Regulations Amending the Atlantic Fisheries Regulations, 1985 and the Maritime Provinces Fishery Regulations: SOR/2020-246

Canada Gazette, Part II, Volume 154, Number 25

Registration
SOR/2020-246 November 23, 2020

FISHERIES ACT

P.C. 2020-904 November 20, 2020

Her Excellency the Governor General in Council, on the recommendation of the Minister of Fisheries and Oceans, pursuant to paragraphs 43(1)(a) footnote a, (b), (c), (d.1) footnote b and (f) footnote c to (g.01) footnote d of the Fisheries Act footnote e, makes the annexed Regulations Amending the Atlantic Fisheries Regulations, 1985 and the Maritime Provinces Fishery Regulations.

Regulations Amending the Atlantic Fisheries Regulations, 1985 and the Maritime Provinces Fishery Regulations

Atlantic Fishery Regulations, 1985

1 (1) Subsection 3(5) of the Atlantic Fishery Regulations, 1985 footnote 1 is replaced by the following:

(5) Sections 13 to 14, 17, 17.1, 39 to 45 and 46 to 50, subsection 51.3(1) and sections 51.4, 52, 54, 57, 61, 61.1, 63, 66, 68, 69, 70.1 to 72, 74, 77, 78, 80, 82, 83, 87, 90, 91, 99, 106, 106.1 and 108 to 115.1 do not apply with respect to fishing and related activities carried out under the authority of a licence issued under the Aboriginal Communal Fishing Licences Regulations and sections 18 and 19 do not apply to the issuance of licences under those Regulations.

(2) Subsection 3(5) of the Regulations is replaced by the following:

(5) Sections 13 to 14, 17, 17.1, 20 to 22, 39 to 45 and 46 to 50, subsection 51.3(1) and sections 51.4, 52, 54, 57, 61, 61.1, 63, 66, 68, 69, 70.1 to 72, 74, 77, 78, 80, 82, 83, 87, 90, 91, 99, 106, 106.1 and 108 to 115.1 do not apply with respect to fishing and related activities carried out under the authority of a licence issued under the Aboriginal Communal Fishing Licences Regulations and sections 18 and 19 do not apply to the issuance of licences under those Regulations.

2 Subsection 14(2) of the Regulations is amended by striking out “or” at the end of paragraph (c), by adding “or” at the end of paragraph (d) and by adding the following after paragraph (d):

3 The Regulations are amended by adding the following after section 17.1:

PART III

Inshore and Coastal Licences

Eligibility Criteria

18 This Part applies to the following licences:

19 (1) A licence referred to in paragraphs 18(a) to (f) may only be issued to

(2) In the case of a licence referred to in paragraph 18(a), (b), (d) or (g), the activities authorized under the licence must be carried out personally by the licence holder, the operator named in the licence or a person authorized in accordance with subsection 23(2) of the Fishery (General) Regulations.

4 The Regulations are amended by adding the following before the heading “Eligibility Criteria” before section 18:

Interpretation

17.2 (1) The following definitions apply in this Part.

family member
has the meaning assigned by paragraph (a) of the definition related persons in subsection 251(2) of the Income Tax Act. (membre de la famille)
inshore family fishing corporation
means a corporation that operates an inshore fishing enterprise and that meets the following conditions:
  • (a) 100% of its voting shares are held by a licence holder;
  • (b) the sole director is the licence holder or, if the licence holder is a corporation, all of the shares of which belong to one individual, that individual; and
  • (c) 100% of its non-voting shares, if any, are held by
    • (i) a member of the licence holder’s family or, if the licence holder is a corporation, all of the shares of which belong to one individual, a member of that individual’s family, or
    • (ii) an inshore fishing corporation or an inshore fishing family trust. (société familiale de pêche côtière)
inshore fishing corporation
means a corporation that meets the following conditions:
  • (a) 100% of its voting shares are held by a licence holder;
  • (b) the sole director is the licence holder or, if the licence holder is a corporation, all of the shares of which belong to one individual, that individual; and
  • (c) 100% of its non-voting shares, if any, are held by
    • (i) a member of the licence holder’s family or, if the licence holder is a corporation, all of the shares of which belong to one individual, a member of that individual’s family, or
    • (ii) an inshore fishing corporation or an inshore fishing family trust. (société de pêche côtière)
inshore fishing family trust
means a trust
  • (a) that has as its sole trustee a licence holder or, if the licence holder is a corporation all of the shares of which belong to one individual, that individual; and
  • (b) for which each beneficiary must be either a member of the licence holder’s family or, if the licence holder is a corporation all of the shares of which belong to one individual, a member of that individual’s family or an inshore fishing company. (fiducie familiale de pêche côtière)

(2) For the purposes of the definition family member, common-law partnership is to be read as a person who is cohabiting with a licence holder in a relationship of a conjugal nature and has done so for a period of at least one year.

5 Section 19 of the Regulations is amended by adding the following after subsection (2):

(3) A licence referred to in paragraph 18(a) or (c) shall not be issued if, at the time of application, the applicant has transferred the use or control of the rights or privileges conferred under the licence for which the applicant is the licence holder or was the licence holder in the 12 months prior to the application or conferred under a licence that may be issued to the applicant.

(4) A licence holder that has been denied the issuance of a licence under subsection (3) or has had a licence suspended or cancelled under paragraph 9(1)(b) of the Act and did not resolve the matter that gave rise to the denial, suspension or cancellation within 12 months of the day on which the licence was denied, suspended or cancelled is never eligible to hold the same type of licence again.

(5) Subsection (3) does not apply in the following circumstances:

6 The Regulations are amended by adding the following after section 19:

Requirements for Certain Licences

20 A licence holder referred to in paragraph 18(a) or (c) shall keep a registry of the crew on board the vessel on each fishing trip.

21 Except in the cases referred to in subsection 19(5), a holder of a licence referred to in paragraph 18(a) or (c) shall not transfer the use or control of the rights or privileges conferred under that licence.

22 Except in the cases referred to in subsection 19(5), no one other than the holder of a licence referred to in paragraph 18(a) or (c) shall use or control the rights and privileges conferred under that licence.

Maritime Provinces Fishery Regulations

7 The Maritime Provinces Fishery Regulations footnote 2 are amended by adding the following after section 29:

PART I.1

Inshore and Coastal Licences

Eligibility Criteria

29.1 This Part applies to the following licences:

29.2 (1) A licence referred to in paragraphs 29.1(a) to (f) may only be issued to

(2) In the case of a licence referred to in paragraph 29.1(a), (b), (d) or (g), the activities authorized under the licence must be carried out personally by the licence holder, the operator named in the licence or a person authorized in accordance with subsection 23(2) of the Fishery (General) Regulations.

8 The Regulations are amended by adding the following before the heading “Eligibility Criteria” before section 29.1:

Interpretation

29.01 (1) The following definitions apply in this Part.

family member
has the meaning assigned by paragraph (a) of the definition related persons in subsection 251(2) of the Income Tax Act. (membre de la famille)
inshore family fishing corporation
means a corporation that operates an inshore fishing enterprise and that meets the following conditions:
  • (a) 100% of its voting shares are held by a licence holder;
  • (b) the sole director is the licence holder or, if the licence holder is a corporation, all of the shares of which belong to one individual, that individual; and
  • (c) 100% of its non-voting shares, if any, are held by
    • (i) a member of the licence holder’s family or, if the licence holder is a corporation, all of the shares of which belong to one individual, a member of that individual’s family, or
    • (ii) an inshore fishing corporation or an inshore fishing family trust. (société familiale de pêche côtière)
inshore fishing corporation
means a corporation that meets the following conditions:
  • (a) 100% of its voting shares are held by a licence holder;
  • (b) the sole director is the licence holder or, if the licence holder is a corporation, all of the shares of which belong to one individual, that individual; and
  • (c) 100% of its non-voting shares, if any, are held by
    • (i) a member of the licence holder’s family or, if the licence holder is a corporation, all of the shares of which belong to one individual, a member of that individual’s family, or
    • (ii) an inshore fishing corporation or an inshore fishing family trust. (société de pêche côtière)
inshore fishing family trust
means a trust
  • (a) that has as its sole trustee a licence holder or, if the licence holder is a corporation all of the shares of which belong to one individual, that individual; and
  • (b) for which each beneficiary must be either a member of the licence holder’s family or, if the licence holder is a corporation all of the shares of which belong to one individual, a member of that individual’s family or an inshore fishing company. (fiducie familiale de pêche côtière)

(2) For the purposes of the definition family member, common-law partnership is to be read as a person who is cohabiting with a licence holder in a relationship of a conjugal nature and has done so for a period of at least one year.

9 Section 29.2 of the Regulations is amended by adding the following after subsection (2):

(3) A licence referred to in paragraph 29.1(a) or (c) shall not be issued if, at the time of application, the applicant has transferred the use or control of the rights or privileges conferred under the licence for which the applicant is the licence holder or was the licence holder in the 12 months prior to the application or conferred under a licence that may be issued to the applicant.

(4) A licence holder that has been denied the issuance of a licence under subsection (3) or has had a licence cancelled under paragraph 9(1)(b) of the Act and did not resolve the matter that gave rise to the denial, suspension or cancellation within 12 months of the day on which the licence was denied, suspended or cancelled is never eligible to hold the same type of licence again.

(5) Subsection (3) does not apply in the following circumstances:

10 The Regulations are amended by adding the following after section 29.2:

Requirements for Certain Licences

29.3 A licence holder referred to in paragraph 29.1(a) or (c) shall keep a registry of the crew on board the vessel on each fishing trip.

29.4 Except in the cases referred to in subsection 29.2(5), a holder of a licence referred to in paragraph 29.1(a) or (c) shall not transfer the use or control of the rights or privileges conferred under that licence.

29.5 Except in the cases referred to in subsection 29.2(5), only the holder of a licence referred to in paragraph 29.1(a) or (c) shall use or control the rights and privileges conferred under that licence.

Coming into Force

11 (1) Subject to subsection (2), these Regulations come into force on the day on which they are registered.

