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Response by Jeff Brownstein (MFU local 6) to DFO's discussion document "Preserving the Independence of the Inshore Fleet in Canada's Atlantic Fisheries"
On behalf of Local 6, of the Maritime Fishermen's Union, I want to say how glad I am to see that DFO does indeed endorse "the importance of maintaining an independent and economically viable inshore fleet". The discussion document goes on to say that "Fisheries and Oceans Canada is intent on dealing with the issue of 'trust agreements' that direct the use of the licence (the beneficial interest) by a party other than the licence holder by exploring options for preserving the independence of the inshore fleet."
We believe that the Minister of Fisheries and Oceans must use his absolute discretion to ensure that the licence holder remains the only entity that holds the title as well as the beneficial interest in the licence. Rarely has a fisheries problem had such a simple solution. There is no need to complicate these policies with levels of "flexibility". Either the policies of Fleet Separation and Owner-Operator get strengthened – the loopholes get plugged – or they are lost. Losing these policies would do undue harm to the resource and to the communities who have always depended upon them.
know that you have heard many sad stories out of British Columbia, where the lack of an Owner-Operator policy has resulted in fishermen who have had to lease quotas from companies, at exorbitant costs. Then they go to sea and work their butts off for nothing. These stories are reminiscent of the days long before Confederation when large properties were run by lords, and the tenant-farmers worked mostly for them. One would like to think that we are beyond that now.
The resource belongs to the people of Canada. Conservation and sustainability are of paramount importance. Who better to grant the privilege to fish than those who live adjacent to it, and who care about having something there for generations to come. Corporations in the fishing and fish-processing industries already control the marketing of what is harvested from the sea. Their owners might be fine people, but their responsibility is to shareholders who do not all live in coastal communities, and who's main incentive is profit, not conservation. An Owner-Operator of a fishing enterprise is responsible for the way he fishes, the way he runs his business, and for what he leaves to his family. Within communities, we are responsible for each other in some ways.
Economically, it only makes sense for licences to benefit only the Owner-Operator. He/she can plan their fishing better, and are not burdened by paying large shares, or lease fees, to someone who is not actually out there fishing. Thus our communities remain more viable, and the inshore fleets retain some level of independence. Rules are easier to follow, because the operators of the licences have more of a say in establishing the rules; more responsibility to follow them; and more incentive, since it is in their own interest to have a fishery there in the future. The lobster fishery is a great example of this . It is no coincidence that the lobster fishery has been the most stable of all fisheries, while at the same time it is the biggest Owner-Operator fishery. Fishermen only invest in lobster licences for the long-term. They know that it is vital to their careers, and even their retirement, to have a fishery that has a future. And peer pressure helps to enforce the rules -- more effectively often then DFO can, and at less cost.
I shudder to think of the fishery if the processing sector had more control than it already does .If past examples are anything to go by, then the fishery would likely become more over-capitalized; less sustainable, and offer much less to the coastal communities that have always depended upon the resource, and used it reasonably well.
Too many times in the past DFO has attempted to rationalize the fishery, with goals of economic viability, and greater flexibility. These attempts have had the opposite effect. Offshore licences were given to large corporations. What followed was over-capitalization of fishing fleets which were not sustainable. There was over-fishing; and TAGS payments, which in this region went out mostly to the employees of these same corporations. Meanwhile, the multi-species inshore fleet went on to pursue other fisheries even after they suffered from the overfishing by the larger fleets. Even then DFO wanted to take away inactive groundfish licences, those which obviously hadn't done the damage. Independent inshore fishermen have just as much interest in ensuring that something is there in the future, than they do in making a living this year. In this way, conservation can be encouraged.
Yet inshore fishermen have too often gotten the message that DFO would just as soon privatize the resource in the hands of a few large corporations. This despite past lessons where DFO should have learned better. In the same Discussion Document which endorses the need to strengthen the Owner-Operator and Fleet Separation policies, there is a list of questions asking how to allow for more flexibility in these policies. More flexibility would quite simply weaken, not strengthen these policies! Is there a sincere wish to strengthen these policies, or is this consultation searching for ways to undermine the commitment to preserving the independence of the Inshore Fleet?
One would hope that DFO is sincere in its intent to preserve the Owner-Operator and Fleet Separation policies. After all, these have served the public well for all these years. The only course of action is to do whatever is necessary to plug the loopholes that allow for trust agreements. Existing trust agreements should be dealt back to the Owner-operator, and regulations must be strengthened to abolish such practice in the future.
This is not a complicated issue that calls for complicated solutions. Plug the loophole that allows for trust agreements which only weaken the policies that Canada should be proud of: An Owner-Operator fishery, in every sense of the word, that truly will preserve the independence of the Inshore Fleet in Canada's Atlantic Fisheries.
