ARCHIVED — Vol. 148, No. 34 — August 23, 2014

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Aquaculture Activities Regulations

Statutory authority

Fisheries Act

Sponsoring department

Department of Fisheries and Oceans

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Background

Global aquaculture production is growing rapidly. Since 1996, aquaculture production in Canada has more than doubled, and its value has tripled to nearly $1 billion a year. Aquaculture is increasingly important to Canada’s economy. It is estimated that over 90% of all aquaculture-related jobs are located in rural Canada, concentrated in coastal areas. Aquaculture occurs in almost every province, and the scope of aquaculture operations varies across the country, depending upon the species being farmed, the environment (marine, freshwater), and the culture technologies used. In 2012, salmon represented the greatest production volume of farmed fish in Canada at 62%, followed by mussels (16%), oysters (6%), and trout (4%).

Issues

The control of disease, pests, and biofouling, and the feeding of animals are critical animal husbandry activities in aquaculture, as they are in other food production sectors. In the aquaculture sector, these activities involve the deposit of substances, such as treatment products (drugs and pest control products) or organic matter (fish feces and feed, biofouling organisms, etc.), into waters.

The regulation of the aquaculture industry in Canada is shared between the federal and provincial/territorial governments. The federal government, through various statutes, regulates certain aspects of aquaculture-based activities. For example, the Fisheries Act includes authorities related to fisheries protection and pollution prevention. The Health of Animals Act provides for the control of fish disease and related matters. The Pest Control Products Act provides for the regulation of pest control products. The new substances provisions of the Canadian Environmental Protection Act, 1999 address environmental risks related to drugs. The Canada Shipping Act, 2001 includes provisions with respect to pollution from vessels and floating platforms.

Generally, provincial authorities license aquaculture operations (i.e. all activities related to the growing of finfish and shellfish), and authorize the allocation of space to carry out aquaculture operations (in British Columbia and Prince Edward Island, Fisheries and Oceans Canada has that role). Many jurisdictions also regulate for potential environmental impacts, animal welfare, fish health, and/or pest control product sale and use. Across Canada, provinces are responsible for the regulation of veterinary practices.

Overall, the environmental impacts of the aquaculture sector are well managed through the suite of federal and provincial regulations addressing aquaculture husbandry activities and the use of products to control diseases and pests. However, given the large number of regulators and the breadth of the regulatory requirements, the current regime can be cumbersome for aquaculture operators and confusing for Canadians who seek assurances that environmentally sustainable practices are required by law.

A consequence of this complex regime is that regulatory gaps exist and, despite multiple legal requirements established by multiple regulators, a risk of negative environmental impacts, however negligible, remains. Conversely, different jurisdictions require overlapping environmental protection measures, resulting in businesses paying to put in place different protective measures for different regulators to address the same (or largely the same) risk. In effect, the regulated business pays to mitigate risks (or elements of risk mitigation) more than once. Another consequence is that aquaculture operations can be subject to different requirements or different standards of performance in different areas of the country. Different operating conditions create inequity between areas and subject businesses to economic disadvantages based on location. This is of particular concern with respect to small business and new entrants to the sector.

The existing regime can make it more difficult for the aquaculture industry and other federal agencies to use the tools needed to meet regulatory requirements and to support good husbandry practices. For example, events related to fish health issues can adversely affect the aquaculture business and the surrounding environment. Both aquaculture operators and regulators need certainty in the requirements associated with the deposit of fish health treatment products.

The proposed Aquaculture Activities Regulations would increase the coherence of federal and provincial/territorial regulation of aquaculture activities related to the control of disease, pests, and biofouling, and the feeding and cultivation of fish. The proposed Regulations would authorize licensed aquaculture facilities to carry out husbandry activities and would also contain requirements that support the pollution prevention provisions of the Fisheries Act, consequently providing the required regulatory solutions. These requirements are intended to minimize harm to fish and fish habitat while permitting essential aquaculture activities. This would allow aquaculture operators to carry out important husbandry activities with greater certainty that activities are being carried out properly, while also ensuring that fish and shellfish populations are suitably protected.

In addition, the proposed Regulations enable the federal government to monitor aquaculture activities nationwide, contribute to ongoing efforts to support fisheries protection and pollution prevention, and increase public transparency in regulatory practices and outcomes through public reports on the combined regulatory measures.

Provincial governments and the aquaculture industry have identified the lack of regulations authorizing the deposit of deleterious substances under the Fisheries Act as a barrier to the sustainable management of the aquaculture industry. In several discussions and consultations with the provinces on this regulatory project, provinces that produce over 90% of aquaculture products in Canada expressed a desire to see this regulatory initiative implemented as quickly as possible.

Objectives

The objectives of the proposed Regulations are to

  • provide national coherence in the environmental management of licensed aquaculture activities;
  • complement the objectives of the Pest Control Products Act, the Food and Drugs Act, the Health of Animals Act, and the Canadian Environmental Protection Act, 1999;
  • streamline and coordinate a complex federal/provincial regulatory environment; and
  • increase public transparency regarding the regulation of the aquaculture sector.

Description

Fisheries and Oceans Canada has been working with its regulatory partners to develop the proposed Regulations to authorize aquaculture-related husbandry activities under section 36 (deposit of deleterious substances) and section 35 (fisheries protection) of the Fisheries Act. In addition, the proposed Regulations would also authorize the Canadian Food Inspection Agency to conduct activities related to sections 35 and 36 of the Fisheries Act for the purpose of aquatic animal health under the Health of Animals Act. The proposed Regulations are ministerial regulations pursuant to subsections 35(3) and 36(5.2) of the Fisheries Act.