(2) Subsection 1(2) and sections 4 to 6 and 8 to 10 come into force on April 1, 2021.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: Concerns have been expressed by fishing sector stakeholders that the independence of fishing licence holders is being compromised through agreements and arrangements between licence holders and third parties. These agreements and arrangements move the rights and privileges conferred under the licence away from the licence holder and undermine ministerial licensing decisions. Enforcement tools are required to address this issue.

Description: The amendments to the Atlantic Fishery Regulations, 1985 (AFR) and the Maritime Provinces Fishery Regulations (MPFR) include certain elements of existing departmental policies and introduce new licensing eligibility criteria and prohibitions respecting the use and control of the rights and privileges conferred under a licence to fish.

The amendments maintain the current scope of application of the policies with respect to licences in the inshore and coastal sectors to

  • restrict the issuance of licences to eligible individuals, their estate, their wholly owned companies, or to organizations that have been issued an allocation of fish to catch; and
  • require that licence holders or operators named in the licence personally fish under the licence;

and, with respect to licences in the inshore sector, to

  • prohibit licence holders from transferring the rights and privileges conferred under the licence to any third party;
  • restrict the issuance of inshore licences to licence holders who have not transferred the rights and privileges conferred under the licence; and
  • prohibit anyone other than the licence holder from using and controlling the rights and privileges associated with a licence.

Rationale: The amendments will help the Minister of Fisheries, Oceans and the Canadian Coast Guard achieve social, economic and cultural objectives pertaining to the inshore and coastal fishing sector in Atlantic Canada and Quebec, where these regulations apply. The intent is to protect the independence of inshore and coastal licence holders by ensuring that ministerial licensing decisions are not undermined by licence holders or third parties. The enforcement tools available under the Fisheries Act will be used to enforce the rules.

By maintaining both the existing scope of application and the current exceptions and exemptions provided under the policy regime, the new regulatory framework will have minimal effect on the licence holders who are already abiding by the inshore fisheries policy rules. There is an expected increase in costs of $17 annually for a category of licence holders (Independent Core), while no additional costs would be assumed by licence holders in other categories or the Government of Canada.

Issues

Over the last 40 years, Fisheries and Oceans Canada (DFO) has developed a suite of policies that apply to the inshore and coastal fisheries in Atlantic Canada and Quebec. The aim of these policies is to promote viable and profitable operations for the average fishing enterprise by keeping licences and their associated benefits in the hands of independent, small vessel owner-operators. However, inshore harvesters, fleets, and industry associations have expressed concerns that a licence holder’s ability to make independent decisions in their own best interest is being compromised by the proliferation of agreements and arrangements between licence holders and third parties, such as fish processors and buyers. In these agreements or arrangements, third parties, who are ineligible to hold inshore licences themselves (as per DFO licensing policy), gain access to the fisheries resource and assert control over the fishing activities and/or the proceeds from those activities. This undermines the exercise of the Minister’s discretion to issue licences in a manner that achieves desired social, economic, and cultural objectives.

Amendments to the AFR and the MPFR, under the authorities of which inshore and coastal licences are issued and regulated, are made in order to protect the independence of commercial inshore and coastal licence holders by addressing two main issues:

Ensuring that the Minister’s licensing decisions are not undermined

These amendments directly address instances when another person or entity (that is typically not eligible to hold a licence) receives some or all of the rights and privileges associated with that licence via an agreement or arrangement with the licence holder.

When a person who is determined to be eligible to hold a licence is issued an inshore or coastal licence to fish, the Minister expects that same individual to carry out the activities authorized under the licence and benefit personally from the fishing activity. Although maintaining this expectation has historically been a key objective behind the intent of the inshore policies, the Fisheries Act and its regulations did not explicitly require that a licence holder retain both the title to the fishing licence and the rights and privileges that flow from it.

The amendments would rectify this regulatory gap by prohibiting such separation and, in doing so, would preserve the Minister’s discretionary licensing decisions regarding who has access to the resource.

Without explicit regulatory prohibitions related to the use and control of the rights and privileges under a licence to fish, it would continue to be challenging for DFO to ensure that the Minister’s discretion to issue licences to meet social, economic, and cultural objectives is not undermined by virtue of such agreements and arrangements.

Conformity challenges associated with the current policy regime

Based on feedback from stakeholders and information gathered through departmental administrative “compliance” assessments, it appears that ineligible third parties, in large part fish processors and buyers, continue to enter into agreements or arrangements that seek to assert control or influence over the inshore fishing sector and secure access to the fisheries resource. Some of these agreements and arrangements intentionally attempt to exploit the flexibility available under DFO’s policy regime to circumvent the intention of the inshore policies, thus undermining their objective of protecting the independence of inshore and coastal licence holders.

Although DFO has assigned additional resources to an administrative review process in an effort to support licence holder adherence with the inshore policies, policies remain subject to interpretation, are not legally enforceable, and are subject to exceptions. There are concerns that the conformity challenges of the existing policy regime have resulted in, among other things, the loss of the benefits flowing from the fishing licences for coastal communities, an inflated market price of fishing enterprises and barriers to entry in the fishery, as prospective independent new entrants cannot easily afford to become licence holders and are sometimes outbid to obtain a fishing enterprise by wealthy third parties lending/giving money to other fish harvesters in exchange for beneficial interest in the licence(s) to be issued.

Without the appropriate tools at its disposal, DFO would remain unable to meet both departmental objectives and calls from stakeholders to protect the inshore fishing sector in Atlantic Canada and Quebec.

Background

Importance of licensing for the proper management and control of fisheries

Fisheries are a public resource that belongs to all Canadians. The Minister of Fisheries, Oceans and the Canadian Coast Guard has the mandate to conserve and protect the fisheries resource and to properly manage fisheries on behalf of all Canadians and in the public interest. In managing fisheries, the Minister may take into account social, economic, or other grounds in order to carry out social, cultural, or economic goals and policies. A key tool at the Minister’s disposal to manage fisheries is the licensing system.

DFO has developed policies to guide the exercise of the Minister’s absolute discretion to issue licences pursuant to section 7 of the Fisheries Act. Among other things, these policies outline directions and restrictions designed to control fishing effort and to promote viable and profitable operations for the average fishing enterprise by distributing fishing opportunities and benefits across regions; controlling the concentration of licences; supporting the retention of employment opportunities in smaller coastal communities; and controlling the overall number of enterprises engaged in the limited entry inshore fishing sector.

By way of licence issuance, the Minister provides privileged access to the fisheries to certain persons under certain conditions. Licence conditions impose specific rules of conduct, in addition to those provided for in the Fisheries Act and its regulations, to which a licence holder is subject. These can include the size of fish that can be harvested and landing requirements. By law, a licence to fish is non-transferable, and the licence holder is responsible for carrying out the activities authorized under the licence.

Although licences to fish issued under section 7 of the Fisheries Act are not considered property, they do confer limited rights and privileges to the licence holder. Such rights include the right to engage in an exclusive fishery under the conditions imposed by the licence — including decision-making over fishing activities authorized by the licence, and a proprietary right to the fish caught under the licence, including, but not limited to decision-making over the benefits resulting from their catch. Privileges granted through policy include the ability to recommend whm the licence should be reissued to (commonly referred to as a “licence transfer,” and subject to the eligibility of the proposed licence holder), and the ability to make requests for substitute operators, licence renewal or quota transfers. These limited rights and privileges are also accompanied by the obligation to abide by the Fisheries Act and its regulations, including licence conditions. These rights and privileges are temporary and exist only for the term of the licence. Members of the industry often refer to these rights and privileges as the “beneficial interest” in a licence, but because the concept of “beneficial interest” is rooted in the common law doctrine which relates to property (and that the concept of “beneficial interest” does not exist under the civil law), the expression “rights and privileges” is used in the regulations to refer to the above-described features of licences.

It has long been the intent of the inshore policies to require that a licence holder retain both the title to the fishing licence and the rights and privileges conferred under it, as well as to maintain a separation between licence holders accessing the resource and the processing sector.

DFO’s policy titled Preserving the Independence of the Inshore Fleet in Canada’s Atlantic Fisheries (PIIFCAF) was the most recent instrument implemented to support the Owner-Operator and Fleet Separation policies. This policy rendered licence holders who are party to an agreement through which a third party has control or influence over the licence holders’ decision to request the reissuance of the licence non-eligible to hold an inshore licence. In effect, cases where the licence title was retained by the licence holder while use and/or control of the rights and privileges of a licence resided with a third party would likely have resulted in a licence holder not meeting the requirements of PIIFCAF. In instances where the beneficial interest of a licence no longer belonged to the licence holder, it could be understood that the licence holder was in effect not free to request the issuance of a replacement licence.

Furthermore, in the February 2019 Federal Court of Appeal decision in Kirby Elson v. Attorney General of Canada, the Federal Court of Appeal provided important clarification to the Department by reaffirming that the Minister has a right to know if the named licence holder is the beneficial owner of the licence and its associated beneficial interest (or intangibles); and if a non-eligible person is or would be controlling and benefitting from the associated rights and privileges.

Importance of the independence of inshore and coastal licence holders for the viability and prosperity of coastal communities in Atlantic Canada and Quebec

Fishing remains one of the main industries in rural coastal Eastern Canada generating about $1.7 billion in landed value (inshore fleets only) in 2017 and supporting many fisheries-dependent communities. In Atlantic Canada and Quebec, the fishing industry employs more than 59 000 fish harvesters and processing workers. footnote 3 The Government of Canada’s policy objective is for this wealth to remain in the hands of those individuals that actively fish and for the wealth accumulated to be reinvested and spent in coastal communities, rather than have it concentrated in the hands of a few, wealthy corporations in larger urban centres.

Progressive fisheries policies that prevent vertical integration between the fishing and processing sectors and that prevent the concentration of licences in the hands of a few corporations or individuals have been pivotal in the maintenance of the wealth distribution across the region and small communities. Without these policies, wealth from fishing licences would be concentrated in the hands of ineligible third parties resulting in fewer or lower paying fishing jobs available in rural coastal areas and a decrease of economic benefits being maintained in the coastal communities.

