Keeping Fishing Licences Local: Navigating policy barriers to creating a licence bank in south-western New Brunswick

1.  Introduction: Fishing communities, the transfer of fishing licences, and licence banks
Community organizations that work with fishers suggest that the free transfer of fishing licences results in fewer people making a living fishing, fewer economic benefits staying in local communities, and poorer management of the fisheries.[1]  Overall, these problems may contribute to a loss of community stability and depleted fisheries.
 
Some fishing regions have created ‘licence banks’ to address these challenges.[2]  Licence banks purchase and hold licences, and then lease licences to individual fishers.  The lease may come with conditions regarding allowable fishing practices for conservation purposes.  The licence bank acquires capital to purchase licences from member fishers, financial institutions, and philanthropic foundations.  Licence leasing fees are used to make payments on loans and to cover the operating costs of the licence bank.
 
Fundy North Fishermen’s Association (FNFA), located in south-western New Brunswick, wishes to establish a licence bank to address challenges facing its members, particularly the local loss of control over fishing licences, and the economic barriers faced by young fishers wishing to acquire licences.  However, the Association’s ability to create a licence bank may be hindered by DFO Owner-Operator and Fleet Separation policies, including the Policy for Preserving the Independence of the Inshore Fleet in Canada’s Atlantic Fisheries (PIIFCAF).  Perhaps ironically, PIIFCAF achieves some objectives of Fundy North Fisherman’s Association by restricting licence holders to individuals.  This same function of the Policy, however, prima facie prohibits a licence bank from holding licences.  Fundy North Fishermen’s Association continues to strongly support PIIFCAF, and does not wish to jeopardize losing the policy.  At the same time, the Association wishes to know what changes to PIIFCAF would be required, if any, to allow the Association to create a licence bank.

2. Results and Analysis
2.1 Impact of licence transfers to non-local fishers
Within the past year, the fishing region in south-western New Brunswick known as Area 36 (roughly from St. Martins to Campobello) saw each of the five licences that have come up for sale transferred to buyers in Nova Scotia, with more transfers potentially in progress.[3]  The recent bump in transfers of licences to Nova Scotia followed the lifting last year of a government-imposed moratorium on licence transfers out of the province.
 
While the number of licences transferred to Nova Scotia is small compared to the total number of licences in Area 36 (some 155), local fishers are concerned that if the trend continues, they may soon lose control of the inshore fishing fleet.  Fishers from Nova Scotia are not represented by local fishermen’s organizations, and are not subject to local normative pressures regarding conservation measures.  Profits and employment that the licences provide are displaced to Nova Scotia, and local young fishers may not be financially able to enter the fishery.  Immediately after the licence transfer moratorium was lifted, the price paid for licences increased, approximately, from $250,000 to $350,000, reportedly putting them out of the purchase ability of local buyers, particularly younger fishers.[4]
 
2.2 The legal nature of fishing licences
Fishers who hold fishing licences have a legal privilege to catch and sell fish commercially, according to the region and fishery to which the licence applies.[5]  This privilege is subject, however, to the discretion of the Minister of DFO to control the number of licences for a particular fishery and region, for resource management, conservation, political or any other policy reason.[6],[7]  Furthermore, regulations under the Fisheries Act stipulate that fishers do not own their licences.  Rather, they are the property of the Crown, and are not transferable.[8]  Additionally, a holder of a fishing licence has no guarantee that the licence will be renewed in any following year.[9] 
 
The Supreme Court of Canada (SCC), nonetheless, has recognized the commercial reality of fishing licences.  Fishers do buy and sell licences, thereby transferring the privilege to fish conferred by the licence from seller to buyer.[10]  It is the licence, the SCC noted, that unlocks the economic potential of a fisher’s fishing gear and boat.[11]  The fishing industry relies on the expectation that the Minister will renew licences from year to year.  In light of this economic reality, the SCC held that licences can be considered as property in certain circumstances involving financial institutions.[12]  The SCC cautioned, however, that this recognition does not fetter in any way the Minister’s discretion to “issue, renew or cancel a fishing licence….”[13]

The upshot of the legal nature of fishing licences is that while licences are transferred as if they were personal property, the Minister of DFO retains discretion to limit or restrict the transfer of licences, in any manner he or she deems fit, short of an abuse of power.[14]  The Minister has broad legal authority to restrict how licences are transferred, and to whom licences are transferred, again short of an abuse of power.
 
