishery; and,
  8. Where possible, support and align with efforts made by the Department to strengthen relationships with Aboriginal groups pursuant to Aboriginal fisheries programs.

4.3 Allocation Eligibility (i.e. Recipients of Fish or Fishing Gear / Equipment)

Eligible recipients of an allocation of fish or fishing gear / equipment under section 10 are limited to harvesters or legal organizations who hold a licence in the fishery where the project is taking place (except under 8.4) and who are not prohibited to sell fish.

In cases where the Department has entered into a collaborative agreement with a harvester or legal organization who are prohibited to sell fish, DFO would recognize a partnership with another licence holder who is authorized to do so, in order to generate the financial support required under section 10. The partnership must be included within the collaborative agreement.

5.0 Stakeholder Support

Stakeholder support is required for both the project and the allocation being set aside under section 10 for every collaborative agreement the Department enters into under this policy.  For the purpose of this policy, stakeholder support is considered to be having the support of a significant majority of those directly affected by the allocation decision  (harvesters or their representative organizations) whose cumulative share of the resource amounts to: 2/3 or 66 percent of the TAC for share based fisheries; or, 66 percent of harvesters participating in the fishery in an input based fishery that will be affected by the allocation of fish or fishing gear / equipment.

The onus will be on the project proponent to ascertain that a significant majority of those affected by the allocation decision regarding the amount of fish proposed for the project has been obtained.  However, this will not relieve the Department from consulting with Aboriginal groups, where necessary or required.

6.0 Process for Project Proposals

Project proposals for the allocation of fish or fishing gear / equipment will be considered by the Department if they:

  1. Are received by the Department within a reasonable amount of time prior to the proposed start date of the activity to allow DFO to assess proposals and consult with Aboriginal groups, where required;
  2. Are submitted as per the requirements of the Operational Guidelines; and,
  3. Meet the eligibility criteria outlined in Section 4.0.

7.0 Collaborative Project Costs

7.1 True Contributions

A collaborative agreement is the required mechanism to partner with someone under section 10 of the Fisheries Act. Due to the collaborative nature of these agreements, all parties who are signatories to the collaborative agreement must demonstrate that they are contributing something from their own resources, either as an in-kind contribution or a cash contribution that is not going to be considered a recoverable expenditure through the allocation of fish or fishing gear / equipment used to finance the project. This is what is known as a true contribution.

Collaborative agreements must define the true contribution(s) included in the project and should be of comparable value between all parties. As well, collaborative agreements should include the sharing of authority and responsibilities; resources (time of personnel working on the project or supporting the project in some capacity, funding, and expertise); benefits; and overall risk of the project.

An in-kind contribution is considered anything contributed to a project that is not cash or fish, but can be quantified in some way (for example, time of personnel working on or supporting the project in some capacity). The quantity of fish or fishing gear / equipment set aside by the Minister under the authority of section 10 cannot be considered an in-kind contribution from either the Department or the proponent since at the time the allocation of fish or fishing gear / equipment is set aside by the Minister, the fish is still a common resource that belongs to the people of Canada.

A cash contribution towards a project that is intended to be a true contribution in the collaborative agreement cannot be recovered as an expense through the allocation of fish or fishing gear / equipment.

7.2 Eligible Costs

Eligible costs that can be recovered under a collaborative agreement through an allocation of fish or fishing gear / equipment are the incremental and direct costs of activities clearly linked to the project (which may include its development, administration, and implementation). Other costs that are not explicitly referenced in Departmental policies and rules regarding collaborative agreements, but are clearly linked to the activity, may be examined on a case-by-case basis and included if the agreement of all signatories has been received.

More information on examples of ineligible costs in a collaborative agreement can be found in the Operational Guidelines.

7.3 Ineligible Costs

Fixed and overhead costs that are not associated with the planning, oversight, or conducting of the activity are ineligible to be recovered through a collaborative agreement.

More information on examples of ineligible costs in a collaborative agreement can be found in the Operational Guidelines.

8.0 Determining the Amount of Fish

Under the Fisheries Act, the Minister has the authority to manage the fisheries on behalf of Canadians to support the proper management and control of the fisheries and the conservation and protection of fish. In doing so, the Minister has the authority to issue a licence, set the TAC for a fishery, and make allocation decisions setting amounts of fish or fishing gear / equipment that can be fished by license holders.

When determining an amount of fish or fishing gear / equipment required to finance an activity under section 10, the Minister will be held to the same standard of accountability and efficiency as would be the case if allocating public funds directly.