Before exercising any power under subsection 35(3) of the Fisheries Act, the Minister needs to take into consideration the factors prescribed in section 6 of the Fisheries Act. The Department has conducted an analysis to demonstrate how factors such as the contribution of the relevant fish to the ongoing productivity of commercial, recreational or Aboriginal fisheries; fisheries management objectives; whether there are measures or standards to avoid, mitigate or offset serious harm to fish that are part of a commercial, recreational or Aboriginal fishery, or that support such a fishery; and the public interest were contemplated.

The proposed Regulations would prescribe the classes of substances authorized to be deposited, and would specify works, undertakings or activities authorized to be undertaken. These provisions enable

  • the deposit of products to control fish pathogens, pests and biofouling;
  • the control of pathogens, pests and biofouling;
  • the deposit of biochemical oxygen demanding matter;
  • the installation, operation, maintenance, and decommissioning of an aquaculture facility; and
  • the killing of fish for the purposes of fish pathogen, pest and biofouling control.

According to the Food and Drugs Act, a drug includes any substance or mixture of substances manufactured, sold or represented for use in the diagnosis, treatment, mitigation or prevention of a disease, disorder, abnormal physical state, or the symptoms thereof in man or animal. It includes products used for restoring, correcting or modifying organic functions in man or animal, or for disinfection in premises in which food is manufactured, prepared or kept. According to the Pest Control Products Act, a pest control product is any product, device, organism or substance that is manufactured, represented, sold or used as a means for directly or indirectly controlling, preventing, destroying, mitigating, attracting or repelling a pest.

Health Canada’s Healthy Environments and Consumer Safety Branch conducts pre-manufacture and pre-import assessments of the potential environmental risk of drugs under the New Substances Notification Regulations of the Canadian Environmental Protection Act, 1999. Health Canada’s Pest Management Regulatory Agency conducts environmental and human health risk assessments in regulating pest control products in accordance with the Pest Control Products Act and its regulations. The proposed Regulations would complement the existing regulation of drugs and pest control products by regulating their deposit into waters for aquaculture purposes.

Biochemical oxygen demanding matter is organic matter that contributes to the consumption of oxygen dissolved in water or sediment. The deposit of biochemical oxygen demanding matter as a result of feeding and biofouling control (e.g. pressure washing) activities has the potential to impact fish and fish habitat. This is due mainly to changes in oxic state within sediments. Species composition varies with changes in the amount of oxygen available in the sediment (i.e. the oxic state) and species’ physiological need for oxygen to carry out basic life functions. Generally, the higher the oxygen content of the sediment, the greater the biodiversity. The accumulation of organic matter on sediments can reduce the amount of oxygen available. The effect of the accumulation of organic matter will vary with the substrate type and species present. The potential intensity, extent and location of effects vary with hydrological and oceanographic factors (e.g. water depth, water currents, wave action).

Biochemical oxygen demanding matter impacts are assessed by monitoring any change to the oxic state of the sediment. Currently, aquaculture regulators impose limits on changes to the oxic state in sediments under marine finfish farms and on land-based aquaculture facilities. Performance standards, such as sulfide concentrations, are commonly used to determine the impact of biochemical oxygen demanding matter deposits. The proposed Regulations would complement the existing controls on the deposit of biochemical oxygen demanding matter and create national coherence in the monitoring approach and remedial actions taken.

Under the proposed Regulations, the authorization of the specified activities would be subject to conditions, namely the following:

  • The aquaculture facility is operated under an aquaculture licence. This includes a licence issued under the Pacific Aquaculture Regulations and, in Prince Edward Island, a licence or a lease issued or granted by the Minister under section 7 or 58 of the Fisheries Act for the purpose of aquaculture. In any other province, a licence is a provincial licence or authorization for the operation of an aquaculture facility;
  • The deposit of products to control fish pathogens, pests and biofouling occurs in the operation of an aquaculture facility;
  • In depositing these products, the owner or operator takes reasonable measures that minimize detriment to fish — other than fish that pose a risk of harm to fish cultivated in the facility or to equipment used in the operation of the facility — and fish habitat;
  • Specific requirements include the following:
  • any drug deposited must be prescribed by a veterinarian licensed in the province in which the drug is deposited;
  • any registered pest control product must be used in compliance with any conditions specified under the Pest Control Products Act;
  • where a treatment product is deposited to control pests, the owner or operator must first consider alternatives and make a record of those considerations;
  • any unregistered pest control product can only be used as authorized under subsection 21(5) or 41(1) of the Pest Control Products Act, or if it is exempted under paragraph 67(1)(z.4) of the Pest Control Products Act;
  • the owner or operator must take measures to minimize the risk of accidental deposit of drugs or pest control products;
  • the owner or operator must take measures to minimize the deposit of fish feces, unconsumed feed, or organic matter resulting from biofouling control;
  • for marine finfish facilities located over soft ocean bottom, monitoring of the oxic state of the sediments in the vicinity of the facility is required and the owner or operator must take measures such that the concentration of free sulfide in the sediments is within the applicable concentration limits;
  • if unusual fish morbidity or mortality is observed outside the aquaculture facility, within 96 hours of the deposit of a drug or pest control product, the owner or operator must notify a fishery officer within 24 hours, and cease the deposit of that substance until the results of a tissue sample analysis have been provided to the Minister; and
  • following an observation of unusual fish morbidity or mortality, the owner or operator will also be required to take water column and sediment samples and submit those results with the annual report;
  • Unauthorized deposit of a deleterious substance is subject to prosecution under the Fisheries Act; and
  • The owner or operator must submit an annual report to the Minister, in a form acceptable to the Minister, which contains the following information:
  • the product name of the drug or pest control product, the purpose of the deposit, the date and quantity of the deposit, and a record of consideration of alternatives to treatment;
  • a description of any measures taken to mitigate detriment to fish and fish habitat;
  • the results of monitoring the sediments on marine finfish facilities located over soft ocean bottom;
  • information related to any observation of unusual fish morbidity or mortality associated with a deposit, including the time, location, and species involved; and
  • for new or expanded facilities for finfish, the habitat, species, and oceanographic conditions present at the facility and the predicted area of deposition.