DFO’s suite of policies that pertain to the inshore and coastal fishery aim to ensure that licence holders remain independent and that the benefits derived from accessing the common property fisheries resources in the inshore fishery flow to licence holders and to their local communities.

The Department’s inshore policy suite includes four policies: the Fleet Separation policy, the Owner-Operator policy (both part of the Commercial fisheries licensing policy for Eastern Canada - 1996), the Preserving the Independence of the Inshore Fleet in Canada’s Atlantic Fisheries (PIIFCAF) policy and the Policy on issuing licences to companies (ILC).

Objective

The Regulations are intended to help ensure that all licence holders abide by the amendments, thereby maintaining a level playing field in the fishery and reducing the risk that the social, economic, and cultural benefits associated with independently owned businesses are diverted away from licence holders. By establishing licence eligibility criteria and clear rules of conduct subject to enforcement action under the Fisheries Act, these amendments aim to address practices that threaten to undermine licensing decisions made by the Minister. This will allow the Minister to continue to licence inshore and coastal fisheries in a manner that fulfills social, economic, and cultural objectives, and to protect the independence and prosperity of small coastal communities.

Description

The regulatory amendments maintain the current scope of application of the inshore policies, while taking into consideration current realities and challenges facing the industry. Therefore, the amendments only apply to Atlantic Canada and Quebec, and to licence holders fishing under the authorities of commercial licences in the inshore and coastal sectors issued under the AFR and the MPFR. These amendments do not apply to licences issued under the Aboriginal Communal Fishing Licences Regulations.

The amendments enshrine current elements of the Owner-Operator policy and the Fleet Separation policy as well as the Policy on issuing licences to companies, where applicable. The regulations require that (1) an inshore and coastal licence only be issued to an eligible individual, their estate or their wholly owned company or to an organization that has been issued an allocation of fish to catch; and (2) holders of inshore and coastal licences, operators named in these licences, or authorized substitute operators, personally fish the licence. These elements apply to inshore and coastal licences currently subject to the Owner-Operator policy and the Fleet Separation policy.

The amendments also include (1) a prohibition against the licence holder transferring the use or control of the rights and privileges conferred under a licence to any third party; (2) a prohibition against anyone other than the licence holder to use or control the rights and privileges associated with a licence; and (3) eligibility criteria that restrict the issuance of licences only to those applicants (including current licence holders applying for renewal) that have not transferred the use and control of the rights and privileges of the licence. These three elements apply to the inshore licences held by licence holders currently subject to the PIIFCAF policy.

The rights and privileges obtained through a licence to fish include, but are not limited to

Under the amended regulations, the licence holder must personally retain and exercise the rights and privileges conferred under the licence, and cannot transfer them to any third party, unless such a transfer is authorized under the Regulations.

Authorized circumstances

The purpose of the amendments is to protect and preserve independence in the inshore fishery while not interfering with the potential for licence holders to obtain legitimate access to capital and have successful fishing enterprises. In order to maintain acceptable current practices, the amendments authorize the use and control of all or part of the rights and privileges to be transferred only in the following circumstances:

Retaining existing exceptions and exemptions

There were both exemptions and exceptions provided under the policy regime. Exemptions are excluded from the normal application of the policies, while exceptions constitute special cases for which the policies should have applied but it was decided administratively to not apply them.

As outlined during consultations, all exceptions that currently exist under the policies and were provided to the current holder of the licence are maintained under the amendments. They include, among others, licence holders authorized to designate an operator to fish the licence issued to them and corporations that held inshore licences prior to the establishment of the Owner-Operator policy in DFO’s Maritimes Region (known as pre-1989 companies).

In addition, the amendments do not apply to the corporations, fleets, and individuals who have historically been exempted and/or excepted from the application of some or all of the inshore policies. They include, among others, corporations that held inshore licences prior to the establishment of the Fleet Separation policy (known as the pre-1979 companies); fleets that were exempted under the PIIFCAF policy; and community-based fishing organizations that receive allocations in the inshore fisheries.

Categorization of licences

In order to manage the existing exceptions, the amendments codify the current application of the policies to inshore and coastal licences issued under the AFR and the MPFR by creating categories of licences based on regional, fleet-specific or situational needs and accommodations. The categories are used to describe which of the regulatory elements apply to each of the licences held by the different types of licence holders (see Table 1). The regulatory elements are as follows:

Where a type of licence or licence holder is not currently subject to one or more elements of the inshore policies, they continue to be excepted from the corresponding element in the regulatory regime. If the licence holder is not subject to the PIIFCAF policy, this exception is maintained under the regulatory regime and the licence holder will not be subject to subsections 20(3) to 20(5) and sections 21 to 23 of the AFR, or to subsections 29.2(3) to 29.2(5) and sections 29.3 to 29.5 of the MPFR.

The licence categories applicable to the AFR and the MPFR are the following:

Many of the existing exceptions that have been granted over the years are only valid as long as the particular licence holder remains the holder of the excepted licence. This means that over time, through attrition, inshore licences will eventually almost all be issued to an Independent Core licence holder and will be subject to all elements of the amendments.

Table 1 below and the following paragraphs provide an overview of the categorization and rationale related to the development of the different categories.

Table 1: Overview of the rules that apply to each licence category

If you currently hold…

The following rules applied to you under policy and now apply to you under the amendments:

Licence category under the amendments
(see paragraphs below table)

An inshore licence and you are Independent Core
  • You need to be an individual or a wholly owned company to be issued the licence;
  • you need to personally fish the licence; and
  • you were subject to the PIIFCAF policy and are now subject to the new requirement to retain the rights and privileges of the licence.

(a)

A coastal licence
  • You need to be an individual or a wholly owned company to be issued the licence; and
  • you need to personally fish the licence.

(b)

An inshore licence on which "designated operator status" appears and you are an Independent Core licence holder
  • You need to be an individual or a wholly owned company to be issued the licence; and
  • you were subject to the PIIFCAF policy and are now subject to the new requirement to retain the rights and privileges of the licence.

(c)

An inshore licence and you are the head of a non-core enterprise
  • You need to be an individual or a wholly owned company to be issued the licence; and
  • you need to personally fish the licence.

(d)

An inshore licence on which "designated operator status" appears and you are the head of a non-core enterprise
  • You need to be an individual or a wholly owned company to be issued the licence.

(e)

An inshore fishing licence and you are a community-based fishing organization that has been issued an allocation
  • You are excepted from all the policy requirements being enshrined by the amendments.

(f)

An inshore licence and you are a pre-1989 company in DFO’s Maritimes Region
  • The majority shareholder needs to personally fish the licence.

(g)

An inshore licence, but you were excepted from all inshore policies (e.g. an Indigenous organization with a commercial licence under the AFR)
  • None — the organisation is personally excepted from all the inshore policy elements being enshrined by the amendments and none of the regulatory provisions will apply until the licence is reissued.

Not in a category.

An inshore licence, but you are exempted from the inshore policies (e.g. licences issued in fisheries or fleets where there has been an exemption provided under the PIIFCAF policy, Eastern Nova Scotia snow crab multi-shareholder companies)
  • You are currently exempted from all the policy requirements being enshrined by the amendments. This exemption will continue to be provided when the licence is reissued.

Not in a category — the regulatory provisions do not apply.

A midshore or offshore licence
  • The inshore policies being enshrined in the regulations do not apply to your sector.

Not in a category — the regulatory provisions do not apply.
(a) Inshore licence held by an Independent Core licence holder

Under the policy regime, these licences were subject to the Owner-Operator policy, the Fleet Separation policy, the Policy on issuing licences to companies, and the PIIFCAF policy. These licences represent approximately 70% of the inshore licences issued in Atlantic Canada and Quebec. All provisions enshrined through these amendments and the new prohibitions apply to these licences.

In 1996, when the Commercial fisheries licensing policy for Eastern Canada - 1996 came into force, the concept of a “core” group of a maximum number of multi-licensed enterprises was adopted for the inshore sector. To qualify as a member of the core group, a licence holder was required to meet specific criteria, such as being the head of an enterprise and being dependent on the fishery. Today, under this concept, new entrants can enter the “core” group only by being reissued the last remaining inshore licences of an existing core enterprise.

When PIIFCAF was adopted in 2007, the Independent Core status became a new eligibility criteria, representing heads of core enterprises who were not party to a Controlling Agreement with respect to any inshore fishing licences issued in their name. In the amended regulations, these inshore licences, held by Independent Core licence holders, are reflected in paragraph 19(a) of the AFR and paragraph 29.1(a) of the MPFR.

In DFO’s Maritimes Region, licences that are issued under the AFR to fleets that were exempted from PIIFCAF — such as the licences issued to fleets fishing for groundfish using mobile gear and a vessel of less than 65 ft., and certain other licences when they are issued in conjunction with some of these licences, such as licences to fish for Sculpin issued to holders of licences for groundfish using mobile gear and a vessel of less than 65 ft. — continue to be exempted from the regulatory elements enshrined in these amendments. These licences are reflected in paragraphs 19(a)(i) to (xii) of the AFR and will clearly identify that Part III of the Regulations do not apply to the licences. This is intended to provide clarity for both licence holders and fishery officers.

(b) Coastal licence (DFO’s Maritimes and Gulf regions only)

Under the regional policy regimes in the Maritimes and Gulf regions, these licences were subject to the Owner-Operator policy and the Fleet Separation policy. These licences were not included under the current PIIFCAF policy and will not be subject to the prohibition against the transfer of the rights and privileges. Through the amendments, coastal licences will now be authorized to be issued to wholly owned corporation, as per the Policy on issuing licences to companies, which has been amended to include the coastal sector. Coastal fisheries are limited entry and licences are fished with or without a vessel and where fish are generally found closer to shore. In the amended regulations, these coastal licences are reflected in paragraph 19(b) of the AFR and paragraph 29.1(b) of the MPFR. Herring or mackerel fixed gear licences held by multi-shareholder companies continue to be exempted under the AFR. Elver licences also continue to be excepted under the MPFR.

