At a November 12 press conference, Sipekne’katik First Nation Chief Mike Sack announced that his Band was launching “hundreds” of lawsuits related to the way governments, some commercial fishers, and the RCMP reacted to its launch of its moderate livelihood fishery on September 17, the 21st anniversary of the landmark Marshall decision that affirmed Mi’kmaq Treaty rights to a moderate livelihood fishery.
The lawsuits, Sack said, would target the RCMP, the federal Department of Fisheries and Oceans (DFO), individual non-Indigenous fishers who allegedly assaulted Mi’kmaw women and sabotaged Mi’kmaw traps who have not been charged, and also the province for preventing the sale of lobsters from the moderate livelihood fishery.
Speaking at the press conference, a lawyer for Sipekne’katik First Nation, Ronald Pink, told the media that there were six lawyers working nearly full-time on the lawsuits. He said the case against the province involves a “constitutional challenge,” that the provincial fish buyers’ regulations are “unconstitutional” because they prevent the Mi’kmaw fishers from selling what they catch in their moderate livelihood fishery. Said Pink:
… this interferes with their ability to sell a moderate livelihood fishery from lobster, for example, that is out of season. We say you [the province] have no authority, no constitutional jurisdiction to that, firstly. Secondly, you violate our Treaty rights for moderate livelihood. Moderate livelihood is to earn an income in a moderate fashion. And if we can’t sell it because your law says no one can buy from us, that interferes with their moderate livelihood, which is their … Treaty right in the constitution.
Asked by a reporter about Premier Stephen McNeil’s contention that he can’t make any changes to provincial laws governing fish buying, Pink interrupted with, “He certainly can.”
When reporters persisted, asking about the province’s claim that it had to wait for Ottawa on the issue, Pink replied, “That’s just the premier being the premier.” He said Premier McNeil could change the regulations “in the morning, but he won’t.”
Pink said that the notice of the lawsuit has been filed, and they have a few more weeks to file the relevant affidavits.
In an interview, the Halifax Examiner asked provincial fisheries and aquaculture minister Keith Colwell how he interpreted the lawsuit against the province and allegations that the government is infringing on Mi’kmaw constitutional rights to a moderate livelihood fishery.
Unfortunately, I can’t comment on that, because we’ve been served notice that they intend to possibly take action against us. So at that point, I can make no comments because it might influence the decision one way or another. I can’t do that.
Reporters also quizzed Sack, who was re-elected Chief the previous week, about the purchase announced recently of Clearwater Foods by Premium Brands Holdings Corporation and a coalition of First Nations, including the Sipekne’katik Band, which would own 50% of the company and all of Clearwater’s offshore licences. Asked whether this might help the Mi’kmaq sell their moderate livelihood-caught lobsters, Sack replied that these were “two separate things.” He explained:
The Clearwater deal for us was an economic development opportunity. So, you know, we’re pursuing that as a community to help better our community to fix some of the problems we have. But as far as fishing for exercising our right, it’s two totally different things and we’re not going to mix the two together … we’re looking to establish our own buying and selling licence … so we’re going to take a different route and establish our own brand that way.
Sack said Clearwater was a “big financial company” and that it was completely separate from the moderate livelihood fishery, and the issue of selling catch from that fishery.
But will it remain that way?
Some commercial fishers and lobster buyers worry it won’t. Before looking at some of those fears, a short history of what led up to the Clearwater deal and what we know about it so far.
The big Clearwater deal
The November 9th purchase of Clearwater by Premium Brands and a coalition of First Nations led by Membertou seems to have come as a surprise to many, but there have been numerous hints that a big deal was in the offing.
Membertou has a decades-long history of doing business with Clearwater, the company begun in 1976 by John Risley and Colin MacDonald selling lobsters out of a truck.
Already back in 2004, the pro-business Atlantic Institute for Market Studies (AIMS), where Risley was a member of the bigwig-heavy Advisory Council, published a report praising Membertou Chief Terry Paul and Chief Executive Officer General Counsel Bernd Christmas for the Band’s “financial success.”