The reporting requirements enumerated in the proposed Regulations are designed to enable the assessment of compliance with the Regulations, inform environmental risk assessments, and aid in the prioritization of efforts in aquaculture management. The reporting requirements will also support public reporting on the regulation, environmental outcomes, and the state of aquaculture activities in Canada. It is expected that information collected by Fisheries and Oceans Canada through the reporting requirements would be shared with other federal agencies to enable risk management and the development of appropriate risk management measures, where appropriate.

Consultation

Fisheries and Oceans Canada has identified parties who may be impacted by the proposed Regulations, including the aquaculture industry, provincial and territorial governments, First Nations and Aboriginal communities, the fishing industry, and environmental non-governmental organizations.

Since the initial development of the regulatory proposal in 2009, Fisheries and Oceans Canada has consulted with external parties to exchange information and solicit feedback. At the outset of this regulatory project, the proposed name for the Regulations was the “Fish Pathogens and Pest Treatment Regulations.” In August 2010, a discussion document was posted on the Fisheries and Oceans Canada Web site, and an online consultation process took place for a period of 15 days. On November 5, 2011, Fisheries and Oceans Canada published, in Part I of the Canada Gazette (Vol. 145, No. 45), the Notice of intent with respect to regulations for fish pathogens and pest treatment.

After receiving feedback in response to the notice, further consultations were held in February 2012. The scope of the proposed Regulations was expanded to include the deposit of biochemical oxygen demanding matter from aquaculture sites, and the title of the initiative was changed to the “Release of Aquaculture Substances Regulations.” Over 140 different comments were received by Fisheries and Oceans Canada from stakeholders, including First Nations representatives, the aquaculture industry, fisheries associations, provincial governments, environmental non-governmental organizations, the general public, and municipalities. The following key concerns were identified:

  • concerns regarding duplication (or redundancy) of existing monitoring and reporting mechanisms;
  • concerns that the proposed Regulations would interfere with the client-veterinarian relationship; and
  • concerns regarding environmental risk impacts (water quality, wild fish, fish habitat, etc.) associated with the deposit of substances (drugs, pest control products, feed, feces, etc.) into waters.

Stakeholder concerns have been taken into account in the design of the proposed Regulations. First, the Department is committed to avoiding duplicative or unnecessary administrative requirements, while ensuring that environmental protection objectives are met. Based on discussions with other federal regulatory authorities (Environment Canada, Health Canada, and the Canadian Food Inspection Agency) and provincial regulatory authorities, the proposed Regulations are not expected to result in regulatory duplication. Fisheries and Oceans Canada had considered the option whereby a ministerial permit would have to be obtained prior to the deposit of a deleterious substance. However, this approach was rejected because it significantly increased administrative burden on aquaculture operators without adding value in terms of additional protection of fish and fish habitat.

The inclusion of reporting of drug and pest control product use in an annual report is not meant to interfere with the practice of veterinary medicine. The information would be supplied by the owner or operator and would be used to understand what products have been used, primarily to ensure that this information is available to Health Canada to inform future environmental risk assessments.

Some respondents expressed concerns that the proposed Regulations would not appropriately manage environmental risks associated with the aquaculture activities within the scope of the Regulations. However, the proposed Regulations have been designed to authorize aquaculture activities if aquaculture operators are in compliance with specific conditions developed to minimize harm to fish and fish habitat. Given that there is already a wide range of federal and provincial regulatory measures in place to regulate many of these risks, the proposed Regulations reference and build on these measures. For example, it is a legal requirement to follow conditions of registration on a pest control product label. Pest control products are only registered or authorized if environmental risks can be appropriately managed to prevent unacceptable harm to fish and fish habitat. Health Canada’s Pest Management Regulatory Agency can take action at any time to address issues of concern.

Recognizing that the deposit of biochemical oxygen demanding matter is not regulated under other federal legislation, Fisheries and Oceans Canada, through the Canadian Science Advisory Secretariat (Science Advisory Report, 2009/071), identified the environmental risks associated with this deposit and included a performance standard in the proposed Regulations that limits the intensity and extent of impact to benthic habitat due to the deposit of biochemical oxygen demanding matter.

In February and March 2012, Fisheries and Oceans Canada consulted with the aquaculture industry and commercial fishing interests in Atlantic Canada and pursued consultations through several stakeholder meetings across Canada.

The aquaculture industry and government agencies are supportive of the overall direction of the proposed Regulations. However, some citizens, public interest groups, and fishery associations have expressed concerns, mainly related to perceptions that the proposed Regulations would lead to the further use of pest control products.

Aquaculture industry comments identified the need to avoid placing further regulatory requirements on the industry, which some respondents considered already greater than regulatory requirements placed on other forms of food harvesting and production. During meetings with industry stakeholders, Fisheries and Oceans Canada clarified that the proposed Regulations would not impose major regulatory burden or costs on the industry, but rather provide a clear regulatory framework during the normal course of aquaculture operations.

While supportive of regulating the release of substances related to the operation of an aquaculture facility, some citizens, public interest groups, and the commercial fishing industry have expressed doubts about the effectiveness of the proposed Regulations.

Environmental non-governmental organizations are generally supportive of greater industry regulation, but feel Fisheries and Oceans Canada is favouring the aquaculture industry at the expense of coastal communities and traditional fishing industries (specifically lobster, which are sensitive to pest control product exposure). They have also expressed concerns that pest control product use will only increase as a result of the proposed Regulations. The intent of the proposed Regulations, as well as the broader regime that integrates several federal and provincial regulations, is to support the sustainable development of aquaculture while protecting fish and fish habitat. To this end, Fisheries and Oceans Canada will continue to provide data and information to assist Health Canada’s Pest Management Regulatory Agency in its assessments (i.e. environmental risk assessments) of the impact of pest control products on commercial species. Furthermore, the proposed Regulations would require aquaculture owners and operators to take measures to minimize harm to fish and fish habitat.