2.3 Government’s response to fishing communities: Owner-Operator and Fleet Separation Polices, and PIIFCAF
Fishing communities in recent decades have experienced social and economic turmoil due to the effect of the free transfer of licences; some have faced the loss of a way of life.[15]  Responding to resulting political pressure from the inshore fishers and their communities, DFO created in the 1970s to 1990s what are known collectively as the Owner-Operator and Fleet Separation Policies.[16]  In 2007, DFO added to these the Preserving of the Independence of the Inshore Fleet in Canada’s Atlantic Fisheries (PIIFCAF) policy.[17]   DFO based these policies, in part, on overarching principles including preserving the independence of the inshore fishing fleet,[18]  accommodating regional specificities of fishers,[19] and maintaining geographic distribution of economic opportunities.[20]  These policies stipulate­­­ that licences are issued in the name of individual fishers, and that licence holders must fish their licences themselves (or a designated substitute).[21]
 
PIIFCAF was added to the Fleet Separation and Owner-Operator Policies, following lobbying effort by inshore fishers, to address a “loop-hole” that was being exploited in the previous policies.  Under the previous policies, individual fishers could enter into trust arrangements with seafood processing facilities, wherein the fisher remained the holder of the licence, but the processor was given control over how the licence was used or transferred.  Seafood processing facilities could also simply purchase fishing licences in the name of fishers in their employ.  These Controlling Agreements thus defeated the purposes of the Owner-Operator and Fleet Separation Policies. 
 
Through PIIFCAF, DFO created two categories of fishers: independent core fishers, who are not party to Controlling Agreements, and fishers who are under review because they might be party to a Controlling Agreement.[22]  Fishers were give seven years (that is, until April 12th, 2014) to declare that they are not party to a Controlling Agreement.  Those who are party to a Controlling Agreement are required to terminate the Agreement by April 12th, 2014 to be eligible for licence renewal.[23]  New licences are issued only to Independent Core fishers (or Aboriginal organizations).[24]
 
2.4 Licence banks – a community-based solution
As described above, the Area 36 fishing region in New Brunswick is losing fishing licences to Nova Scotia at a rate that causes concern to local fishing communities.  While PIFCAFF addresses some issues around the impacts of Controlling Agreements, it has not stopped the transfer of licences out of communities.
 
Fundy North Fishermen’s Association is considering the possibility of creating a licencing bank, as done elsewhere such as British Columbia and Maine, to slow or reverse the loss of licences from the communities within their region.  Licence banks are legal entities created to hold licences on behalf of fishers, who in turn lease the licenses from the organization.  Licence banks acquire funds from various sources including philanthropic foundations, fishers themselves, and traditional lending institutions.  The licence bank then purchases licences that come up for sale, and lease them to local fishers, often with conditional conservation measures as part of the lease agreement.  Lease income is used to pay interest on loans and to keep the licence bank running.[25]  Ideally, a licence bank created and operated by the Fundy North Fishermen’s Association would promote community social and economic stability by keeping licences in local control, enabling access to younger fishers, and putting local conservation norms into written agreements.[26]
 
2.5 The problem with PIIFCAF vis-à-vis licence banks
While PIIFCAF and the other Owner-Operator and Fleet Separation Policies are a victory for inshore fishers’ lobbying efforts, they may prevent the creation of licence banks.  The policies, as described above, allow only individual fishers to hold licences.  Exceptions are made for Aboriginal Community licences, and for financial institutions and designated fisheries loan boards.  A licence bank operated by a community organization such as the Fundy North Fishermen’s Association does not meet the licence holder requirements, and does not fall under the listed exceptions.  Thus, prima facie, licence banks are not permitted under current DFO policies.
 