This, said the AIMS report, was based in large part on gaming revenues, Membertou’s commercial projects in fisheries and food and gasoline retailing, and the Band’s “corporate partnerships with companies such as SNC-Lavalin, Lockheed Martin/Fujitsu,” among others.
The report added that:
The Band is undertaking a review of its commercial fishing, and developing a strategy for upcoming negotiations with DFO, since most of its “post-Marshall-decision” fishing licences expire within the year.
The Band also hopes to expand its unique partnership with Clearwater Fine Foods, a major Atlantic fish products company, which includes not only contract harvesting (with a 50–50 profit split) but also branding of Membertou-fished products.
In 2018, then-Minister of Fisheries and Oceans, Dominic Leblanc, put an end to Clearwater’s 20-year monopoly on the lucrative offshore fishery of Arctic surf clam when he allocated a quarter of the clam quota to the Five Nations Clam Company, a partnership comprising Premium Seafoods of Arichat, Nova Scotia and a consortium of five First Nations in the Atlantic provinces led by the Elsipogtog Band in New Brunswick.
Clearwater threatened legal action over the deal, and after it emerged that Liberal MP Darrell Samson had family ties to Premium Seafoods, the plan was cancelled. Clearwater regained its surf clam monopoly for a year.
In 2019, Clearwater signed a 50-year partnership with 14 First Nations in Atlantic Canada, which Membertou Chief Terry Paul said was a “business development model” that had been successful in his community.
Then in 2020, just nine days before Sipekne’katik First Nation launched its moderate livelihood fishery in Saulnierville in Southwest Nova, Clearwater announced that Membertou First Nation had purchased two of its eight licences for offshore lobster, over which the company had a monopoly, as the Halifax Examiner reported on October 7 in Part 2 of its series, “Lobster Fishery at a Crossroads.”
On November 5, the Halifax Examiner published an article examining the history of Clearwater’s monopoly on Atlantic Canada’s offshore lobster fishery, and how — if media reports were true that the BC-headquartered transnational company Premium Brands Holdings, together with Membertou First Nation and Miawpukek First Nation of Newfoundland and Labrador, was “being tipped as the frontrunner” to buy Clearwater Seafoods — that might affect the independent inshore lobster fishery.
The article detailed how Clearwater had been charged with and fined for a “gross violation” of fishery regulations in lobster fishing area 41 over which it held a monopoly. It also reported that several people had told the Examiner that First Nations arrangements with Clearwater, particularly as it was up for sale, might open a back door for foreign money and investors seeking access to the fishery, which they might otherwise not be able to obtain.
The article also quoted “Frank” (not his real name), a lifelong lobster fisher and former employee on a Clearwater lobster boat, who said he was worried that the current uncertainty about the governance of the inshore lobster fishery could lead ultimately to the erosion of its independence.
Frank told the Examiner that this might involve replacing licences that come with trap numbers by individual transferable quotas, as happened to the longliners in the ground fishery decades ago, opening the door to corporate consolidation and control of the fishery by what he called “big crooked companies.”
I think it’s either going to be a free-for-all and everybody’s just going to come and go until there’s nothing left, or there’s going to be quota. The natives will have so much quota and the commercials will have so much quota. And Clearwater has their quota. Maybe this is all happening because Clearwater intends on selling out to Premium Brand, I don’t know. But there’s something awful fishy going on here.
Four days after the article was published, on November 9, the announcement came that Premium Brands and a coalition of First Nations were indeed purchasing Clearwater in a deal worth a billion dollars. According to the press release:
“This represents a historic opportunity for the Mi’kmaq to strengthen our role in Canada’s commercial fisheries, including playing a much larger part in its unique deep-water fisheries,” said Chief Terry Paul, Membertou First Nation. “Mi’kmaq will not only become 50% owners of Clearwater with our new partner, Premium Brands, but will proudly hold all of Clearwater’s Canadian fishing licences within a fully Mi’kmaq owned entity. Each of Paqtnkek, Pictou Landing, Potlotek, Sipekne’katik and We’koqma’q have confirmed their intention to participate with Membertou and Miawpukek in this historic investment,” added Chief Terry Paul.