Fisheries and Oceans Canada received comments from veterinarian associations concerned with how the proposed Regulations might impact a veterinarian’s role in managing disease in aquaculture. Fisheries and Oceans Canada has communicated with veterinarian associations to assure them that the proposed Regulations would not overlap with existing guidelines for veterinary practice. Moreover, the proposed Regulations would not restrict the type of products that could be prescribed by veterinarians.

Preliminary dialogue with First Nations communities and organizations in British Columbia was held in Vancouver in May 2012. First Nations have expressed concern regarding possible environmental impacts and the resulting potential for decreases in property values, as well as impacts on traditional ways of life. Fisheries and Oceans Canada has communicated with First Nations and is committed to ensuring that the proposed Regulations are clearly understood, that resource management decisions are made in the interest of all parties, and that the proposed Regulations would not negatively affect property values as these Regulations would not increase the frequency of use or access to pest control products.

During policy consultations, the industry was consulted regarding cost-related figures. The numbers provided by the industry were found to be consistent with the Department’s projected costs related to the implementation of the proposed Regulations.

Benefits and costs

The proposed Regulations would entail a total monetized cost to industry and government of $548,398 in the first year (2014). The present value (PV) of total costs would be $3,701,096 over a 10-year period, and the annualized average (AV) cost would be $529,748.

The benefits of the proposal have been qualitatively assessed and include modernized regulatory requirements for the aquaculture industry and enhanced public confidence in Canada’s management of the aquaculture sector.

Given the significant scope of these qualitative benefits, it is believed that they would outweigh the costs that would be imposed on the aquaculture industry and government.

Baseline scenario

In the absence of the proposed Regulations, there are already a wide range of regulatory and legislative measures in place for managing activities that would be authorized through the proposed Regulations. For example, the management of pest control products is subject to the federal Pest Control Products Act and the management of the deposition of biochemical oxygen demanding matter falls under provincial regulations.

Proposed Regulations scenario

The proposed Regulations would require the following incremental measures from aquaculture operations: (1) having in place measures to minimize detriment to fish and fish habitat when depositing deleterious substances (i.e. drugs, pest control products, and biochemical oxygen demanding matter); (2) monitoring biochemical oxygen demanding matter deposits (i.e. related to the oxic state of the sediment) in accordance with the standard; (3) annual reporting; and (4) notifying a fishery officer when unusual mortality or morbidity of fish is observed, keeping records at the aquaculture facility of such events, and obtaining relevant samples in accordance with the standard.

Given existing regulatory requirements and documented practices, the majority of the proposed requirements would not result in incremental costs to aquaculture facilities.

Analysis
Costs to government

The mitigation and monitoring requirements included in the proposed Regulations are based on existing federal and provincial legislation and compliance programs. The Department’s compliance and enforcement strategy for the proposed Regulations will therefore focus on ensuring compliance with the reporting requirements of the proposed Regulations.

The only incremental costs to the Department would stem from communicating with the aquaculture sector with respect to the requirements of the proposed Regulations, and from ensuring the continued submission, compilation and review of annual reports and biochemical oxygen demanding matter deposit monitoring submissions. The Department would dedicate existing resources to these tasks, including two weeks of a PM-04 classification in each of the six Fisheries and Oceans Canada regions to analyze and compile the data received from the aquaculture industry, and two months of an EC-05 classification from Fisheries and Oceans Canada in the National Capital Region to prepare a publicly available report. The Department would also handle biochemical oxygen demanding matter monitoring information submitted by industry (i.e. approximately one week, BI-03 classification).

In addition, an interdepartmental memorandum of understanding between Fisheries and Oceans Canada, Environment Canada, and Health Canada would be developed to improve coordination and consistency between federal partners, and to increase transparency of regulatory measures and outcomes. The costs of developing and implementing this memorandum of understanding would be absorbed from existing resources in each department. Current personnel at the three departments would dedicate a small portion of time to meet on a required basis (i.e. approximately three times a year) to discuss and resolve memorandum of understanding related issues. The Department would dedicate an existing 0.25 full time equivalent, EC-05 classification, to coordinate these meetings and to prepare or distribute relevant documents.

The opportunity cost to government has been estimated to be $57,800 annually, for a total PV of $405,960 (see Cost-benefit statement table). This cost will not require incremental resources, since existing staff will be employed.

Benefits to government

The proposed Regulations would provide better coordination, resulting in an integrated and effective management of risks. By comparison, the current management of these activities by a variety of regulators results in regulatory gaps.

Costs to industry

The incremental compliance costs resulting from the requirements to minimize the deposit of deleterious substances and to minimize detriment to fish and fish habitat are associated with the adoption of measures for (i) minimizing the risk of unintended deposit of drugs; (ii) minimizing the deposit of unconsumed feed and fish feces; and (iii) minimizing the deposit of organic matter resulting from biofouling. The two latter requirements apply exclusively to facilities with a biomass production of over 2.5 tonnes. These requirements are not meant to set new standards or change aquaculture industry’s behaviour, but rather to document the practices they are already utilizing. Therefore, compliance costs are expected to be very low.

Most provinces have in place regulatory measures and documented practices for addressing these requirements. In the case of Newfoundland and Labrador, Ontario, and Saskatchewan, no such practices were found publicly available online. Hence, an assumption is made that they would have to develop them. In these three provinces, the aquaculture industry is expected to hire a consultant to review and adjust existing practices from other provinces. These are one-time, upfront costs of low magnitude, provided that no new work is required to develop practices that do not exist in other jurisdictions. Compliance costs have been estimated to total $2,117 during the first year of implementing the proposed Regulations (see Cost-benefit statement table).