2.6 Extent of DFO Minister’s power to change policy
The preface to the Owner-Operator and Fleet Separation Policies includes a reminder that these polices may change without prior notice, and that the Minister of DFO retains “complete discretion” to make exceptions to these provisions.[27]  These comments from DFO are consistent with the courts’ decisions regarding government discretion on policy matters.  In Maple Lodge Farms, the SCC held that while government guidelines serve a useful purpose to give those affected general knowledge of the Minister’s policies and practices, ministerial directions are not to be elevated to the level of law.  The SCC acknowledged that the courts generally do not interfere with Ministerial discretion, provided discretion is exercised in good faith and according to principles of fundamental justice.[28]  The Minister of DFO would most likely be unaffected by a legal challenge by way of judicial review to a decision to alter PIIFCAF, should he or she decide to do so.  The Minister is legally entitled to make such alterations. 
 
DFO has indicated an intention to provide opportunity for public review and input regarding any changes to licensing policies.[29]  It would be prudent for DFO to provide for this opportunity to avoid any hint of procedural unfairness,[30] should it decide to alter PIIFCAF to allow for licence banks.

3. Discussion
3.1 Purposive interpretation indicates that DFO policies are not fundamentally at odds with licence banks
The principles upon which the Owner-Operator and Fleet Separation polices are based do not appear to fundamentally conflict with the purpose of licence banks.  While licence banks are, without doubt, not permitted according to a plain language reading of the policies, a purposive interpretation[31] suggests potential leeway.  As detailed in section 2.3 above, the policies were created to, among other reasons, promote the independence of the inshore fleet, accommodate regional specificities of fishers, and maintain geographic distribution of economic opportunities.  Licence banks would be created to achieve similar ends.  Essentially, DFO’s policies and licence banks are two different means to achieve common purposes.

3.2 DFO’s Owner-Operator and Fleet Separation policies already accommodate exceptions
DFO’s Owner-Operator and Fleet Separation policies exempt Aboriginal communities from the general rule against non-individual holders of licences, for the purpose of enabling Aboriginal communities to participate in the fisheries.[32]  This exception is not in conflict with the over-arching principles of the policies, so the policies can accommodate the exception without difficulty.
 
The policies also exempt financial institutions and provincial fisheries loan boards from the rule against non-individual licence holders.  Again, because this exemption does not conflict with the fundamental purpose of the policies, it is accommodated without apparent difficulty.
Given the exemptions already accommodated under the policies, it may be reasonable for DFO to accommodate another exception that is in line with the fundamental purpose of the policies.
 
3.3 Counter arguments and potential down-sides
Licence banks, as well as the Owner-operator and Fleet Separation policies, may be criticized as out-of-step with a trend towards economic efficiency in the resource sector because they limit the freedom of the market to favour least-cost production.  Some argue that fears associated with the free transfer of licences (unemployment, monopoly powers, social instability) are unfounded, and at any rate, economic efficiency results in overall gains to the economy and society.[33]
The current Conservative federal government may not be entirely supportive of the Owner-operator and Fleet Separation policies.  Concerns were expressed during recent consultation on fisheries policies that the government might abandon or weaken these policies.  The government did not in the end, but there remains a sentiment that given a chance, the government may seek to weaken or eliminate these policies.  Requesting the government to open the policies to amendments could result in unintended negative consequences.

4. Conclusion: FNFA should recommend DFO to amend their policy in order to accommodate licence banks
Fundy North Fishermen’s Association can request the Minister of DFO to add licence banks to the list of entities entitled to hold licences aside from individual fishers.  While the Owner-operator and Fleet Separation Policies prevent licence banks on a plain language interpretation, these policies and licences banks share similar goals.  According to a purposive interpretation, the licence banks are not out-of-step with DFO’s policies, and it would seem, thus, that DFO could without difficulty accommodate licence banks as an additional exception to the individual licence holder policy.
 