As part of the Transaction, a newly formed Canadian entity, wholly-owned by the Participating Communities, will acquire substantially all of the Canadian seafood licences held by Clearwater. Clearwater will maintain a perpetual licence for use of the seafood licences. [emphasis added]
The deal still has to be approved by shareholders, which is expected to happen at a meeting to be held in early 2021, and if it closes on or before January 29, Clearwater shareholders will receive $8.25 per common share.
In a September 2020 presentation to shareholders about the acquisition that the Examiner accessed on November 10 and which is archived here, Premium Brands provided a summary of the structure of Clearwater after the sale. It shows that Clearwater will pay licence payments to the participating communities of about $18 million a year, for 30 years. It also notes that the participating communities will “use a portion of the payments to purchase subordinated debt from Premium Brands on a recurring basis.” The subordinated debt is about $450 million.
In a letter to Membertou First Nation, Paul wrote that the Mi’kmaq coalition would finance the purchase over 30 years with $250 million from the First Nations Finance Authority (FNFA). He also stipulated this was a “commercial acquisition” that was “separate from both our moderate livelihood (rights-based) fishery, and our commercial in-shore fishery operations.”
The announcement was widely heralded as good news for First Nations, and garnered a great deal of positive media attention across Canada, with headlines such as “We won:’ Indigenous group in Canada scoops up billion dollar seafood firm,” and “First Nations chief calls $1-billion Clearwater deal a ‘generational acquisition.’”
Not everyone was effusive.
A few days before the purchase was announced, Solidarity K’jipuktuk / Halifax had held a protest at Clearwater headquarters to voice “opposition to Clearwater Seafoods’ megafishery on the basis that it threatens Mi’kmaw livelihood fishing,” maintaining that “Just by existing, Clearwater’s massive operation poses a serious threat to both Mi’kmaw livelihoods and lobster conservation.”
The Examiner asked Solidarity K’jipuktuk / Halifax if the purchase of Clearwater by First Nations and Premium altered their stance on the company, but didn’t hear back.
And while seven First Nations communities in Nova Scotia are participating in the deal, that means that six are not.
The day after the deal was announced, Chief Deborah Robinson of Acadia First Nation, a Mi’kmaw community that chose not to be part of the coalition, wrote to her community, congratulating Membertou First Nation on “its historic achievement in negotiating a purchase of Clearwater Seafoods.” However, she also explained why Acadia Chief and Council decided not to be part of the coalition and why they could not divulge any more details of what it entailed:
Our community learned of this opportunity on an introductory call at the end of September, 2020. The information that could be communicated to Acadia was strictly limited by Non-Disclosure Restrictions, including on such topics as details of Clearwater’s financial performance, projections for the industry, the identity of the 50% partner, the terms of the intended investment/shareholder agreements, and the amount of money (in the multi-millions) that Acadia would have to commit.
Chief and Council had to decide whether to make a binding commitment to join this transaction within roughly two weeks. Our Financial Administration Law requires a thorough review and report from our Finance and Audit Committee on any major capital transaction.
Unfortunately, the limited information available, combined with the short time to make a decision, left Acadia unable to fully assess the opportunity under our Financial Administration Law and to get comfortable with such a complex, fluid and substantial transaction.
Acadia’s Chief and Council respectfully declined participation in the Clearwater acquisition. We congratulate those communities who chose to participate in the transaction and wish them the very best.
The Non-Disclosure Restrictions in effect in this transaction remain applicable to the information we received. As a result, Acadia is not able to discuss the Clearwater process in any greater detail.
What could it mean for the inshore lobster fishery?
In an interview, the Examiner asked Chief Terry Paul how the Clearwater purchase affected Membertou’s earlier purchase of two of Clearwater’s eight offshore lobster licences, whether those would change hands now or whether that deal was now dead.
Paul replied, “No, that was a different commercial transaction.” He said that Membertou would still own those two licences.