(c) Inshore licence on which “designated operator status” appears and that is held by an Independent Core licence holder (DFO’s Maritimes region only)

Under the policy regime, these inshore licences were subject to the Owner-Operator policy, the Fleet Separation policy, the Policy on issuing licences to companies, and the PIIFCAF policy. When the Owner-Operator policy was adopted in DFO’s Maritimes Region, some licence holders were grandfathered into the regime through an exception to the policy and were allowed to continue to designate an operator (i.e. the licence holder is allowed to not fish the licences themselves). This exception was provided in order to prevent undue harm to the licence holder and their fishing operations at the time. These licences currently indicate “designated operator status” on them and do not have an operator named in the licence as per paragraph 14(2)(d) of the Atlantic Fishery Regulations, 1985. This exception will not be provided to the next holder of that licence upon reissuance, which means that these licences will eventually be held by an Independent Core licence holder and will need to be fished by the licence holder. In the amended regulations, these inshore licences held by Independent Core licence holders in the Maritimes Region who have a personal exception and use a designated operator are reflected in paragraph 19(c) of the AFR and paragraph 29.1(c) of the MPFR.

(d) Inshore licence held by the head of a non-core enterprise

Under the policy regime, these licences were subject to the Owner-Operator policy, the Fleet Separation policy and the Policy on issuing licences to companies. These inshore licences are held by heads of non-core enterprises. In 1996, under the newly developed Commercial fisheries licensing policy for Eastern Canada - 1996, the head of these enterprises did not qualify as “head of a core enterprise,” but was allowed to continue to hold the inshore licences issued in his or her name. These licences are not subject to the PIIFCAF policy; however, upon reissuance to an Independent Core licence holder, if the licences are reissuable, these licences will become subject to all the regulatory elements. In the amended regulations, these inshore licences held by the heads of non-core enterprises are reflected in paragraph 19(d) of the AFR and paragraph 29.1(d) of the MPFR.

(e) Inshore licence on which “designated operator status” appears and held by the head of a non-core enterprise (DFO’s Maritimes Region only)

Under the policy regime, these inshore licences were subject to the Owner-Operator policy and the Fleet Separation policy. These inshore licences are held by the heads of non-core enterprises [similarly to the ones mentioned in licence category (d)], but the current licence holder has been provided with a personal exception from the requirement to personally fish the licence. When the Owner-Operator policy was adopted in the Maritimes Region, some licence holders were grandfathered into the regime through an exception to the policy and allowed to continue to designate an operator (i.e. they are allowed to not fish the licences themselves). This exception was provided in order to prevent undue harm to the licence holder and their fishing operations at the time. These licences currently indicate “designated operator status” on them and do not have an operator named in the licence as per paragraph 14(2)(d) of the AFR. This exception will not be provided to the next holder of that licence, which means that these licences, if reissuable and through attrition, will eventually be reissued to an Independent Core licence holder and become subject to all the regulatory elements. In the new regulations, these Maritimes Region inshore licences held by heads of non-core enterprises who have a personal exception making it permissible to use a designated operator are reflected in paragraph 19(e) of the AFR and paragraph 29.1(e) of the MPFR.

(f) Inshore licence held by an organization that has been issued an allocation of fish to catch for the benefit of its membership

In Atlantic Canada and Quebec, a number of fish harvesters’ associations, fleet planning boards or community-management boards have been issued allocations. Initially, these were provided in order to assist harvesters affected by sudden drastic reductions in total allowable catch (TAC) for groundfish fisheries. However, the allocations were then regularized such that organizations could use them as they see fit. The organizations are led by harvester representatives.

Under the policy regime, the licences linked to allocations received by these organizations were fully excepted from the application of the inshore policy requirements and they will continue to be under the regulatory regime. The organizations do not hold licences (they are not licence holders) but, in certain regions, the allocations provided to these specific groups are attached to licence numbers (each allocation being linked to a licence number) for reporting purposes. Once an allocation (or quota) is provided by the Department to such an organization, the allocation is redistributed among its members to be fished by them. Although there is no intent to provide additional allocations to new organizations at this time, the Department wanted to ensure that the current regime was fully recognized under the regulations and allowed the Minister, should the Minister wish to do so, to issue inshore licences to such organizations.

In the amended regulations, the inshore licences linked to allocations held by these organizations are reflected in paragraph 19(f) of the AFR and paragraph 29.1(f) of the MPFR.

(g) Inshore licence held by pre-1989 corporations (DFO’s Maritimes Region only)

Under the policy regime, these inshore licences were subject to the Owner-Operator policy, the Fleet Separation policy, and the Policy on issuing licences to companies. When the Owner-Operator policy was adopted in the Maritimes Region, some corporations (e.g. family businesses) held inshore and coastal licences; these corporations, generally referred to as the pre-1989 corporations, were grandfathered into the regime through an exception to the requirement to be an individual or wholly owned company, and they were allowed to continue to hold the licences. Unless the licence mentions a “designated operator status,” the majority shareholder of the corporation cannot change and is required to fish the licence personally. Upon reissuance to a new licence holder, these licences can be reissued to another pre-1989 corporation, or be reissued to an Independent Core licence holder. In the latter case, the licence will become subject to all the regulatory elements. In the amended regulations, these inshore licences held by DFO’s Maritimes Region pre-1989 corporations are reflected in paragraph 19(g) of the AFR and paragraph 29.1(g) of the MPFR.

(h) Inshore licences held by other corporations or organizations that are excepted or exempted from the application of the inshore policies

Under the policy regime, certain inshore licence holders that are neither Independent Core, nor head of non-core enterprises were fully excepted or exempted from the application of the inshore policy requirements. These licences are held by pre-1979 corporations, by certain pre-1989 companies that are authorized to designate an operator, by Eastern Nova Scotia snow crab multishareholder companies and by a few Indigenous organizations that hold commercial licences that are issued under the AFR. These licence holders continue to be fully excepted or exempted from the application of the regulatory amendments.

Eligibility criteria

The amendments introduce new eligibility criteria that will restrict the issuance of inshore licences to Independent Core licence holders (individuals or wholly owned companies) that have not transferred the use and control of the rights and privileges under the licence they hold, or were holding in the prior 12 months (if the licence expired prior to the licence being issued for the season), or under a licence that may be issued to them (if they did not hold that licence previously), unless under authorized circumstances in the regulations.

Contrary to eligibility criteria found in policy, eligibility criteria established in regulations are binding on the Minister. This means that once the Minister determines that an applicant (either new or renewing) has transferred any or all of the use and control over the rights and privileges under a licence, the Minister cannot issue the licence to said applicant and the applicant will therefore not be allowed to fish that licence since the licence will not have been issued.

Any licence holder that has been denied the issuance of a licence because they were found to have transferred the use and control of the rights and privileges, or any licence holder that has had a licence cancelled as per paragraph 9(1)(b) of the Fisheries Act, will have 12 months to demonstrate to the satisfaction of the Minister that the transfer no longer exists. If unable to adequately demonstrate their compliance to the Minister, the licence holder will no longer be eligible to hold the licence for which the transfer was determined forever. In law, a licence ceases to exist upon its expiry and any “renewal” constitutes the issuance of a new licence. On the other hand, in the administration of licence issuance, individual licences are assigned a specific licence number. This identifier persists when a licence is renewed and issued on an annual basis as well as when it is reissued to another eligible fish harvester following a recommendation from the previous licence holder. The regulations, in subsection 20(4), refer to a licence of the same type to bridge this inconsistency between the legal and operational realities. The licence of the same type will be interpreted by the Department to be the licence bearing the same licence number. Therefore, individuals found to have transferred rights and privileges to third parties will no longer be eligible to hold the licence bearing the same specific licence number in the future. However, a licence holder that has become ineligible as a consequence of non-compliance for a specific licence may, in the future, apply and be granted a licence for the same species, area and gear type, provided they meet eligibility criteria and that the licence is a different licence (bearing a different licence number).

Regulatory development

Initial consultations

Over the course of the consultations, DFO informed stakeholders — via letters, email, radio interviews and web content — of the purpose of the consultation, the dates and locations of in-person information sessions. Information in the form of a presentation was distributed to stakeholders via email and was posted online.

External consultations were launched on July 26, 2018, and were conducted by staff in all relevant DFO regional offices and National Headquarters. DFO engaged stakeholders on proposed changes to the AFR and the elements of the inshore policies that were proposed to be reflected in the Regulations, as well as a proposed prohibition on the separation between the title in a licence to fish from the rights and privileges in a licence to fish. Consultations on the amendments were undertaken in Newfoundland and Labrador, Nova Scotia, New Brunswick, Prince Edward Island, and Quebec. The formal consultation period closed in late September 2018; however, input received subsequent to that period was also taken into consideration.

DFO contacted or directly engaged with (1) harvester organizations, including the Canadian Council of Professional Fish Harvesters and the Canadian Independent Fish Harvesters Federation (the Federation); (2) industry organizations and stakeholders, including the Fisheries Council of Canada, the Atlantic Groundfish Council, the Canadian Association of Prawn Producers, and the Northern Coalition; and (3) provincial governments. DFO also consulted directly with harvesters, licence holders, and other organizations involved in the Atlantic fisheries that may not associate or identify with the aforementioned organizations.

Comments were received both verbally during meetings and via written submissions sent to the Department or the Minister. Below is a summary, organized by interest group, of the central positions and concerns based on comments received.

(i) Inshore and coastal harvesters: There is widespread support for the inshore policies among inshore and coastal fish harvesters associations and for moving elements of the inshore policies into regulation. However, some individual harvesters have expressed concerns regarding the potential restrictions being placed on how they manage their enterprises and the types of agreements into which they can enter. The main concerns expressed were related to existing exemptions and exceptions to the various elements of the amendments, the potential requirement for harvesters to change their corporate structures to be compliant with the new prohibitions, and to the initial proposal to restrict in the Regulations the possession of more than one licence per given species. Stakeholders that were captured under one or more exemptions/exceptions under the policy regime wanted to ensure that these would be maintained. It was also requested that current exceptions and exemptions be documented, examined, and made public. Comments were received regarding DFO’s current inability to enforce the existing inshore policies, expectations for regulatory enforcement, and a desire to have the Regulations apply to both the licence holders and third parties entering into agreements or arrangements with them.