Industry’s annual reporting costs are based on the number of aquaculture facilities (1 927), rather than on the number of aquaculture businesses (472). This is to account for the fact that annual reports would be required for each facility, rather than for each business. Industry’s administrative costs were calculated by using the Regulatory Cost Calculator.

All aquaculture facilities across Canada will bear an average annual cost of $240 per facility, which reflects the time spent by employees in keeping records of data and practices related to activities managed under the regulation, in compiling and verifying this information for the annual report, and in submitting the report to the Department. It must be noted that this cost is based on operations of a certain complexity. Small aquaculture operations will probably require less effort and resources to meet this requirement.

Aquaculture facilities engaged in marine finfish on soft bottom substrate (150 facilities) will require reporting of the monitoring activity of the biochemical oxygen demanding matter deposit. This will represent an additional cost of $42 per facility every two years, and will be borne in most part, if not all, by larger firms.

The total annual administrative cost to industry stemming from annual reporting requirements has been estimated at $468,852.

In addition, all aquaculture firms will bear a one-time, upfront cost of learning about the new regulatory requirements, which has been estimated to be $42 per firm, and $19,629 for the entire industry.

The total PV for upfront and annual reporting costs has been estimated to be $3,293,019 (see Cost-benefit statement table). The average annualized cost per business is estimated to be $1,017. These estimates may be construed as the maximum administrative costs industry may bear in implementing the proposed Regulations, since industry may already be reporting to aquaculture regulators on the use of drug and pest control products.

Finally, costs associated with notifying unusual mortality or morbidity of non-target fish are expected to be negligible. Available information indicates that, in relation to the use of authorized pest control products, no such events have occurred at aquaculture operations during the past decade. Assuming that this trend will continue over the period of this analysis, the occurrence of such unusual events is expected to be sporadic at the most, and its associated notification costs would, therefore, be negligible.

Benefits to industry

The proposed Regulations would modernize regulatory requirements in the aquaculture sector with respect to the application of the Fisheries Act to their activities (specifically for sections 35 and 36). This would provide greater clarity with respect to rules concerning the deposit of deleterious substances. The proposed Regulations would facilitate access to appropriate management tools to address disease or pest outbreaks, which would reduce the industry’s economic risk and the potential impact to aquatic ecosystems.

Costs to consumers and Canadians, in general

Given the small magnitude of the reporting costs for industry, it is unlikely that these costs would be passed on to the consumer. It is anticipated that there would be no incremental costs to consumers or Canadians in general as a result of the proposed Regulations.

Benefits to consumers and Canadians, in general

A more integrated and better coordinated risk management regime, together with public reporting of industry level data collected through the proposed Aquaculture Activities Regulations are expected to improve consumers’ confidence in aquaculture products and to enhance the value of Canada’s brand in export markets.

Cost-benefit statement
  First Year (2014) Middle Year (see note 3) (2018) Final Year (see note 3) (2023) Total (PV) (see note 1) Annualized Average (see note 2)
A. Quantified impacts ($2012) $548,398 $526,652 $526,652 $3,701,096 $529,748
Benefits By stakeholder n/a n/a n/a n/a n/a
Costs Industry: Administrative (Upfront) (Ongoing) Compliance $19,629 $468,852 $2,117 n/a $468,852 n/a n/a $468,852 n/a $19,629 $3,273,390 $2,117 $2,795 $468,852 $301
Government $57,800 $57,800 $57,800 $405,960 $57,800
B. Quantified impacts in non-dollars — e.g. from a risk assessment
Positive impacts By stakeholder n/a n/a n/a n/a n/a
Negative impacts By stakeholder n/a n/a n/a n/a n/a
C. Qualitative impacts
Short list of qualitative impacts (positive and negative) by stakeholder.

1. Government: Better coordination under an overall regulatory regime (proposed by the Aquaculture Activities Regulations), as opposed to the current management by a variety of regulators, would result in an integrated and effective management of risks.

2. Industry: (a) A more integrated risk management regime in place under the Aquaculture Activities Regulations would improve the public confidence in aquaculture products and in the government capacity to adequately manage the aquaculture industry. (b) Averted legal costs in potential lawsuits, if found in contravention of sections 35 and 36 of the Fisheries Act, would confer an indirect benefit to the industry. Depending on the level of penalties imposed and the frequency of violations, this may represent substantial potential cost savings by the industry.

3. Consumers: Improved confidence in the sustainability of aquaculture products due to a better coordinated risk management regime in place under the Aquaculture Activities Regulations. Given the small magnitude of the reporting costs to aquaculture industry, it most likely would not result in an appreciable increase in consumer prices.

Note (1): The calculations reported in the table above are taken directly from the Regulatory Cost Calculator.

Note (2): Industry’s annual reporting costs are based on a number of aquaculture facilities (1 927), rather than the number of aquaculture businesses (472). The number of facilities is the more relevant variable in these cost calculations, because the proposed Regulations take effect at the facility level.

Note 1
"Total Present Value (PV)" is calculated over 10 years, using the formula: Equation - Total Present Value, where ct is the cost in year t, and rt is the discount rate (7%). The yearly stream of PVs is then summed to get the Total PV.

Note 2
"Annualized Average" is calculated using the following formula (extracted from TB’s Canadian Cost-Benefit Analysis Guide: Regulatory Proposals): AV = [PV * r] / [1 - (1+r)-t].

Note 3
At this time, Fisheries and Oceans Canada does not have data to forecast changes in the aquaculture industry; therefore, the Department is using a conservative approach showing that costs will remain the same. These estimates will be revised if needed according to comments received during the prepublication period.