Response by L. Wayne Spinney, Vice President LFA District 34 Lobster Committee Yarmouth, January 15, 2004 to DFO's discussion document "Preserving the Independence of the Inshore Fleet in Canada's Atlantic Fisheries"
It is with both sorrow and hope that I appear before this Committee on the subject of Owner Operator. The sorrow part is that our elected and hired servants who are entrusted to protect all aspects of the fishery here in Atlantic Canada have failed miserably in the past. Yet, I stand here today with some hope for positive change to protect the lobster fishery in the very near future. The future survival and sustainability of our Coastal Communities depend so much on the social and economic benefits that arise from this important fishery. If this Lobster Fishery is allowed to be further eroded through 'trust agreements' and 'beneficial use agreements', the eminent result a concentration of licences in the control of a few companies then our coastal communities will be devastated. Our culture, a way of life in coastal and rural Atlantic Canada will be shattered. A way of life that provides benefits for all Canadians indirectly through it's substantial tax revenue for all levels of government; our purchasing power and investments in our local communities; and our ability to educate our children who become productive citizens across Canada, etc. In LFA 34 the lobster fishery represents the single most important outside revenue source for our local economy, bringing over $240 million yearly (Socio-Economic Impact LFA 34 Lobster Fishery, 2003). This evidence shows that the economic and social sustainability of our communities depend on preserving the independence of the inshore fleet in Atlantic Canada to prevent a very serious social and economic impact on our rural coastal communities.
Recommendations:3.2 Regulatory Options
Should Fisheries and Oceans Canada pursue a regulatory solution to the issue of "trust agreements"?
Definite YES! DFO should take immediate action to implement a regulatory solution to eliminate the problem of "trust agreements" that lead to a concentration of inshore lobster licences. This regulatory action by DFO would be appropriate and long overdue.
An overwhelming response from LFA 34 lobster licence holders came with a resounding YES to regulatory measures that require the owner to be the operator of the vessel to which the lobster licence has been assigned "require that the license holder remains the only entity that holds the title as well as the beneficial interest in the license" and licence holder must be the owner-operator of the enterprise.
Flexibility in owner-operator policy should be limited to special situations such as owner-operator death, illness, or injury where the 'beneficial use' continues to be tied to the license holder or to his/her estate or his family in case of death. Flexibility must not undermine the principles of the owner-operator and fleet separation policies.
Unanimous support for maintaining the integrity of the owner-operator policy and serious concern about the rapid concentration of lobster license by a few companies were the key issues identified at recent port cluster meetings across LFA District 34, with the exception of one location.
2.2 Licensing Policy Option
How can Fisheries and Oceans Canada bring greater transparency to the decision-making process related to the issuance of licences?
Fisheries and Oceans Canada must adopt a more open and transparent process in the decision-making process by involvement of fish harvester organizations at every level of the decision making process.
Should it be possible for licenses to be issued to corporations in the inshore sector?
Yes, it is very important to recognize that each core license holder operates as a small business. Give owner operator fishing companies the fiscal rights of other small businesses such as farming.
3.2 Under what constraints (for example, should such corporations be wholly owned by individual Core fishers)?
Constraints:
To preserve the independence and viability of the inshore fleet it is crucial to maintain the principle of owner-operator individual/company;
Encourage multi-species licenses but limit for example one lobster license per owner-operator company.
Bind the 'beneficial use' to license holder.
Existing constraint: the limited entry licensing policy limits the existing number of small business lobster operations in LFA 34. These small businesses are the backbone of our coastal communities.
There are a few people in the industry that believe selling your lobster license to the corporate sector through 'trust agreements' is just doing business. This is so far from the truth, especially in a limited entry lobster fishery. Every limited entry licence lost to the corporate sector erodes the independence of the inshore fishing fleet.
Some will compare doing this transaction as being no different than a corner store owner who builds up his or her business over the years and selling it. The major difference is another store can then be started next door by the seller, it is not a limited entry sector.
2.2 Should limits be imposed on the concentration of licences? If so, what limits are appropriate?
In order to preserve the integrity of owner operator and fleet separation policies and to preserve the independence of the inshore fleet the concentration of same species licences by individuals or companies must be limited by enforcing the owner-operator policy through regulation, conditions of license, and by binding the 'beneficial use' of license to license holder. Limit one lobster license per owner-operator company/individual but support multi-species licenses.
When you look at a recent social and economic impact study of LFA 34 lobster fishery you will see that our inshore lobster fishery in 2001 represented 70% of the total landed value of all fisheries in the region, it's clear why large corporate entities are now stacking lobster licenses through trust agreements. For one reason only to take control of the inshore lobster fishing industry.
3.2 Other Options Are there approaches other than regulatory change that should be explored to deal with the issue of "trust agreements"?
An immediate implementation of regulatory measures that enables the enforcement of fleet separation and owner-operator policies through conditions of licences is the only effective method to preserve an inshore fishery in Atlantic Canada that will benefit fishing families and fishing communities. In addition: approaches must be developed to support the application of the fleet separation policy. A model to explore would be the 'sunset clause' in the New Brunswick 'trust agreement' case.
It is absolutely a requirement and a responsibility of the federal and provincial governments to provide financial access for new entrants to purchase core enterprise lobster licences in the inshore lobster fishery.
3.2 Apart from the owner-operator and fleet separation policies, what else can be done to foster the independence and economic viability of inshore fleets?