(ii) Accountants and lawyers representing fish harvesters: A number of accountants and lawyers identified some potential impacts that the new prohibitions on the separation of title from rights and privileges under a licence to fish could have on their clients. They expressed concerns and provided information about corporate structure models that are currently being used in the inshore and coastal sectors, and how these would be potentially impacted as a result of the amendments.

(iii) Processing industry: Feedback from fish processors and buyers indicated mixed to low support for the amendments. Some concerns were expressed by the processing industry regarding the reduced flexibility of the Regulations and the potential for the amendments to restrict their capacity to conclude operational business arrangements with licence holders. The industry wanted assurance that the intent of the Regulations is not to prohibit business arrangements, such as supply agreements. Almost all comments received from fish processing companies and buyers showed their interest in being recognized as potential financial lenders under DFO’s Notice and Acknowledgement System. Support was also expressed for reflecting the exemptions/exceptions found in the inshore policies, in the amendments. They also requested that future exemptions be possible, as is currently the case under the policy.

(iv) Provinces: DFO presented the proposed amendments during meetings of the Canadian Council of Fisheries and Aquaculture Ministers (CCFAM) Fisheries Act Review Task Group and received formal feedback from multiple provinces. Provinces were generally supportive of the inclusion of the Owner-Operator policy and the Fleet Separation policy elements into regulations. However, comments received from provinces presented contrasting positions on the inclusion of the restriction of one licence per given species as initially proposed, and highlighted the importance of balancing a loss of flexibility and an ability to quickly adapt to changing environmental or economic circumstances as a result of moving from a policy regime to a regulatory regime. Concerns were also expressed regarding licences being used as collateral in loans with non-traditional lenders, potentially giving them control over the licences in event of default of payment.

Modifications to the initial proposal

As a result of the consultations and the comments and concerns that were expressed between the summer of 2018 and early 2019, the proposal was modified to reduce potential unintended impacts of the proposal on industry, while maintaining the overall objectives of the proposed Regulations. The following changes were made to the initial proposal and were prepublished in the Canada Gazette, Part I, in July 2019.

One licence per species

Current policy restricts inshore and coastal licence holders to holding only one licence per species. This element was originally included in the regulatory proposal and consultation materials. Comments received from stakeholders illustrated mixed reactions to this element. There was concern by those harvesters who currently benefit from an exception to this policy that they may lose it. Conversely, some stakeholders expressed a desire to see this element of the policy more strictly applied and not allow for exceptions in order to avoid undue concentration.

Over time, there have been many exceptions to the “one licence per species” element of the Owner-Operator policy, mainly where a licence holder has more than one licence for a particular species, but where the gear type or geographic area is different. These exceptions were granted in order to support economic opportunities for harvesters and because they were felt not to undermine the overall objective of the promotion of an independent inshore sector.

Due to the diverse views expressed on this proposed element and the need for further analysis and consultation, this element was removed from the regulatory proposal, but is maintained in the Commercial fisheries licensing policy for Eastern Canada - 1996 and other regional policies with the existing exceptions. The Department is committed to undertaking further review and consultation regarding the existing exceptions to this policy in order to determine whether and what regulatory amendments, if any, should be pursued at a later date.

Separation of title from rights and privileges

During consultations, the Department received information about how some licence holders have structured their fishing enterprises using different types of corporate structures in order to reduce taxes, protect assets (including the fishing licences they hold), and in some cases, to facilitate the intergenerational transfer of the fishing enterprise. Although these structures generally involve the licence holder conducting the fishing operations and maintaining 100% control over the corporation and decisions relating to the licence, some of these structures would have been in contravention of the prohibition as presented in the initial regulatory proposal, as there is a transfer of rights and privileges between the elements of the corporate structure [i.e. between the licence holder and the corporation(s)].

Upon further internal analysis and discussions with key stakeholders, DFO decided to focus the scope of the prohibitions on a prohibition against the transfer of the rights and privileges to fish processors and buyers. This modification reflected the long-standing intent of the inshore policies and of the proposed prohibitions (i.e. to maintain a separation between the fishing sector and fish processing/buying sector and to ensure that eligible licence holders have independent access to the resource and retain the benefits from the harvest).

Stakeholders have expressed concerns regarding the amount of influence that some large corporations in the fish processing/buying sector have on the market price of fishing enterprises, and the recommendation regarding to whom the licence should be reissued (commonly referred to as “licence transfer”). Some larger corporations lend large sums of money to harvesters in exchange for the beneficial interest or the intangibles in fishing licences (referred to in the regulations as the “rights and privileges”), driving the prices up and making it more challenging for prospective new entrants to afford a fishing enterprise. Ensuring the separation of the fishing sector from the fish processing/buying sector through a clear prohibition addressed part of the concerns expressed by stakeholders by maintaining the distribution of wealth and employment opportunities across small communities.

Based on information received from fish harvesters’ associations, accountants and lawyers, significant costs would have been assumed by licence holders needing to restructure their corporate affairs in order to comply with the original proposed prohibition. In addition, there would have been impacts on their ability to avail themselves of tax and employment insurance benefits as well as to protect assets, such as the licence, from liability. At the time, the Department decided to move forward with a reduced scope of the prohibitions in order to prepublish the amendments in the Canada Gazette, Part I, in a timely manner. A more focused scope for the prohibition allowed the overall regulatory objectives to be achieved without penalizing harvesters that use corporate structures established to improve the economic viability of their fishing enterprises.

Prepublication in the Canada Gazette, Part I

The proposed Regulations were published in the Canada Gazette, Part I, on July 6, 2019. Twenty-four individual written submissions were received from various stakeholders, including representation from the fishing industry (individuals and associations), the processing industry, and provincial governments. Comments were also received verbally during meetings where the Department presented the proposed Regulations. Below is a summary, organized by interest group, of the central positions and concerns based on comments received.

(i) Inshore and coastal harvesters, including the Canadian Independent Fish Harvester’s Federation (who represent 12 000 members) and other associations representing them, expressed strong support for the inshore policies themselves and the regulatory amendments that would enshrine them into legislation, but also voiced concerns to the effect that the proposal was not going far enough. They expressed concerns regarding the scope of the prohibitions, limited to prohibiting the transfers of rights and privileges with fish processors and fish buyers, which was too narrow to capture all instances of control by a third party. At the same time, they expressed a desire to see family corporations being able to use and control the rights and privileges under a licence in order to qualify for the tax benefits of having a small/medium enterprise under the Canada Revenue Agency regime. They also expressed a desire to see an exception added to the fish processors and fish buyers definitions to allow licence holders that are also fish processors and/or fish buyers to not be captured by the prohibitions. Finally, the inshore and coastal harvesters and their associations expressed concerns with allowing fish processors and fish buyers to enter into financial agreements where the licence to fish is used as collateral for the loan, as it is could lead to the lender obtaining control over the licence in cases of default of payment.

(ii) Accountants and lawyers representing fish harvesters expressed concerns that the prohibitions and the definitions of fish processors and fish buyers would capture some of their clients that started their business operations as licence holders and subsequently bought fish processing plants, were members of processing co-operatives, or were licenced by the province to buy fish. They also expressed concerns about the potential for the proposed regulatory amendments to restrict their ability to develop agreements between licence holders and third parties (including family corporations), which in their opinion were compliant under the policy regime and would benefit their clients from a taxation point of view. Finally, they asked for the coming into force of the amendments to be delayed to allow them time to restructure their clients’ corporations and amend the agreements between the licence holders and third parties.

(iii) Processing industry: Feedback from fish processors and buyers indicated mixed to low support for the amendments. Some expressed a desire to have DFO recognize the symbiotic relationship between both sides of industry and not unintentionally vilify the processing sector as a whole. These stakeholders supported the efforts made by DFO to maintain the exceptions from the policies in the regulations, and to limit the scope of the amendments to the licencing framework in Atlantic Canada and Quebec. Concerns were expressed that the Regulatory Impact Analysis Statement (RIAS) published in the Canada Gazette, Part I, did not adequately capture the full cost impact of the proposal. Finally, they were concerned that the proposed Regulations may limit legitimate financing and contractual options between fish processors and buyers and licence holders.

(iv) Provinces: Newfoundland and Labrador representatives were pleased to see that the concerns they had raised during the initial consultations were taken into account, namely to remove the restriction of one licence per species from the proposal. New Brunswick representatives were also pleased with the proposal as published; however, they raised concerns about licences being used as collateral for loans with processors and buyers, potentially giving them control over the licences in event of default of payment.

Modifications to the regulatory amendments following prepublication

In response to the comments and concerns that were expressed following the initial consultations and the prepublication of the proposed regulatory amendments, and following engagement with stakeholders and industry accountants and lawyers, the amendments were modified to mitigate unintended impacts of the proposal on industry, while maintaining alignment with the overarching objectives of the Regulations as outlined in the prepublished proposal.

Scope of the prohibitions

During the prepublication period, comments were received from the Canadian Independent Fish Harvester’s Federation and other associations representing fish harvesters asking the Department to go back to the initial proposal (i.e. to prohibit all transfers of rights and privileges), as there remained concerns that other types of third party, beyond fish processors and fish buyers, may attempt to use or control the rights and privileges under a licence to fish. In fact, as some fisheries become more lucrative and the enterprises that hold the licences to harvest those fisheries grow in value, speculators or foreign investors could attempt to profit illicitly from the market by obtaining the beneficial interest in licences.

In order to mitigate the potential impacts of a broadened prohibition on transfer of rights and privileges, DFO is adding exceptions that would allow for transfers in circumstances where the owner-operator regime and the independence of the licence holders in the inshore fleet are not jeopardized. While some circumstances had been previously identified during the initial consultation in 2018, others have been added to reflect the comments received and the subsequent research and analysis done. Below is the complete list of circumstances where the use and control of the rights and privileges will be allowed to be transferred away from the licence holder and into someone else’s hands.