“One-for-One” Rule

Element A of the “One-for-One” Rule applies to this regulatory proposal as it imposes new administrative burden costs on business and Element B of the “One-for-One” Rule applies as the regulatory proposal is an entirely new regulation that imposes new administrative burden costs on business.

As described in the “Benefits and costs” section, the increase in administrative costs is linked to the reporting and notification requirements introduced under the proposed Regulations. The annualized average (AV) of administrative costs increase is estimated at $409,513 for all businesses. It represents an annualized average of $868 per business, assuming the 1 927 facilities are equally distributed across the 472 businesses (i.e. an average of 1 927/472 = 4.08 facilities per business). During consultation processes, industry and provincial partners were informed that this initiative would have low incremental cost and administrative burden.

Small business lens

Statistics Canada business classification categories (i.e. small, medium, large) are based on the number of employees and annual gross revenues. Based on these classifications, most aquaculture businesses in Canada, 465 out of 472 businesses, are either micro businesses (i.e. fewer than five employees or under $30,000 in annual gross revenues) or small businesses (i.e. fewer than 100 employees or between $30,000 and $5 million in annual gross revenues).

The Statistics Canada business classification categories correlate with the types of aquaculture operations: finfish facilities are generally owned by large businesses, whereas shellfish and freshwater facilities are mainly owned by micro and small businesses.

Fisheries and Oceans Canada has designed the proposed Regulations to minimize disproportionate incremental cost on small businesses. The small business lens does not apply to this regulatory proposal as the incremental cost to businesses is lower than $1,000,000 annually and the cost per small business is estimated to be lower than $1,000 annually.

The main cost to industry is the annual reporting activity under section 12 of the proposed Regulations, which requires an annual report for each facility. The annual report has 16 sections, 8 of which can apply to micro and small businesses (i.e. shellfish and freshwater aquaculture facilities) depending on the types of activities undertaken in any given year by these facilities. It is therefore assumed that the administrative burden on micro and small businesses to complete the annual report would be half that of a large business (i.e. finfish aquaculture facility).

Using the Regulatory Cost Calculator and assuming that the 1 592 small facilities are equally distributed across the 465 small businesses (i.e. an average of 1 592/465 = 3.42 facilities per small business), the cost for the small business group to complete the annual report is estimated to be $820 per small business (at a rate of $240 per facility).

Taking the above assumptions into consideration, it is estimated that the proposed Regulations would not result in any disproportionate burden to small businesses.

Rationale

Given that section 36 of the Fisheries Act prohibits the deposit of deleterious substances unless authorized by regulations, no non-regulatory options were considered. However, Fisheries and Oceans Canada identified three regulatory design options that would provide for the protection of fish and fish habitat: (1) the use of permits to authorize and regulate aquaculture activities; (2) the use of maximum limits for deleterious substance deposits included in regulations; and (3) the authorization of prescribed aquaculture activities within regulations when regulatory conditions are met.

After analysis of potential design options for the proposed Regulations and within the authority of sections 35 and 36 of the Act, Fisheries and Oceans Canada concluded that the most appropriate option would be option (3): to prescribe and authorize aquaculture activities in regulations under subsections 35(3) and 36(5.2) of the Fisheries Act when activities are conducted in conformity with regulatory conditions. This design would facilitate compliance by businesses while imposing a lower additional administrative burden compared to the two other options.

The proposed regulatory option was selected based on a number of factors. First, it would rely on existing regulatory mechanisms and provide for the protection of fisheries at the lowest costs to all parties. It would allow for improved integration of the Fisheries Act, the Canadian Environmental Protection Act, 1999, the Food and Drugs Act, and the Pest Control Products Act, and minimize duplication with established provincial regulatory regimes. The proposed Regulations would also support Fisheries and Oceans Canada’s objectives to support sustainable fisheries and aquaculture through the presence of an effective, efficient and transparent regulatory regime that builds public confidence in the management of the sector. Furthermore, the proposed Regulations would contribute to the long-term financial viability of the aquaculture industry by enabling integrated risk management and fish health management practices.

The proposed Regulations have been designed to provide greater certainty for aquaculturists on regulatory requirements related to sections 35 and 36 of the Fisheries Act. The Regulations would allow for

  • efficiencies within government and transparency in the management of the aquaculture sector;
  • low additional administrative burden on small business; and
  • cost-effectiveness, with no anticipated financial cost to Canadian consumers.

Implementation, enforcement and service standards

To improve integration between federal departments and their respective legislative responsibilities, and to increase transparency in the management of the sector, a federal interdepartmental memorandum of understanding involving Fisheries and Oceans Canada, Health Canada, and Environment Canada is being developed. This agreement would identify clear operational roles and responsibilities for these federal departments related to science review and oversight, information sharing, and compliance and enforcement activities. To ensure that the proposed Regulations and associated Aquaculture Monitoring Standard (see footnote 1) evolve as new technologies and new scientific information become available, the commitment includes provisions for an executive committee that may establish special working groups to lead implementation activities. The memorandum also contains a provision to establish a two- to three-year science-based research and advisory process to support implementation of the proposed Regulations and other initiatives under section 36 of the Fisheries Act. The results of this process would be used to inform cost-effective, risk-based post-deposit monitoring and remedial actions, with respect to drugs and pest control products, for future incorporation into the proposed Regulations.

