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Ottawa cracking down on big business dominance of inshore fisheries

Captain Michael Shea and his daughter, Ashley, pile lobster traps onto the wharf in Northport Tuesday. The season ends Wednesday, but the Sheas were determined to finish landing all of their gear a day early.
Captain Michael Shea and his daughter, Ashley, pile lobster traps onto the wharf in Northport, P.E.I., early in July. New regulations are hardening Ottawa's stance against "controlling agreements" that let large businesses hide behind a thin veil and control licences to fish lobster, snow crab, and other inshore species. - Eric McCarthy

Fishery regulation changes to end so-called controlling agreements

New federal laws will require those with a fishing licence to be the ones actually doing the fishing, something Ottawa says will protect the independence of the inshore fleet.

What was once a largely informal Department of Fisheries and Oceans policy has now become law with the passing of the modernized Fisheries Act, Bill C-68, last month.

Earlier this week, Fisheries Minister Jonathan Wilkinson announced the specific owner-operator and fleet-separation regulations that will be enshrined in law, putting an end to so-called controlling agreements between harvesters and processing plants or brokers.

Fish, Food and Allied Workers union president Keith Sullivan said fishers in Newfoundland and Labrador have been fighting for stricter enforcement of the owner-operator policy for decades.

“I think it will mean the difference between no real rural economies in some areas of our province versus vibrant ones, because the value of the wild fish will be there for years to come,” Sullivan told SaltWire.

The amendments to the Atlantic Fishery Regulations, 1985 and the Maritime Provinces Fishery Regulations will restrict the issuance of licences to eligible individuals, their estate or their wholly-owned companies; and require that licence holders or operators named in the licence personally fish the licence and receive the benefits from their licences.

They will also prohibit fish processors and dealers from using and controlling the rights and privileges associated with a licence.

Curbing corporate control

“We’ve seen the consequences in practically every community in the province where a young person trying to get into the fishery, trying to find a licence they’re able to avail of, had it plucked out from under them by one of these big companies.”
            - Fish, Food and Allied Workers president Keith Sullivan

DFO has been cracking down on controlling agreements in recent years in an effort to avoid corporate takeover of the inshore fishing industry.

Although initially there were no restrictions on who could hold a licence, by the late 1970s concerns from inshore harvesters on the East Coast began to arise in response to the number of fish processing plants that were acquiring vessels and registering them for the inshore fishery.

Under these sorts of agreements, which are common in Newfoundland and Labrador and in Nova Scotia’s lucrative inshore lobster fishery, a harvester would technically own an inshore licence in name, but every aspect of the licence would be controlled by the company that funded it — in some cases even in the event of the fisher’s death.

Although the government has technically banned the practice, considering it a breach of its existing policies, it has continued, often in secret. DFO’s position on controlling agreements was upheld in 2017 federal court ruled in the case of a Newfoundland and Labrador snow crab fishermen that Ottawa had the right to strip him of his license after he refused to leave a controlling agreement with two dealers.

“We’ve seen the consequences in practically every community in the province where a young person trying to get into the fishery, trying to find a licence they’re able to avail of, had it plucked out from under them by one of these big companies, mostly fish companies,” Sullivan said. “Now we hope that reverses itself and young fishermen can pay a fair value for a licence and get in the fishery on fair footing.”

Credit for control agreements

Workers unload snow crab at a wharf in Cheticamp, N.S., in July 2018. - Aaron Beswick
Workers unload snow crab at a wharf in Cheticamp, N.S., in July 2018. - Aaron Beswick

One group has been lobbying the government to create a legal middle-ground whereby lobster dealers would fund young fishers hoping to break into the lucrative lobster industry — which can cost millions — in exchange for exclusive access to their catch.

The Western Nova Scotia Lobster Dealers Coalition is a consortium of nine prominent lobster dealers in the region, represented by former Chrétien-era fisheries minister Robert Thibault.

Thibault argues this would be an alternative to traditional loans from a bank or credit union often used by fishers and would benefit both dealers and harvesters. Under the proposed model, the harvester would fish their own licence and, once their loan is paid, theoretically be free of any obligations to the dealer.

Thibault describes the independence of the inshore fishery as a “motherhood and apple pie” issue — something everyone would agree with — but said there needs to be some way to formalize the relationship between harvesters, processors, and dealers within the confines of the law.

“In the past, it was always just word-of-mouth loans — the (broker or) processor would loan money for a fisherman to be able to buy a boat and gear and licence until his loan was paid he would, of course, through honour be committed to selling his lobster to that broker or processor,” he said.

“Over the years the licences have come to be millions of dollars ... so you have to have some method of institutionalizing those relationships.”

While the new regulations deal explicitly with arrangements between processors/brokers and harvesters, some are wondering how the changes might impact medical substitutes.

Current policies mandate that when the holder of a licence is affected by an illness which prevents them from operating a fishing vessel, upon request and with medical documentation, they can designate a substitute operator. That designation, the regulations state, may not exceed a total period of five years.

Several cases now before federal court are challenging that rule as a violation of the Charter based on discrimination due to disability

“The argument that has come back from DFO is saying ‘we need to crack down on these medical substitute operators because there’s concern that there’s third-party influence in these licences and that it is a form of controlling agreement,’” said former justice minister Michel Samson, who now works for a law firm that is representing two clients fighting the policy. 

“We completely disagree. The clients we represent, for the most part, either have a child or a long-term deckhand or close friend in the community that has been fishing the licence for them because they physically can’t be on the boat every day.”

The changes to the Atlantic Fishery Regulations, 1985 and the Maritime Provinces Fishery Regulations were published in the Canada Gazette on July 6 and will be open to public comment for 30 days.

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