Vol. 137, No. 26 — December 17, 2003

Registration
SOR/2003-398 3 December, 2003

FISHERIES ACT

Regulations Amending the Pacific Fishery Regulations, 1993

P.C. 2003-1922 3 December, 2003

Her Excellency the Governor General in Council, on the recommendation of the Minister of Fisheries and Oceans, pursuant to sections 8 and 43 (see footnote a)  of the Fisheries Act, hereby makes the annexed Regulations Amending the Pacific Fishery Regulations, 1993.

REGULATIONS AMENDING THE PACIFIC FISHERY REGULATIONS, 1993

AMENDMENTS

1. (1) Subsection 3(3) of the Pacific Fishery Regulations, 1993 (see footnote 1)  is replaced by the following:

(3) Sections 6, 8 to 10, 13 to 15, 22, 24 and 25, and Parts IV to VII and IX 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.

(2) Subsections 3(4) and (5) of the Regulations are repealed.

2. The portion of subitem 3(11) of Part I of Schedule II to the Regulations in column II is replaced by the following:

Item	Column II Fee ($)
3. (11)	1,517.00 multiplied by the number of tonnes of herring spawn on kelp authorized to be taken under the licence, minus 40% of that product where the product is less than 2,500.00, or minus 1,000.00 where the product is 2,500.00 or more.

COMING INTO FORCE

3. These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

Amendments are made to the Pacific Fishery Regulations, 1993 (PFRs), pursuant to the Fisheries Act. The amendments include a reduction in licence fees for herring spawn on kelp and administrative changes to the application section (section 3) of the Regulations.

Reduction in Licence Fees for Herring Spawn on Kelp

The Regulations amend the PFRs, made pursuant to the Fisheries Act, to amend the licence fee for herring spawn on kelp to reflect the current landed value of the product.

The fee structure for spawn on kelp licences was adjusted for the 1996 licence year as part of a nation-wide departmental initiative to implement the policy that those who benefit from preferred access to a public resource should pay a fee that fairly reflects the value of such access. When consultations occurred in 1995, no comments were received from the licence holders. The spawn on kelp fee structure was adjusted again in 1999 to apply the same progressive calculation used in all other individual quota (IQ) fisheries.

The current licence fee is $1,770 per tonne for spawn on kelp, which represents 5% of the average landed value per tonne (i.e., $35,380 per tonne or $35.38 per kilogram). The average landed value per tonne is intended to reflect the average price received by fish harvesters from 1990 to 1993, as recorded by the Department. The fee is meant to reflect the value of "customary" onboard processing (e.g., heading, gutting, or freezing the harvested product) but is not meant to include the value of additional processing.

The Spawn on Kelp Operators Association (SOKOA) has raised a concern with respect to the landed value calculated for herring spawn on kelp. In other fisheries, the Department records the landed value as the value paid by processors to harvesters. For herring spawn on kelp, SOKOA's view is that the Department records landed value as the value paid to processors by other buyers. In this fishery, the processors usually accept delivery from harvesters, prepare the product for export, and sell the product. From the proceeds of this sale, processors cover their costs, sales commission, worker's compensation premiums, and, in most cases, export transportation costs before licence holders receive payment for their product. Therefore, the value received by processors from other buyers includes costs beyond the landed value of the product. As a result, SOKOA has suggested an adjustment to the current licence fee to reflect a more accurate estimate of the landed value, consistent with the valuation calculated for other fisheries.

In other fisheries, the Department has reviewed and adjusted landed values for purposes of licence fee calculations to more accurately reflect the landed value rather than the value after processing. For example, some shrimp caught in the Atlantic offshore shrimp fishery are processed, frozen, and packaged onboard vessels. The actual landed price for this value-added shrimp is not used in the licence fee calculation, rather the landed value is calculated from other shrimp fisheries that do not process onboard.

Although no comparable fishery exists for herring spawn on kelp, several recent studies have been completed that estimate costs in the fishery (e.g., Spawn on kelp Market Study — Part II, prepared for Fisheries and Oceans Canada by Edwin Blewett & Associates Inc, November 2001). Based on these studies and information from SOKOA, adjusting for processing costs would reduce the estimated landed value approximately 14%, and the corresponding licence fee per tonne would drop from $1,770 to $1,517. The Department and industry will continue to collect information to confirm the landed value for spawn on kelp.

Amendments to the Application Section (Section 3)

The PFRs, were previously amended in June 2002 (SOR/2002-225) such that subsections 3(3), 3(4), and 3(5) were added to the Regulations. These amendments were made as part of a larger package of amendments to the Aboriginal Communal Fishing Licences Regulations (ACFLR) and ten other fishery regulations. The purpose of amending the PFRs, was to identify which provisions apply to fishing and related activities carried out under the authority of a communal licence issued under the ACFLR. These amendments made in 2002 were in direct response to concerns raised by the Standing Joint Committee for the Scrutiny of Regulations (SJC).

Upon further review, it has been found that the amendments to the PFRs, in June 2002 inadvertently removed the application of close times to fishing for tuna outside Canadian fisheries waters. Subsection 3(4) currently states that Parts IV to VII and Part IX apply only with respect to commercial fishing carried out under the authority of a licence issued under the PFRs, which removes the ability of the Government to close the tuna fishery in waters outside Canadian fisheries waters (section 30 is in Part IV). The ability of the Government to close the tuna fishery in waters outside Canadian fisheries waters may be an important management tool in future years for regulating the Canadian tuna fleet fishing under the Canada/U.S. Albacore Tuna Treaty.