Access to financial alternatives for crew, sons, or daughters of license holders and other members of our communities to purchase the fishing enterprise other than depending on corporations to back them financially to access the fishing industry.
A role for provincial and federal governments to cooperate to establish these financial alternatives. The trust agreements became out of control because crew cannot find financial means to purchase licenses.
Revenue Canada must recognize fishing enterprises as small businesses, and provide similar fiscal benefits that other small businesses have
Enable transfer of licenses to son or daughter – Adapt a similar process that is used in the farming industry to pass down lobster licence. This issue has been discussed at the Nova Scotia Minister's Conference over the past several years.
Enable LFA District 34 Lobster Committee to collect fees from their members. Fish harvesters would then have the means to develop better communication processes, develop lobster science research programs, advance professionalization, and many other issues that would help owners, crews, and families also our communities would be more informed and involved in the process.
2.2 Enforcement Issues
What are the most effective and efficient means to enforce policies or regulations designed to protect the independence of inshore fleets?
Revenue Canada and the DFO must cooperate on this issue. Once the "Beneficial Use" of a license is tied to an owner operator license holder it is not a difficult assessment to identify where the beneficial use lies. Federal departments have the means to share information to verify 'beneficial use. A similar process was developed between federal departments to implement the TAGS Program (DFO and Human Resource Development of Canada).
2.3 Other Issues
How will the approach to deal with "trust agreements" affect existing arrangements?
To preserve the inshore fishing fleets by recognizing and enforcing existing policies does not have to cause undue hardship for those who knowingly ignored these policies.
It is clear in the AFPR discussion document that 'trust agreements' contravene owner-operator and fleet separation policies.
2.2 last paragraph:
"Trust agreements" that purport to transfer the beneficial use of a licence although they have not been considered as illegal by the courts, contravene the owner-operator and fleet separation policies and the core fisher designation since they allow a corporation third party or entity other than the licence holder to control a licence in the inshore fleet.
Investments made by corporations with the knowledge that they were undermining existing fisheries policies to gain control of the inshore lobster fishing industry by using 'trust agreements' must not be rewarded under any circumstances.
Each license to be sold to individual fish harvesters. The corporations do not lose out on their financial investment. The license holder as well as our coastal communities gain back the "benefits" derived from the use of the fishing license.
Implementing regulatory measures to deal with trust agreements would enable the enforcement of current owner operator and fleet separation policies. These policies and any licences held by corporations prior to 1979 would not be affected. The Grandfather clause established effecting licenses prior to 1979 would stay in effect. Absolutely no other grandfathering of lobster licenses.
4.2 Is the process developed through consultations on Vessel Replacement Rules appropriate? If not, what should be changed?
DFO needs to ensure a more open transparent decision-making process that includes at every level of the process representation from the diverse inshore organizations in Atlantic Canada. Stop back room, closed door decision-making processes.
Response by Ashton Spinney, President LFA District 34 Lobster Committee Yarmouth, January 15, 2004 to DFO's discussion document "Preserving the Independence of the Inshore Fleet in Canada's Atlantic Fisheries"
In this process of the A.F.P.R. we welcome and thank you for the opportunity to address some concerns and issues in the discussion paper.
LFA 34 has in excess of 900 lobster licenses. Issues that could destroy the independence of this inshore lobster fleet must be carefully avoided in order to protect not only their independence but also the viability of the communities represented. The future of the inshore fleet is at risk without the immediate action of the Department of Fisheries and Oceans.
The Department of Fisheries and Oceans must take immediate steps to enact a regulatory solution to the problem of 'Trust Agreements' by incorporating the owner-operator and Fleet Separation policies into the General Regulations of the Fisheries Act.
The regulation should include provisions specifically stating that the legal interest of the holder of a fishing lobster licence and the related beneficial interest of the lobster fishing licence be as one, and not allowed to be split for the interest of different parties.
The beneficial interest of the lobster licence must remain with the lobster license holder whom is the fish harvester in the event of a lobster licence transfer where financial backing has been provided.
Question 3:2, the answer is Yes. Fisheries and Oceans must pursue a regulatory solution.
Should it be possible for licences to be issued to corporations in the inshore sector?
Only if the person to whom this licence is transferred must be:
Under enforcement Issues:
An appropriate penalty: Anyone found in violation would not be issued a license the following year.
Other Issues:
As stated in the A.F.P.R. discussion section 2.2 document 'trust agreements' contravene owner-operator and fleet separation policies.
"Trust agreements" that purport to transfer the beneficial use of a licence … contravene the owner-operator and fleet separation policies and the core fisher designation since they allow a corporation third party or entity other than the licence holder to control a licence in the inshore fleet.
Under no conditions should DFO reward this flagrant disregard for fisheries policies. It would seriously erode any confidence in future DFO policies.
Comments on the timing of this discussion paper. Notice to short to be able to speak with fishers and representatives, etc. This process I would suggest is stage one and stage two for the organizations are to meet with their members to draft responses to the document questions as time was prohibitive due to our fishing season.
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