Keeping this in mind, and the collaborative nature of section 10, proponents will need to determine the minimum amount of fish or fishing gear / equipment that is required to cover the determined cost of the activity, and provide the Department with this amount for consideration by the Minister when making allocation decisions for that fishery. Having the ‘significant majority’ support by those affected by the allocation decision (as defined in section 4.2) will be required for the amount of fish or fishing gear / equipment proposed. The amount of fish or fishing gear / equipment allocated should be the smallest possible amount that can reasonably be expected to generate sufficient funds to securely finance the specified activity over the timeframe of the collaborative agreement. It should consider the full revenue from selling the fish and the costs of catching and landing the fish. Estimated revenue and cost may be adjusted to account for uncertainty around fluctuating economic factors, such as landing prices and operational costs.

Further information on how to determine an amount of fish used to cover the costs of the activity is provided in the Operational Guidelines.

9.0 Allocation of Fish or Fishing Gear

The following considerations will guide the Minister when setting aside an allocation of fish or fishing gear / equipment to finance scientific or management activities under section 10.

Allocation decisions under section 10 of the Fisheries Act will be made by the Minister or delegated authority for that fishery as it relates to decisions on TAC or level of effort. Further information on the decision making process can be found in the Operational Guidelines.

9.1 TAC based fisheries

In the context of TAC based fisheries, fish will typically be coming from the existing Canadian TAC, with those affected by the allocation decision being determined by whether the activity will be for the benefit of all those in the affected fishery. The following rules apply:

  1. Subject to (b) and (c), an allocation of fish will typically be taken off the top of the Canadian TAC of the fishery associated with the project, after deducting what is required for existing Food, Social or Ceremonial (FSC) fisheries.
  2. Taking fish off the internationally set TAC can be considered with the concurrence of the responsible international body that recommends the TAC.
  3. Where an activity is proposed by a sub-group of harvesters within a larger fishing area, the allocation can be taken off the sub-group’s share of the quota only (i.e. 2/3 support of the sub-group required).

9.2 Input Controlled Fisheries

In the context of input controlled fisheries, such as lobster, the allocation used to generate the financial support for the activity would typically come from existing effort in any given fishery.

9.3 Communal Commercial Licences and Food, Social and Ceremonial (FSC) Fisheries

Where the allocation decision has the possibility of affecting established or potential Aboriginal and Treaty rights the following process will apply:

  1. The Department will maintain the honor of the Crown, and proper consultation with the affected Aboriginal groups will occur;
  2. If applicable, relevant provisions of any land claims agreements will be taken into account before making the decision.

9.4 Allocation of Fish to Fund an Activity in a Different Fishery

Strong support from harvesters in the affected fishery will be required for the Minister to set aside a quantity of fish or fishing gear / equipment to finance an activity aimed at a fishery for another species.

For the purpose of this policy, strong support should be aiming for consensus from those who are affected by the allocation of fish or fishing gear / equipment used to finance the activity.

10.0 Licensing

The allocation of fish or fishing gear / equipment will be provided through a fishing licence. The actual licensing mechanism to allocate the fish or fishing gear /equipment may vary and will be determined based on the specifics of the activity, such as when the fishing activity is occurring, and current regulations in place (e.g., commercial fishing licence, section 52 of the Fishery (General) Regulations scientific licence).

Other relevant fisheries licensing policies and rules continue to apply in the application of section 10.

11.0 Collaborative Agreements

Collaborative agreements are required for section 10 activities financed using an allocation of fish or fishing gear / equipment and should be drafted using the Cost Sharing Agreement template which can be found in the Operational Guidelines.

Collaborative agreements may be developed for a period longer than one year, with preference being given to those that are in-line with the multi-year management and assessment decisions associated with the particular fishery.

In order to ensure a rigorous and transparent process, the Department will have the right to audit activities that took place through a collaborative agreement entered into under section 10 of the Fisheries Act. The audit may include verification of value and costs associated with the activity and/or the amount of fish or fishing gear / equipment allocated by the Minister. As per the collaborative agreement, throughout the course of the collaboration, and for a period of six years following the expiration or termination of the Agreement, all parties shall maintain accounting records for the purposes of auditing section 10 activities.

12.0 Data Collection

The fishing activity associated with a section 10 allocation is subject to the same data collection provisions as normally applied to the fishery via conditions of licence in either the commercial season or scientific survey, depending on when the fishing activity occurs. Specific rules with respect to the collection and transmission of data from the activity to DFO will be outlined through the conditions of licence for the fishery.

13.0 Performance Evaluation and Reporting

Upon completion of the activity, as per the requirements of the collaborative agreement, all parties will conduct an evaluation and report on the outcomes outlined and agreed to in the collaborative agreement.

Using the Treasury Board Secretariat's Guidelines on the Proactive Disclosure of Contracts, which requires the mandatory publication of contracts over $10,000.00, DFO will make available through the Department’s website information related to the collaborative agreements. The signatories to the Collaborative agreement will complete the template for Proactive Disclosures of Collaborative Agreements under section 10 of the Fisheries Act during the time that the collaborative agreement is developed.

The template can be found in the Operational Guidelines.