The proposed regulatory option takes into consideration already existing federal and provincial policies and regimes. Federal agencies would continue to lead in compliance and enforcement activities in relation to those aspects already within their legislative purview. For example, Health Canada’s Pest Management Regulatory Agency would continue to be responsible for regulating pest control products and enforcing pest control product conditions of registration or authorization. With the proposed Regulations, existing agreements between federal and provincial agencies regarding aquaculture remain in place. Provincial aquaculture regulators are also expected to play a key role in supporting the implementation of the proposed Regulations through their existing programs and tools. For example, Ontario, New Brunswick, Nova Scotia, and Newfoundland and Labrador already have requirements and practices in place regarding integrated fish health and pest management, mitigation and performance standards for sediment effects arising from the deposition of biochemical oxygen demanding matter, and information requirements for new farm sites. However, Fisheries and Oceans Canada would have new responsibilities for collecting/collating data reported and ensuring that the reports received are in accordance with standards and regulatory requirements.

The report to the fishery officer of unusual fish morbidity or mortality would also be communicated to the Pest Management Regulatory Agency in situations where the tissue sample results indicate that a pest control product may have contributed to the unusual mortality. The Minister of Health, under the Pest Control Products Act, has the authority to undertake a variety of actions ranging from further investigation and monitoring to cancellation of the pest control product’s registration or authorization. Actions taken would be linked to the severity of impact to fish populations.

For drugs, the power exists under the Food and Drugs Act to cancel the identification number of drugs. Cancellation results in the sale of the drug being prohibited which, in turn, results in the deposit of the drug not being authorized under the proposed Regulations.

Fisheries and Oceans Canada will develop communications material and will meet with interested regulators and stakeholders to further explain the intent and implementation aspects of the proposed Regulations prior to the final publication of the proposed Regulations in the Canada Gazette, Part II.

To support consistency in application and implementation of the proposed Regulations, a guidance document would be developed. This document would be made publicly available through posting on the Fisheries and Oceans Canada Web site and would clearly explain the requirements and expectations for aquaculture facility owners/operators. As well, it would describe in clear terms the roles and requirements for all aquaculture regulators under the proposed Regulations.

Achieving compliance involves the assessment of risks and identification of compliance issues, compliance encouragement, promotion and inspection, and investigations. Fisheries and Oceans Canada’s enforcement tools under the Fisheries Act include education, warnings, compliance orders, and prosecutions with fines of up to $2,000,000, imprisonment of up to three years, or both in the case of an individual (clause 40(2)(a)(i)(B) of the Fisheries Act); fines are higher when a corporation is found guilty of violating section 36 of the Fisheries Act. For compliance matters related to the use of pesticides, Health Canada’s Pest Management Regulatory Agency is responsible for Pest Control Products Act enforcement activities. Their enforcement response tools under the Pest Control Products Act include education, warnings, product detention, and depending on the situation of non-compliance and the enforcement approach taken, maximum prison terms from six months to three years and maximum fines from $200,000 to $1,000,000.

Performance measurement and evaluation

Although promulgation of the proposed Regulations would not require a performance measurement and evaluation plan, Fisheries and Oceans Canada intends to conduct a performance review after five years of the coming into force of the proposed Regulations.

Contact

Ed Porter
Manager
Aquaculture Policy and Regulatory Initiatives
Fisheries and Oceans Canada
200 Kent Street, Room 8N187
Ottawa, Ontario
K1A 0E6
Fax: 613-993-8607
Email: FPPTR-RTPPP@dfo-mpo.gc.ca

PROPOSED REGULATORY TEXT

Notice is given that the Minister of Fisheries and Oceans, pursuant to subsections 35(3) (see footnote a) and 36(5.2) (see footnote b) of the Fisheries Act (see footnote c), proposes to make the annexed Aquaculture Activities Regulations.

Interested persons may make representations concerning the proposed Regulations within 60 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Ed Porter, Manager, Aquaculture Policy and Regulatory Initiatives, Department of Fisheries and Oceans, Room 8N187, 200 Kent Street, Ottawa, Ontario K1A 0E6 (fax: 613-993-8607; email: fpptr-rtppp@dfo-mpo.gc.ca).

Ottawa, July 23, 2014

GAIL SHEA
Minister of Fisheries and Oceans

AQUACULTURE ACTIVITIES REGULATIONS

INTERPRETATION

Definitions

1. The following definitions apply in these Regulations.

“Act”
« Loi »

“Act” means the Fisheries Act.

“aquaculture”
« aquaculture »

“aquaculture” means the cultivation of fish.

“aquaculture licence”
« permis d’aquaculture »

“aquaculture licence” means any of the following:

  • (a) a lease or licence issued or granted by the Minister under section 7 or 58 of the Act, or its regulations, for the purpose of aquaculture;
  • (b) a lease granted by the government of a province under subsection 59(1) of the Act for the cultivation of oysters;
  • (c) a provincial licence or authorization for the operation of an aquaculture facility.

“biochemical oxygen demanding matter”
« matière exerçant une demande biochimique en oxygène »

“biochemical oxygen demanding matter” means any organic matter that contributes to the consumption of oxygen that is dissolved in water or sediment.

“Monitoring Standard”
« Norme »

“Monitoring Standard” means the Aquaculture Monitoring Standard, as amended from time to time, that is produced by the Minister and maintained on the Department of Fisheries and Oceans website.

“soft bottom”
« fond meuble »

“soft bottom” means, in relation to a body of water, a bottom or floor that consists of loose particles such as clay, mud, marl, sand, pebbles, gravel, shells or small stones.

DELETERIOUS SUBSTANCES

Specified substances

2. For the purpose of paragraph 36(4)(c) of the Act, the following classes of substances deposited in the operation of an aquaculture facility are specified to be deleterious substances:

  • (a) drugs whose sale is permitted or otherwise authorized, or whose importation is not prohibited, under the Food and Drugs Act;
  • (b) pest control products that are registered, or whose use is authorized, under the Pest Control Products Act; and
  • (c) biochemical oxygen demanding matter.

CONDITIONS

Conditions applicable to deposits

3. An owner or operator of an aquaculture facility may, subject to the conditions set out in sections 4 to 10, deposit a deleterious substance specified in section 2 in any water or place referred to in subsection 36(3) of the Act.

