A FRAMEWORK FOR COMMERCIAL LICENSING 93 



fleet-reduction program and the introduction of quota 

 licences in which established Hcensees are given priority 

 in new hcence allocation. 



The appropriate limit on holdings should be deter- 

 mined primarily with reference to the scale of operations 

 required to support an efficient fishing unit and the total 

 size of the fishery. Thus, in general, the limit for large 

 fisheries should be a smaller share of the total licences 

 than for small fisheries. Accordingly, I recommend 

 that — 



24. No person or corporation should be eligible to obtain a 

 limited-entry licence through a transfer or new licence 

 allocation if it would result in the person or corpora- 

 tion controlling niore than live percent of all licences, 

 by number, for that species. 



25. No person or corporation should be eligible to obtain a 

 quota licence for a major quota ftslK'r\ through a 

 licence transfer or new licence allocation if it would 

 result in the person or corporation controlling more 

 than five percent of the total allowable catch of the 

 fishery. 



For these purposes, "major quota fishery" includes hal- 

 ibut, sablefish and groundfish. 



26. The limit for all other quota fisheries should be fixed 

 at 15 percent unless t\\c level of catch suffKient to 

 support an efficient fishing unit indicates tliat aiiotlKr 

 level would be more appropriate. 



27. When a licensee's holdings exceed these limits at the 

 inception of these new licensing arrangements, he 

 should be eligible to retain his holdings at tlH.* higher 

 level but not to increase them further. If any such 

 licensee subsequently reduces his holdings, he should 

 not be eligible to iiK'rease them again except up to the 

 prescribed limit. 



28. These limits on licence lioldings, and the requireuK'nt 

 to report transfers recommended abo\e. slM)uld apply 

 to fishing privileges "or any beneficial or other inter- 

 est" in them, so that trusts, leases and related arrange- 

 ments cannot be used to circumvent the limits. The 

 limits should also apply to the transfer of shares of 

 incorporated licensees that would change the control 

 of the licence, quota or lease. 



For these purposes, "beneficial interest" and "control" 

 should be defined in the regulations. And the holdings of 

 corporations, their shareholders, subsidiaries and 

 afiiliates should be pooled to ensure that the limits are 

 not circumvented by corporate manipulations. 



These provisions should not apply to licensees who use 

 their fishing privileges as a security under bona fide 

 financing arrangements, such as a bank or processing 

 company. That is, a mortgage or pledge should not be 



regarded as a transfer. If a financier forecloses, but is 

 ineligible to take control of the rights under the hmits 

 outlined above, he should be required to dispose of them 

 within a specified period. This provision will enable 

 fishermen to obtain needed financing, but will prevent 

 anyone from expanding his foothold in the fishery 

 through loan defaults. 



My Preliminary Report suggested another restriction 

 on licence transfers to processing companies to replace 

 the existing informal limit of 13.2 percent on the number 

 of salmon licences to be held by members of the Fisheries 

 Association of British Columbia. The restriction sug- 

 gested there will now be unnecessary since my proposals 

 above will ensure that processing companies now holding 

 substantial fishing privileges will be prevented from 

 increasing their shares. At the same time, these arrange- 

 ments will permit the formation of fishermen's coopera- 

 tives or other ventures involving processing as long as 

 they stay within the proposed limits. In any event, the 

 holdings of fishing privileges by processing companies is 

 diminishing, as I explain in Chapter 13. The Department 

 should monitor these holdings to ensure that the present 

 trends are not reversed. 



These proposals are generally consistent with the pol- 

 icy of the Government of British Columbia regarding fish 

 buyers and processors. 



The spirit and intent of new policy directing 

 the issuance of processing plant and fish 

 buyers' licences is to promote competition 

 and economic efficiency within the buying- 

 processing sector. . . .' 



An explicit set of regulations of the kind proposed will 

 go a long way towards clarifying governmental policy 

 regarding the fishery's structural development and will 

 assure fishermen that new changes in policy will not 

 result in greater concentrations of power in the industry. 



Royalties 



For too long the revenues from commercial fisheries on 

 the Pacific coast have been pumped into wasteful expan- 

 sion of catching capacity, while at the same time the 

 Canadian public has shouldered heavy expenditures for 

 administering and managing these resources. The token 

 $2.5 million realized from licence fees in the Pacific 

 region in 1981 is paltry compared to the $85 million 

 budgeted for managing, administering and enhancing the 

 resource and in relation to the potential economic returns 

 under rationalized fishing. A realistic portion of revenues 

 derived from commercial fisheries should now be 

 directed away from excess catching capacity toward 

 recouping these costs to the public, reducing bloated 

 fleets and enhancing the resource. 