Paul previously told the Examiner that Clearwater would continue to fish the licences Membertou purchased, as this was “much more efficient and economical.”
He also said the purchase of Clearwater was strictly a commercial transaction, and an investment in the commercial offshore fishery, which he said is completely separate from the inshore fishery.
But that doesn’t mean there are not potential implications for the independent inshore lobster fishery.
Commercial lobster licence-holders are subject to owner-operator regulations that stipulate the licence holder be on the boat doing the lobster fishing, as the Examiner reported here. This prohibits the leasing out of licences to — and the making of “controlling agreements” with — wealthier fishers or corporations that could then fish using those licences and consolidate control of the fishery.
Communal commercial licences issued to First Nations are not subject to owner-operator laws, meaning that Bands are free to lease them out to whomever they wish.
The Examiner asked Paul if, with First Nations as part owners of Clearwater, there was a possibility that First Nations might lease out their communal commercial lobster licences to boats operated by Premium or Clearwater, which would erode the owner-operator system that protects the independence of the inshore fishery.
Paul replied, “No, no, I don’t have any thoughts about that at all.”
“Frightened and stressed”
The Examiner has been hearing from fishers who are concerned about the possible implications of the Clearwater deal on the inshore fishery.
The wife of a fisher in the Gulf Region — we’ll call her Laura — told the Examiner she sees a potential “corporate takeover” of the inshore fishery, and that this could lead to the collapse of what she called the “biggest economic driver in the province.”
She worries that without the independent inshore fishery, the coastal communities and economy will be gone.
Laura noted that the existing First Nation communal commercial licences are exempt from the owner-operator rule, and that the moderate livelihood fisheries are self-governed, while, she said, DFO “regulates our every move,” which is important for “sustainability and conservation.”
Laura said her husband has always fished side-by-side and sometimes together with First Nation fishers, because, “that’s how we roll here, no one distinguished between native and non-native fishing.”
But, she said, “The moderate livelihood fishery added lobster traps to the water for the first time in what, 80 years? Adding traps to the bottom of the ocean is explicitly prohibited by the rules of DFO.”
She laid out a scenario that she thinks the Clearwater purchase could lead to:
Clearwater begins funding Indigenous people who want to fish for a moderate livelihood, lending money for bigger and better boats, ones that can sustain the harsh winter months and have the capabilities to fish year-round with the best gear. The already existing First Nation licences get leased out to the highest bidder … Clearwater has the capacity to store hundreds of thousands of pounds of lobsters and flood the market when it comes times for the commercial fisheries to open in certain parts of the province. While they are at that, they will be negotiating market prices with their Asian markets and the European markets for 50 cents cheaper than mom and pop buyers. How does one compete with that? You don’t. You close up shop. The independent fishers’ market value begins to deplete drastically. No market, no price, no way to pay loans.
Fighting tears, she continued:
I am frightened. I am stressed. We bought in 26 years ago. We went through [years with] no lobsters, no price, a better price, less traps, bigger carapace size, more conservation measures, a little more lobster, a little better price, a company that did not care if they destroyed our marine ecosystem … but this, this takes the cake. I am saddened at the lack of support by government, provincial and federal. What am I supposed to do? How do I tell my husband that we have to sell out?
Laura said she was planning to meet with her MP and ask him if he would like to buy their fishing gear, but figured he would say no, since her expenditures annually are more than his salary. Anyway, she said, “Why would you want something that is essentially worthless now?”
Lobster buyers wary
An independent lobster buyer who spoke to the Examiner said that buyers are entirely dependent on the inshore fishers for their business. He expressed concern that the First Nations partial ownership of Clearwater could lead to an erosion of the owner-operator regime if the company began to buy moderate livelihood lobsters or gain control of the market in other ways. This, he said, could curtail his supply and prompt the bank to foreclose on his loans, driving him and other independent buyers out of business.
The Nova Scotia Seafood Alliance, which advocates for land-based seafood buyers and processors, did not respond to questions from the Examiner about the potential effects of the Clearwater purchase on the owner-operator regime and on independent lobster buyers.