(a) When the licence is offered as security in a financial agreement under provincial legislation: In order to borrow money, it is common practice to use something of value to guarantee the loan. In the context of a fishing enterprise, the most valuable asset is often the fishing licence(s). In 2007, when the PIIFCAF policy was released, recognized financial institutions were exempted from the application of the policy and allowed to control or influence the licence holders decision to request reissuance of the licence. In the 2008 Saulnier vs. RBC decision, the Supreme Court of Canada established that the fishing licence could be seen as “property” under the Bankruptcy and Insolvency Act and “personal property” under the Nova Scotia Personal Property Security Act. Following this decision, DFO interpreted PIIFCAF policy in a way that ensures that implementation of the policy does not prevent a creditor from exercising a financial remedy to which they are entitled by law. As a result, the use of the licence as collateral and general security agreements (GSAs) have been permitted under the PIIFCAF policy, so long as the licence holder was not controlled or influenced in their decision to submit a request for issuance of a replacement licence to the Minister pre-default of payment or bankruptcy, as per the PIIFCAF policy. The Department’s objective is to ensure that licence holders retain this option to access capital to grow and maintain their operations. The amendments enable the continuation of this standard business practice.

(b) When a creditor is a recognized financial institution and collects on the security: In cases where the licence holder obtains capital from a recognized financial institution (RFI) [e.g. a financial institution or a provincial loan board] and uses the licence as security to guarantee the loan, the licence holder is in effect conditionally separating the rights and privileges. In case of default of payment on the loan, the creditor would be able to collect on (repossess) the collateral and obtain control of the rights and privileges in order to recuperate the amounts owed. Since RFIs do not have interest in accessing the fisheries and their objectives in repossessing the collateral would be of a financial nature, they will be allowed to use and control the rights and privileges under the licences in order to recuperate the amounts owed.

(c) When a creditor is not a recognized financial institution and collects on the security: In cases where the licence holder obtains capital from a non-recognized financial institution (non-RFI) [e.g. a family member, a fellow licence holder, or a fish processor] and uses the licence as security to guarantee the loan, the licence holder is in effect conditionally separating the rights and privileges from the licence. Concerns have been expressed by various stakeholders that this situation could represent a potential for non-RFI lenders, who might have an interest in the fisheries, to control the rights and privileges in cases of default of payment on loans. In these situations, the creditor would be able to collect on (repossess) the collateral (i.e. the fishing licence) and obtain control of the rights and privileges. In order to maintain the Fleet Separation policy, balance the need for access to diverse sources of capital in the fishing industry, and mitigate the concerns expressed around having a non-RFI lend money and potentially gain control of licences and access to the fishery via default of payment on the loan, DFO will be limiting the rights and privileges that the non-RFI creditors will be able to use and control in cases of default of payment to the ones that would allow the creditor to recuperate the amounts owed without allowing them to access the fishery resource directly. The regulations will only allow non-RFI creditors to use the privilege under the licence in two ways: (1) by making a recommendation to the Minister as to the identity of the next licence holder (commonly referred to as a transfer to another qualified licence holder), or (2) in the reallocation of a quantity of fish (such as a portion of quota) to another licence holder in order for the security to be repaid. Non-RFIs will not be able to request a substitute operator to ensure no control over the prosecution of the catch is exercised. This means that non-RFI creditors will not be able to, for example, request a substitute operator or fish the licence themselves. This is to ensure that transactions are purely financial, and that non-RFI creditors may recuperate their investments through a recommendation to the Minister as to the identity of the next licence holder, or in the reallocation of a quantity of fish. In either case, conditions of eligibility must be met. At no time prior to default of payment should the lender have any use or control over the rights and privileges conditionally transferred to them by the licence holder. If a non-RFI creditor needs to collect on the collateral and recommends the name of a harvester for the reissuance of the licence, DFO will evaluate the eligibility of the recommended harvester on a multitude of criteria established in regulations and policies, and will ensure that it does not transfer the use and control of the rights and privileges under the licence to any third party upon or after the issuance of the licence to them.

(d) In case of bankruptcy: In cases of bankruptcy, a trustee is named and will generally sell the bankrupt’s estate to pay the creditors. In these cases, the regulations would devolve the use and control over the rights or privileges conferred by the licence to the trustee. Since the trustee is a neutral third party with no interest in the fisheries, DFO is confident that trustees will not try to gain undue access to the fisheries for which they are not eligible, and therefore will impose no restrictions on the use and control of the rights and privileges beyond ensuring that the person recommended by the trustee to hold the licence next is eligible to receive it.

(e) When all or part of the rights of the proceeds from the sale of the catch are transferred to any person on the vessel who is participating in making the catch: Catch share (or share catch) agreements predetermine how the earnings from a catch will be distributed among people (crew, licence holder, fishing corporation, etc.). Under current rules, to be a fisher as defined under the Employment Insurance (Fishing) Regulations, an individual must, among other things, be a self-employed person and also has to participate in the making of the catch and have a right of ownership to all or part of the proceeds from the sale of that catch. In order to maintain the eligibility of the harvesters for employment insurance, DFO worked with Employment and Social Development Canada and the Canada Revenue Agency to develop the exception that would allow a licence holder to transfer the rights to the proceeds from the sale of the catch to the crew. In order to implement and enforce this exception, licence holders will be asked to keep a record of their crew for each fishing trip.

(f) and (g) When the rights and privileges under the licence have been transferred to the licence holder’s or applicant’s inshore family fishing corporation or their inshore family fishing trust: In early 2019, DFO was made aware of the fact that some licence holders have structured their fishing enterprises using different types of corporate structures. Under these circumstances, rights and privileges are conferred to the corporation in order to conduct the fishing activities and report the income. This current practice constitutes a transfer of the rights and privileges away from the licence holder and therefore violates both prohibitions under the regulations.

Comments received during prepublication expressed the desire to see these entities excepted from the application of the prohibitions. The stakeholders argued that these structures do not hinder the independence of the licence holder or erode the owner-operator regime and they could help maintain the benefits stemming from the privileged access to the fishery within the hands of the licence holders and the coastal communities. After analysis, the Department decided to except these structures, but only if the licence holder maintains control over the entire corporate structure. This is done to ensure the preservation of the owner-operator regime.

The regulations define the inshore family fishing corporation as

In cases where the licence holder is a wholly owned company, the harvester who owns 100% of shares of that company would have to be in control of the inshore family fishing corporation (IFFC), meaning they have 100% of the voting shares, are the sole director or administrator of the IFFC, and the non-voting shareholders would have to be their family members, their inshore fishing company or their family trust.

Since the family corporations are often created for tax optimization purposes and intergenerational transfers, DFO sought a regulatory design that is aligned with the Canada Revenue Agency regime, and defined “family members” using the definition of “related persons” in the Income Tax Act. The following persons will be considered as eligible family members to hold non-voting shares: parents, grandparents, siblings, and children and descendants of the licence holder; their spouse or common-law partner; and their spouse or common-law partner’s parents, grandparents, siblings, children and descendants.

After verification with fishing industry accountants and lawyers, it was determined that almost all corporate structures that they have put in place for their clients would meet the regulatory requirements.

(h) When the licence holder transfers quota or gear upon authorization from the Department: In certain fisheries where this is allowed, the act of transferring either a part of the quota or a number of gear (traps, pots, etc.) would have violated the regulations. The regulations continue to allow for these temporary or permanent transfers to occur between eligible licence holders.

(i) When an organization who has been issued an allocation of fish to catch requires a licence holder to provide part of the proceeds from the sale of the catch back to the organization in exchange for additional fish allocation: These organizations are involved in the sub-allocation of community quota among different gear types, and in devising rules for all participating harvesters via a community-management plan consistent with conservation requirements set by DFO. The organizations often have a goal of helping the community and will sometimes require that harvesters, who are allowed to fish part or all of the organization’s allocation, return a part of the earnings from the sale of that catch to benefit the membership of the organization. These allocations and organizations help bolster the objective of the Federal government to keep the benefits of the access to the fisheries within the coastal communities that are dependent on fishing’s economic activities.

(j) Upon death of the licence holder: In this case, the estate of the licence holder, via the liquidator of the succession, the executor or the administrator, is permitted to use and control the rights and privileges under the licence. As per existing policy, and in order to maintain an owner-operator regime in the inshore fleet, the estate will continue to have five years upon the death of the licence holder to request to the Minister the reissuance of the licences to another eligible harvester.

(k) In case of incapacity of the licence holder: If the licence holder were found to be incapacitated, a person legally authorized to act on their behalf would be able to use and control certain rights and privileges under the licence, depending on the nature of the incapacity and subject to DFO’s authorization. For example, upon presentation of the proper documentation, the legally authorized representative of an incapacitated licence holder would be able to request a substitute operator, would be able to pay the fines and fees associated with the licence, etc. If there is no chance for the licence holder to recover from this incapacity, upon presentation of the proper legal and medical documentation, the representative would be able to request the reissuance of the licence and recommend to the Minister who should hold the licence next.

(l) When an authorized substitute operator is fishing the licence: When the licence holder is unable to perform the fishing activity, they can request to have a substitute operator authorized by DFO fish the licence on their behalf. In this case, the authorized substitute operator is transferred the use and control of all rights such as the access to the fishery, the rights over all or part of the catch and the earnings from the sale of the catch, with the exception of the signing authority. The licence holder must remain in control and be the one to use the rights and privileges of the licence that require their signature, for example to recommend to the Minister the reissuance of the licence, to request a substitute operator, or to sign agreements.

Indigenous engagement and consultations

The amendments do not apply to fishing and related activities carried out under the Aboriginal Communal Fishing Licences Regulations (ACFLR), the mechanism by which communal fishing licences are issued to an Indigenous organization to authorize (among other things) the carrying out of fishing for food, social and ceremonial (FSC) purposes. Nevertheless, DFO contacted national and regional Indigenous organizations to inform them of the amendments and to provide them with an opportunity to comment.