In making its amendment recommendation, FNFA should identify and, as far as possible, quantify the problem, that is, the impact that the loss of licences is having on local communities, and what the impact may be should the current trend continue.  FNFA should also remind the Minister of its strong support for the purposes and principles underlying the Owner-operator and Fleet Separation policies, including PIIFCAF, and suggest that enabling licence banks to hold licences would further the purposes and principles of the policies. 
 
FNFA should note in their recommendation that the Minister has discretion to amend these policies.  So long as changes are made absent an abuse of power, the Minister has legal authority to change the policies.  Given that the proposed change is in line with the purposes and principles of the policies, it is highly unlikely that the Minister could be successfully challenged by a judicial review of the amendment.
 
From a cost-benefit view, FNFA appears to have little to lose in proposing the amendment.  Given the inshore fishery’s strong support for the policies, and given an election year is fast approaching, it is unlikely that the government would use the opportunity to get rid of the policies.  FNFA could suggest that the amendment would help gain the government more support from the inshore fishery sector.


[1] Personal communication with Maria Recchia, executive director of Fundy North Fishermen’s Association, March 27th, 2014

[2] British Columbia, Canada; and Maine, USA, for example.

[3] Personal communication with Maria Recchia, executive director, Fundy North Fishermen’s Association, March 27th, 2014.

[4] Ibid.

[5] See for example Joys v MNR, 1995 128 DLR (4th) 385.

[6] Fisheries Act, RSC 1995, c F-14, s7(1): “The Minister may, in his absolute discretion … issue or authorize to be issued leases and licences for fisheries or fishing…”

[7] Comeau’s Sea Foods v Canada, 1997 1 SCR 12.

[8] Atlantic Fishery Regulations (1985), s16(1)

[9] Ibid, s16(2)

[10] RBC v Saulnier, 2008 SCC 58.

[11] Ibid, at para 14.

[12] Ibid, at para 49-50.

[13] Ibid, at headnote, with reference to para 48.

[14] See Roncarelli v Duplessis, 1959 SCR 121 for the limits of public office discretion.

[15] See for example, John F Kearney, Community-Based Fisheries Management in the Bay of Fundy: Sustaining Communities Through Resistance and Hope (2003) Paper presented at the Third Annual Community-Based Conservation Network Seminar, Savannah, Georgia, October 15-17.

[16] Commercial Fisheries Licensing Policy for the Gulf Region, Department of Fisheries and Oceans, 2010 (amended 2013), EKME 2201439.

[17] Ibid, s20.1, and Annex X.

[18] Ibid, s7.5.

[19] Ibid, s7.8.

[20] Ibid, s7.9.

[21] Ibid, s22.1, 22,2, 23.1.

[22] Ibid, Annex X, s3.

[23] Ibid, Annex X, s5.

[24] Ibid, s29.1.

[25] Ecotrust Canada, “Fisheries Quota & Licence Bank” (2008) Briefing Issue 5.

[26] Personal communication with Maria Recchia, executive director at Fundy North Fishermen’s Association, March 27th.

[27] Supra note 16, preface notes 1 and 3.

[28] Maple Lodge Farms v Government of Canada, 1982 2 SCR 2, at 7.

[29] Supra note 16, s63.

[30] In a judicial review, a minister can be challenged on the grounds of both or either procedural unfairness and incorrect or unreasonable substantive outcome.

[31] See Re Rizzo & Rizzo Shoes Ltd, 1998 1 SCR 27 for a discussion of SCC’s preference for purposive interpretation of legislation.

[32] Supra note 16, s 33.1.

[33] For example, J A Crutchfield, “Economic and social implications of the main policy alternatives for controlling fishing effort” (1979) 36 J Fish Res Board Can 742, at 750-51.