However, speaking with the CBC’s Paul Withers, Seafood Alliance president Osborne Burke said that while his association supports Indigenous Treaty rights, it does not support fishing out of season or buying lobsters harvested out of season. Burke told the CBC that he doesn’t accept assertions that moderate livelihood fisheries are too small to pose a conservation risk to stocks.
The Examiner contacted the provincial Department of Fisheries and Aquaculture, to find out more about the lobster buyers’ licensing — whether any new licences are being issued, if the province regulates and controls licences for the offshore, whether Clearwater’s licence for purchasing lobster from the inshore fishery differs in any way from other buyers’ licences, and if any buyers have applied for licences to purchase lobsters from First Nations moderate livelihood fisheries.
Department spokesperson Dan Davis sent this reply:
There is currently a freeze on the issuance of new buyers’ licences while the Department of Fisheries and Aquaculture carries out a strategic review of its licensing regime. To support the ongoing business transactions in the industry while this review is carried out, the department will consider licence transfers between companies.
Applicants for lobster buyer licences must meet and maintain the holding and handling requirements outlined in “Schedule C” of our Fish Processors and Fish Buyers Licensing Policy. Quality seafood is a priority for Nova Scotia, and our lobster buyers are required to demonstrate proof that employees have taken the Lobster Quality Handling Course prior to having their lobster buying licence issued or renewed.
The province regulates buyers’ licences for all seafood in Nova Scotia. Clearwater’s buyers’ licences would be subject to the same licence requirements and conditions as any other operator in Nova Scotia.
Before we can look at our provincial regulations for fish buyers in terms of the moderate livelihood fishery, the federal Department of Fisheries and Oceans needs to answer the question of what constitutes legal harvesting under a moderate livelihood fishery. That comes first because Nova Scotia’s regulations rely on the Department of Fisheries and Oceans’ authority and responsibility to manage the fishery and identify what are legal, licensed fisheries.
All corporate entities licensed in Nova Scotia as Fish Buyers or Fish Processors are required to be registered with the Nova Scotia Registry of Joint Stock Companies. Anyone with concerns about potential illegal buying activity are asked to pass along details relating to those concerns to the Nova Scotia Department of Environment, which carries out enforcement activities for the province as it relates to buying and processing licences.
The Examiner asked provincial fisheries minister Keith Colwell whether the purchase of Clearwater by Premium Brands and a coalition of First Nations meant there was a chance that the province would issue new licences to purchase what Sipekne’katik was designating their moderate livelihood fishery.
The minister made it clear the province has no intention of making changes in its fish buyer regulations, telling the Examiner that the Clearwater deal:
… will have no effect on our licensing regime with a modest livelihood fishery. Ours is very specific and we’ve been very clear on it that if someone buys, this is not directly related to the moderate livelihood fishery, totally, if anyone is fishing outside of the season, anyone that doesn’t have a proper license from DFO, they’re not permitted to buy lobsters or any other product, not just lobsters from that individual. And that doesn’t matter what fish plant it is or what buyer it is. The rules are all the same, it’s very clearly laid out in our regulations as based on what DFO classifies as a qualified license under their rules. And that’s what our regulations are based on. It’s totally a DFO issue, really.
All that could change, of course, when Sipekne’katik First Nation challenges the province in court for its refusal to exempt the moderate livelihood fishery from the fish buyers’ regulations, which it says is an infringement of its constitutional and Treaty rights.
With files from Tim Bousquet.
Note: This article was amended on Nov. 16. An earlier version misnamed LeBlanc as the person with family ties to Premium Seafoods. We regret the error.
The Halifax Examiner is an advertising-free, subscriber-supported news site. Your subscription makes this work possible; please subscribe.
Some people have asked that we additionally allow for one-time donations from readers, so we’ve created that opportunity, via the PayPal button below. We also accept e-transfers, cheques, and donations with your credit card; please contact iris “at” halifaxexaminer “dot” ca for details.