The Department contacted seven national and pan-regional Indigenous organizations including the Assembly of First Nations, the Inuit Tapiriit Kanatami, the Metis National Council, the Native Women’s Association of Canada, the First Nations Fisheries Council, the Atlantic Policy Congress and the First Nations of Quebec and Labrador Sustainable Development Institute (FNQLSDI). DFO extended invitations to meet, and encouraged the submission of views and feedback on the amendments. The regulatory proposal was also the subject of one of DFO’s semi-annual calls with Indigenous groups and management boards that was held in September 2018.

The majority of Indigenous engagement and consultations were led by DFO staff in regional offices. In July 2018, DFO’s Quebec Region presented the consultation materials at a meeting with the Liaison Committee between DFO and Quebec’s harvesting sector. Attending stakeholders included two representatives from Indigenous associations in addition to representatives from associations (Gaspésie-Bas-Saint-Laurent, Îles-de-la-Madeleine, and Côte-Nord) and the ministère de l’Agriculture, des Pêcheries et de l’Alimentation du Québec (MAPAQ). DFO’s Quebec Region also contacted 36 representatives from Indigenous organizations via email to provide information on the amendments and invite feedback.

In August 2018, the Department met with representatives from the Maritimes Aboriginal Peoples Council, and the Native Councils of Nova Scotia, New Brunswick, and Prince Edward Island, who expressed concern about the use of the word “rights” when describing the limited rights and privileges conveyed by an inshore licence, as opposed to Indigenous Treaty rights. The limited rights granted to a licence holder (e.g. the access to the fishery and the proprietary right to the fish harvested and the proceeds from their catch) are different and unrelated to the Indigenous and treaty rights granted under subsection 35(1) of the Constitution Act, 1982.

Feedback provided by the Unama’ki Institute of Natural Resources (UINR) expressed concerns about the quantity of proposed exemptions/exceptions within the amendments due to concerns of corporate influence on Owner-Operator and Fleet Separation. The Mi’kmaq Rights Initiative (Kwilmu’kw Maw-klusuaqn Negotiation Office) expressed support for the substitute operator policy and the amendments.

No comments were received from Indigenous organizations or persons identifying as Indigenous during the prepublication of the amendments. The Department will continue efforts to engage with Indigenous groups, partners, and stakeholders on implementation to ensure that there is a clear understanding of which licences would be subject to the amendments.

Modern treaty obligations

During the assessment of modern treaty implications (AMTI) process, DFO identified that the proposed regulatory amendments would take effect in and/or take place adjacent to geographic areas subject to modern treaties in Atlantic Canada and Quebec. In Quebec, modern treaties include the James Bay and Northern Quebec Agreement and Complementary Agreements, Nunavik Inuit Land Claims Agreement, and Crees of Eeyou Istchee Regional Marine Land Claims Agreement. In Newfoundland and Labrador, one modern treaty was identified: the Labrador Inuit Land Claims Agreement.

The geographic scope of the amendments is limited to Atlantic Canada and Quebec, and specifically excludes licences issued under the Aboriginal Communal Fishing Licences Regulations (ACFLR). Indigenous organizations that fish under the authority of the ACFLR will therefore not be impacted by these amendments. Indigenous individuals who hold inshore and coastal commercial licences issued under the Atlantic Fishery Regulations, 1985 and the Maritime Provinces Fishery Regulations are currently subject to the inshore policies and will therefore be regulated as other non-indigenous commercial licence holders in these sectors. Indigenous organizations that hold inshore commercial licences issued under the Atlantic Fishery Regulations, 1985 will continue to be excepted from the application of the elements of the inshore policies that will be incorporated in the regulations.

The AMTI concluded that implementation of these regulations is unlikely to have an impact on the rights, interests and/or self-government provisions of the James Bay and Northern Quebec Agreement and Complementary Agreements, Nunavik Inuit Land Claims Agreement, Crees of Eeyou Istchee Regional Marine Land Claims Agreement, or on Labrador Inuit Land Claims Agreement treaty partners.

DFO sent letters and consultation materials to the modern treaty partners in Quebec (Nunavik Marine Region Wildlife Board and Eeyou Itschee Wildlife Management Board), and Newfoundland and Labrador (Nunatsiavut Government [NG] and Torngat Joint Fisheries Board) to ensure that they are aware of the amendments. No issues or concerns were raised pertaining to these modern treaties.

Instrument choice — The rationale for regulations

Need for enforceable rules

Over the last 40 years, DFO has attempted to support the independence of the inshore fishery sector in Atlantic Canada and Quebec through the use of different types of policy instruments. Policies and education were used to deter corporate concentration of licences, promote locally owned independent fishing enterprises, and to help support and grow fishery-dependent communities. However, despite these policies being in place, licences in the inshore sector became the subject of agreements and arrangements that undermined these objectives. In order to address this issue, DFO undertook a major consultation process in 2004 that led to the introduction of a new policy instrument called PIIFCAF in 2007. However, even with better education and communication regarding the applicable rules and intended goals, there remain attempts to circumvent the policies. Stakeholders want to see stronger measures being taken to address third parties that are attempting to assert control over access to the fisheries and benefits for which they are not eligible.

Policy reinforcement measures

In response to these concerns, DFO implemented new policy-based administrative measures to reinforce the application of the PIIFCAF policy in 2015.

Under this approach, if DFO’s administrative review determined that a licence holder was party to a Controlling Agreement, that licence holder would have lost his or her Independent Core (IC) status and their eligibility for the issuance of a licence the following year. Under the policy regime, this type of licensing decision could be appealed and reviewed by the Regional PIIFCAF Review Committee and the Atlantic Fisheries Licence Appeal Board (AFLAB), with the Minister ultimately making the final decision as to whether the licence holder should retain their IC status, and eligibility to hold the licence subject to the agreement.

This administrative review process, from the original licensing decision to the final ministerial decision, could take a significant amount of time to complete. While the licensing decision was under the DFO appeal process, DFO allowed the licence holder to renew the licence and continue fishing. Furthermore, because this process was policy-based, the flexibility and discretion that are part of a fair and transparent licensing system was open to be exploited by licence holders and third parties in an attempt to affect or delay the ultimate decision. Finally, the primary objective of an administrative process is not to penalize, but instead to bring licence holders in line with the policy requirements. Stakeholders are of the view that this approach was ineffective at changing behaviour.

The regulatory approach allows for enforcement of the rules on both the licence holder and the third party by making it an offence for a licence holder to transfer rights and privileges conferred under a licence to anyone unless allowed under the regulations and by making it an offence for a third party to use and/or control any of those rights and privileges. The regulated licensing eligibility criteria also render ineligible a licence holder that has made such a transfer. The amendments also impose a requirement for licence holders to personally fish the licence issued to them and a requirement on the Minister to only issue licences to individuals, their estate, wholly owned companies or community-based fishing associations (subject to existing exceptions).

The Owner-Operator policy, the Fleet Separation policy, the Policy on issuing licences to companies and the PIIFCAF policy have strong support among members of stakeholder associations in the inshore sector. These stakeholder groups have previously questioned the effectiveness of the current administrative reinforcement regime, and requested that the Department adopt a more stringent approach to upholding the independence of the inshore sector, by making policy elements enforceable under the Fisheries Act. The amendments to the Atlantic Fishery Regulations, 1985 and the Maritime Provinces Fishery Regulations provide the enforceability sought by the stakeholders who will ultimately be operating under the authority of the new regulatory regime.

Maintaining the current scope and exceptions/exemptions

The regulatory amendments maintain the current scope of application of the inshore policies. Because each of the inshore policies were introduced over time, it was recognized that the application of these policies in some specific cases would have been more disruptive than beneficial. It was decided to allow certain fleets, companies or organizations to remain outside the scope of the policies because they were either corporations that could not meet the Owner-Operator and Fleet Separation requirements or because, at the time PIIFCAF was implemented, these fleets had already experienced significant restructuring and rationalization as a result of the Individual Transferable Quota program and had reorganized their enterprises in a way that may not have met the PIIFCAF requirements.

Regulatory analysis

Costs and benefits

Costs

The incremental costs associated with the amendments are expected to be low.

Regulatory cost of keeping a registry: The amendments will add the requirements for Independent Core licence holders to keep a registry of the crew on the vessel on each fishing trip. This requirement will allow DFO to implement and enforce the exception related to the sharing of the rights over the proceeds from the sale of the catch with the crew. It is estimated that it will take about 42 seconds per trip for the licence holder to record a list of crew members (on average 2.75 crew members per trip). Using the number of landing occurrences as a proxy for the number of trips, an average licence holder makes 36 trips per year. As such, the new administrative requirement will impose an incremental administrative cost — aggregated across approximately 9 332 licence holders — of $160,560 per year. In net present value terms, the cost over a 10-year period beginning in 2021 would be $1,127,708. This estimate does not take into consideration the number of licence holders who already keep records of the crew on board for each trip. The average annualized cost would be $17 per licence holder per year, or $121 per licence holder in net present value over a 10-year time frame ($2012).

Benefits of keeping a registry: Keeping a registry of crew members onboard a vessel is anticipated to serve multiple purposes, beyond those associated with the present regulations. Upon discussions with Transport Canada, the benefits of having a list of individuals onboard in the case of an emergency and to ensure available training is put to good use became apparent. The Canada Revenue Agency also flagged that registries would facilitate processing of benefits where doubts could otherwise arise with respect to a crew member’s participation in the fishery.

Owner-Operator, Fleet Separation and Issuing Licences to Companies elements: Although it changes slightly from year to year, in 2017, 83% of the licence holders in Atlantic Canada and Quebec held licences in the inshore sector. As stated in the previous sections, some inshore and coastal licences are excepted (around 700 licences, including about 600 licences excepted from the requirement to personally fish) or exempted (182 licences) from the application of the policies. Certain licence holders may hold multiple excepted/exempted licences while others will hold none. These excepted/exempted licence holders represent a small portion of the overall number of inshore licence holders (13 470 in 2017 in Atlantic Canada and Quebec).