Further, subsection 3(4) of the PFRs, is unnecessarily restrictive in prescribing the application of Parts IV to VII and Part IX only to activities carried out under the authority of a licence. If someone is fishing without a licence, then the close times, size limits, and gear restrictions do not apply and the only charge that could be laid would be fishing without a licence. This is not what was intended when the amendments were made in 2002.

The amendments to subsections 3(3), 3(4), and 3(5) correct these unintentional errors and clarify the application of the PFRs.

Alternatives

Reduction in Licence Fees for Herring Spawn on Kelp

Maintaining the status quo is not considered acceptable, as this would mean that spawn on kelp licence holders would continue to pay proportionately more for the privilege of access to the resource than other commercial harvesters.

Consideration was given to delaying any change to licence fees until more accurate landed price information could be collected and a nation wide review of licence fees is implemented. This alternative was rejected, as licence holders would continue to pay licence fees based on the incorrect values for a prolonged period. The amendment will provide early relief by removing an estimate of processing-related costs from the licence fee calculation while more precise information is gathered.

Amendments to the Application Section

The ability to close the tuna fishery in waters outside Canadian fisheries waters would not be possible without changes to section 3 of the PFRs. Likewise, close times, size limits, and gear restrictions under the PFRs could not be enforced for someone fishing without a licence. Therefore, maintaining the status quo is not considered acceptable.

The amendments to the application section is the best alternative to the status quo. The amendments correct the errors found and clarify which provisions of the PFRs apply to fishing and related activities carried out under the authority of a communal licence issued under the ACFLR.

Benefits and Costs

Reduction in Licence Fees for Herring Spawn on Kelp

Under this amendment to PFRs, estimated landed value for herring spawn on kelp will decrease from $35.38 per kilogram to $30.34 per kilogram. With these adjustments to landed value, the licence fee per tonne would correspondingly drop from $1,770 per tonne to $1,517 per tonne. Based on 35 herring spawn on kelp harvesting licences issued and an average quota of 7.3 tonnes per licence, the total licence fee decrease for the industry will be approximately $65,000.

The Department's revenue will decrease an equivalent $65,000. However, this decrease is fairly insignificant relative to the Department's total revenue of approximately $40,000,000 from all commercial fishery licence fees collected.

There are no other impacts on herring spawn on kelp or other fisheries anticipated from this reduction of licence fees.

Amendments to the Application Section

No impact on departmental costs or revenues is anticipated.

Consultation

Reduction in Licence Fees for Herring Spawn on Kelp

Since July 2001, the proposal to reduce the Herring Spawn on Kelp licence fee has been discussed at two meetings of SOKOA and at the Annual General Meeting of SOKOA, which is attended by the majority of licence holders. This issue has also been discussed at two meetings of the Spawn on Kelp Working Group and two meetings of the Herring Industry Advisory Board. At these meetings, licence holders expressed unanimous support for the fee reduction and urged to have the fee amendment processed quickly. DFO has, in turn, explained the regulatory process, discussed how best to calculate the fee adjustment, and described the proposed regulatory amendment.

There have been at least ten meetings between DFO staff and executive members of SOKOA on the licence fee reduction. Some of these were working meetings on the specific calculation of the fee reduction. Through these meetings agreement was reached on how to update the landed value estimates for the base period used in calculating the licence fee. As well, DFO has reinforced the need to ensure that more accurate landed value estimates are provided henceforth, and has provided detailed information on the regulatory amendment process and timeframe. Executive members of SOKOA have also met with senior DFO officials, during which they have expressed concern over the financial situation of spawn on kelp harvesters and their need to have the licence fee reduced.

Amendments to the Application Section

These amendments simply correct errors made in earlier amendments to the PFRs, and clarify the application of the PFRs. As such, no consultations were conducted.

These amendments were pre-published in the Canada Gazette, Part I, on October 11, 2003 and no comments were received.

Compliance and Enforcement

The Fisheries Act and the PFRs are enforced by fishery officers through existing enforcement programs. The Fisheries Act provides for fines up to $100,000 for summary conviction offences and up to $500,000 for indictable offences.

In accordance with its mandate, DFO will continue to administer compliance with the requirements of the herring spawn on kelp licence fees, and enforcement of the Regulations, under the Fisheries Act. The individuals affected by the reduced herring spawn on kelp licence fee will be reminded of the change when they receive their 2004 application form, which is sent directly to each licence holder by mail.

Amendments to the application section of the Regulations will allow, when and if required, DFO to administer compliance and enforcement with respect to close times for fishing for tuna outside Canadian fisheries waters. As well, and in addition to enforcing requirements for fishing with a licence, these changes will allow DFO to administer compliance and enforcement for close times, size limits, and gear restrictions for anyone fishing without a licence.

Contacts

Diana Trager
Resource Management Co-ordinator-Pelagics
Fisheries and Oceans Canada
460-555 West Hastings Street
Vancouver, British Columbia
V6B 5G3
Telephone: (604) 666-3637
FAX: (604) 666-9136
E-mail: TragerD@dfo-mpo.gc.ca

Peter Ferguson
Legislative and Regulatory Affairs, Policy
Fisheries and Oceans Canada
200 Kent Street
Ottawa, Ontario
K1A 0E6
Telephone: (613) 990-9325
FAX: (613) 990-2811
E-mail: fergusonp@dfo-mpo.gc.ca

Footnote a 

S.C. 1991, c. 1, s. 12

Footnote 1 

SOR/93-54

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