The amendments establish criteria that the Minister already considered in licensing decisions through the Owner-Operator policy, the Fleet Separation policy, and the Policy on issuing licences to companies (i.e. to issue licences to individuals or wholly owned companies). As DFO carries forward all current exemptions and exceptions that exist in policy, moving to regulations does not have any incremental impact on the licence holders that already meet the requirements of the existing regime. Furthermore, the regulatory element requiring that a licence holder, or their substitute operator, personally fish the licence is not new. It will complement subsection 14(2) of the Atlantic Fishery Regulations, 1985, which prohibits fishing for people who do not meet the prescribed requirements.

Rights and privileges element: The vast majority of Independent Core licence holders already comply with this element of the Regulations. Licence holders had to self-declare annually that they were not in a Controlling Agreement under PIIFCAF. The Department has also been interpreting that where a separation of title from rights and privileges had occurred, the licence holder may not be able to freely dispose of the licence at a time or for a price that they determine because the rights and privileges (and the revenue generated from the fishing activities) belonged to someone else. Therefore agreements separating the rights and privileges away from the licence holder were identified as requiring further review with regard to the specific circumstances that may have resulted in non-compliance with the PIIFCAF policy.

Since the agreements between licence holders and their business partners are unique and information on how many licence holders may have entered into these agreements is not readily available, DFO is not in a position to provide any specific cost estimates. However, it is assumed that any cost associated with renegotiating or restructuring non-compliant agreements would be assumed almost exclusively by those who are in contravention to existing DFO policies in a circumstance that is not excepted under the Regulations.

In addition, since the licence holder makes a declaration upon issuance of the licence or renewal to demonstrate eligibility to receive the licence, making a false declaration to obtain a licence would be an offence under the Fisheries Act and could lead to charges, prosecution and ultimately to penalties established under the Act. As the compliance impacts are not a consequence of the Regulations, but rather due to existing policy requirements, associated costs are not attributable to the Regulations.

Other costs may be assumed by the few licence holders that were in family corporations prior to the amendments where the licence holder was not the only voting shareholder or where people that do not qualify as family members under the regulations were part of the corporation. According to accountants and lawyers consulted by DFO, it is estimated that very few licence holders would have to amend their structure and that the one-time costs related to this would be in the $2,000–4,000 range.

Cost to Government: The Department will implement the new provisions in the following manner: the review of the new licensing eligibility criteria will be carried out as an administrative function as part of DFO’s licensing process, and the prohibitions on the separation of title from the rights and privileges in a licence to fish will be enforced by DFO’s enforcement branch. In addition to existing resources dedicated to licensing and enforcement, resources have been reallocated internally to support the administrative review of eligibility criteria and the enforcement of the amendments by fishery officers. Therefore, the amendments should be cost-neutral for DFO and the Government of Canada.

Benefits

Ensuring that all licence holders abide by the amendments maintains a level playing field and reduces the risk that the current social, economic and cultural benefits associated with independently owned fishing enterprises are diverted away from the inshore and coastal fishing sectors. Providing enforcement capabilities to DFO generates disincentives for future violations, closes the policy loopholes that could be exploited, and provides the tools necessary to penalize those who violate the rules.

The commercial fishery is the socio-economic backbone of many rural and remote communities across Atlantic Canada and Quebec and has prominent cultural importance. DFO has conducted research on fishery-dependent communities, defined as those where fishing incomes (i.e. fish harvesting and processing) account for over 20% of the community’s employment incomes. A total of 79 communities in the geographic region were assessed to be fishery-reliant in 2015, of which 57% were located in Newfoundland and Labrador. In addition, 411 communities in Atlantic Canada and Quebec had at least 10 fisheries-related workers. These regulatory amendments are expected to promote viable and profitable operations for the average fishing enterprise in Atlantic Canada and Quebec by keeping the control of the licences in the hands of independent owner-operators, and the economic benefits in the communities.

Clear and repeated input and requests throughout both consultations and the entire regulatory development process show that rural residents in Atlantic Canada and Quebec support DFO’s inshore objectives and place value on strengthening and clarifying the inshore policy suite through regulations.

Small business lens

Small businesses form the majority of the stakeholders currently operating under the inshore policies. These policies, which form the basis of the amendments, are intended to protect and promote the viability of small businesses in Atlantic Canada and Quebec. The sections related to the use and control of the rights and privileges will be coming into force on April 1, 2021, in order to allow time for small businesses to comply with the new requirements which should mitigate potential impacts on small businesses. However, there are nominal cost impacts associated with the amendments.

One-for-one rule

The one-for-one rule applies as an administrative cost — aggregated across the total number of Independent Core licence holders — of $160,560 in annualized costs, or $1,127,708 in net present value over a 10-year period ($2012), as Independent Core licence holders will have to record the names of their crew members for each trip.

Strategic environmental assessment

Enshrining the inshore policies into regulations has no impact on the conservation of fish or any other environmental effect, as it does not change harvesting practices or harvesting levels. The Department continues to maintain the implementation of other regulations and policies aimed at supporting the sustainability of fisheries.

These new Regulations help ensure that the independence and economic viability of the inshore sector are maintained and further strengthened, and that the socio-economic and cultural environment of the coastal communities in Eastern Canada is preserved by keeping a strong link between the licence holders and the economic benefits derived from the privileged access to this common property resource.

Gender-based analysis plus

During the stakeholder consultations on the amendments, several concerns were raised specific to identity factors. These concerns included impacts on youth and older harvesters (age), fisheries industry/business viability and relationships (income), and impacts on communities (geography).

Following a gender-based analysis plus (GBA+) assessment, no significant impacts were identified that might disproportionately affect any specific groups, demographics, or identity factors (or combinations thereof) as a result of the regulatory changes.

Implementation, compliance and enforcement

Implementation

In order to give business owners time to ensure their compliance with the regulations, sections related to the prohibitions against the transfer of the use and control of the rights and privileges under a licence to fish (AFR subsections 20(3) to (5) and sections 21 to 23, and MPFR subsections 29.2(3) to (5) and sections 29.3 to 29.5) will come into force on April 1, 2021.

The implementation of the new licensing eligibility criteria will be carried out as an administrative function of DFO’s licensing process, while the enforcement of the prohibitions against separating the title in a licence from the rights and privileges under a licence will be carried out by DFO’s Conservation and Protection Branch.

As stated earlier, the prohibition against the licence holder transferring the rights and privileges under the licence is not intended to impact the regular operations of fishing enterprises. Education and outreach are planned to ensure that licence holders understand how to craft agreements and arrangements such as supply agreements and vessel charters in a manner that allows them to retain the rights and privileges of the licence and remain aligned with the intention of the amendments.

Education and outreach efforts are planned to ensure a smooth transition from policy to regulations. The amendments will be supported by both internal and external guidance focusing on implementation. This could include, but is not limited to,

Compliance and enforcement

The amendments pertaining to the owner-operator provision (i.e. the requirement to personally fish a licence) will be enforced by fishery officers through regular dockside and on-the-water inspections, ensuring that the licence holder is present on the vessel or that a substitute operator has been authorized by DFO.

Upon boarding a vessel, DFO fishery officers would request to see a copy of the licence or the substitute operator authorization documentation. Based on the categorization of licences, the fishery officer will be able to determine if some or all of the proposed regulatory provisions apply.

The regulatory provisions related to the Fleet Separation policy and the Policy on issuing licences to companies (i.e. licences issued to individuals, wholly owned companies or organizations that have been issued an allocation only) will be implemented as part of the licence issuance process. The onus will be on DFO to ensure that licences are only issued to individuals or wholly owned companies. New applicants will be required to prove to DFO licensing officials that they are eligible to be issued a licence to fish. Renewing applicants will continue to be required to declare any changes in controlling interest of a corporation that holds a licence to DFO as per existing policies. Providing false information to a licensing officer is a prosecutable offence under the Fisheries Act.

The regulatory provisions prohibiting the transfer of the rights and privileges under a licence to fish and the prohibition against any third party using or controlling the rights and privileges under a licence will be enforced though established departmental enforcement approaches and procedures.

The implementation of the regulated eligibility criteria used to issue licences to Independent Core applicants will build on the existing administrative review process currently used under the PIIFCAF policy: it will be applied through licensing processes. The declaration made by the licence holders, to the effect that they meet the requirements of the PIIFCAF policy, has been modified to include language that reflects the new eligibility criteria for licences referred to under paragraphs 19(a) and (c) of the Atlantic Fishery Regulations, 1985 and licences referred to under paragraphs 29.1(a) and (c) of the Maritime Provinces Fishery Regulations detailing that applicants for these licences must not have transferred the rights and privileges in a licence to fish to any third party, except under circumstances authorized through the regulations. Licensing officers will assess the eligibility of the applicant for that requirement via that self-declaration and will continue to flag triggers that may indicate that a licence holder is non-compliant with the Regulations. Triggers have been developed under the PIIFCAF policy based on previous cases and include elements such as who pays for the fees associated with the licences and whether the licence holder fishes using their own vessel. Raising triggers does not in and of itself indicate non-compliance, but rather is a means for the Department to identify licence holders that may need to have their circumstances further reviewed. Submitting a false declaration is a prosecutable offence under the Fisheries Act.

The Department can also request information from applicants, pursuant to section 8 of the Fishery (General) Regulations, in order to satisfy the Department that they meet the eligibility criteria for the issuance of a licence. If an applicant were found to be ineligible, the licence would not be issued.

Instances of potential non-compliance with the Regulations can also be identified and referred to DFO’s Conservation and Protection Branch. If enforcement action is warranted, fishery officers could initiate a series of activities to obtain additional information, in accordance with authorities conferred under the Fisheries Act and the relevant processes and procedures for these types of cases, as well as follow-up actions in consultation and cooperation with the Public Prosecution Services of Canada and potentially other government departments.

If, following analysis of the additional information received by the Department, a fishery officer has reasonable grounds to believe that an offence under the Fisheries Act has been committed, a more formal investigation may follow, which may lead to charges, prosecution, and ultimately to penalties.

Contact

Fisheries and Oceans Canada
Subject: Independence of the Inshore Fishery Regulations
200 Kent Street, 14W-096
Ottawa, Ontario
K1A 0E6
Email: DFO.IndependentFishers-PecheursIndependants.MPO@dfo-mpo.gc.ca