Aquaculture facility

4. The deleterious substance must be deposited in the operation of the aquaculture facility, and the facility must be operated under an aquaculture licence.

Drugs

5. In the case of a deposit of a drug,

  • (a) if by or under an Act of Parliament the drug may only be sold under a prescription, it must be prescribed by a person who is authorized to practise veterinary medicine
    • (i) under the laws of the province in which the aquaculture facility is located, or
    • (ii) under the laws of any province, if the aquaculture facility is not located in a province;
  • (b) the owner or operator of the aquaculture facility must take measures to minimize the risk of an accidental deposit of the drug; and
  • (c) if the drug is deposited to control a pest as defined in the Pest Control Products Act, the owner or operator must consider whether there are alternatives to such a deposit and make a record of that consideration.

Pest control products

6. In the case of a deposit of a pest control product,

  • (a) if the pest control product is registered, it must be used in compliance with any conditions specified under the Pest Control Products Act, including any conditions relating to the place where it may be used and the quantity and concentration that may be used;
  • (b) if the pest control product is not registered, it must be authorized to be used by the owner or operator of the aquaculture facility under subsection 21(5) or 41(1) of the Pest Control Products Act or have been exempted from registration by a regulation made under paragraph 67(1)(z.4) of that Act; and
  • (c) if the pest control product is deposited to control a pest as defined in the Pest Control Products Act, the owner or operator must consider whether there are alternatives to such a deposit and make a record of that consideration.

Measures to reduce detriment

7. (1) The owner or operator of the aquaculture facility must, in depositing the deleterious substance, take reasonable measures to minimize detriment to fish — other than fish that pose a risk of harm to fish cultivated in the facility or to equipment used in the operation of the facility — and fish habitat, having regard to

  • (a) the cost and effectiveness of the available measures;
  • (b) the degree and nature of the detriment that may result from the deposit; and
  • (c) the physical characteristics of the facility and the type of aquaculture that is engaged in.

Biomass production greater than 2.5 t

(2) In the case of an aquaculture facility that is operated under an aquaculture licence that permits a biomass production of more than 2.5 t, the owner or operator must take reasonable measures to minimize the deposit of fish feces, unconsumed feed or organic matter resulting from biofouling control, having regard to the factors set out in paragraphs (1)(a) to (c).

Soft bottom in tidal waters

8. In the case of an aquaculture facility that cultivates finfish and is located over a soft bottom in tidal waters in or adjacent to Quebec, Nova Scotia, New Brunswick, British Columbia, Prince Edward Island or Newfoundland and Labrador, the owner or operator of the facility

  • (a) must take samples of the substrate in the manner and at the times and locations specified in the Monitoring Standard and determine the oxic state of the samples in accordance with that Standard by measuring the concentration of free sulfide;
  • (b) must take additional samples of the substrate, in the manner and at the times and locations specified in the Monitoring Standard, within 90 days after the day on which the samples referred to in paragraph (a) are taken if
    • (i) in the case of a facility located in tidal waters in or adjacent to Quebec, Nova Scotia, New Brunswick, Prince Edward Island or Newfoundland and Labrador, the mean concentration of free sulfide as calculated at the four locations specified in the Monitoring Standard exceeds 3000 µM, and
    • (ii) in the case of a facility located in tidal waters in or adjacent to British Columbia, the mean concentration of free sulfide as calculated at 30 m and 125 m from the structure that contains the cultivated fish exceeds 1300 µM and 700 µM, respectively; and
  • (c) must not restock the facility if the concentrations of free sulfide as measured in accordance with paragraph (a) exceed the applicable concentration limit.

Unusual fish morbidity or mortality

9. If unusual fish morbidity or mortality outside the aquaculture facility is observed from any part of the facility within 96 hours after the deposit of any drug or pest control product referred to in paragraph 2(a) or (b), the owner or operator of the facility must

  • (a) notify a fishery officer within 24 hours;
  • (b) record the following information:
    • (i) the geographic coordinates of the fish observed,
    • (ii) the estimated number and, if known, species of the fish observed, and
    • (iii) the product name of the drug or pest control product deposited and the date of the deposit;
  • (c) obtain, in the manner and at the times and locations specified in the Monitoring Standard,
    • (i) tissue samples of the affected fish,
    • (ii) water samples, and
    • (iii) substrate sediment samples;
  • (d) send the samples for an analysis of the presence of chemotherapeutants to a laboratory that is accredited by the Standards Council of Canada or by any other national accreditation organization that is a member of the International Laboratory Accreditation Cooperation; and
  • (e) cease depositing the drug or pest control product until the results of the tissue sample analysis of the affected fish have been provided to the Minister.

Annual report

10. The owner or operator of the aquaculture facility must submit an annual report to the Minister in accordance with section 12.

SECTION 35 OF THE ACT

Prescribed works, undertakings, activities and conditions

11. For the purposes of paragraph 35(2)(a) of the Act,

  • (a) the following works, undertakings or activities are prescribed:
    • (i) the installation, operation, maintenance or removal of an aquaculture facility, and
    • (ii) measures to control biofouling or the presence of fish pathogens or pests in the aquaculture facility; and
  • (b) the following conditions are prescribed for the carrying on of those works, undertakings or activities:
    • (i) the aquaculture facility is operated under an aquaculture licence,
    • (ii) the owner or operator of the facility takes reasonable measures to minimize detriment to fish — other than fish that pose a risk of harm to fish cultivated in the facility — and fish habitat, having regard to the factors set out in paragraphs 7(1)(a) to (c), and
    • (iii) the owner or operator submits an annual report to the Minister in accordance with section 12.

REPORT

Annual report

12. (1) An annual report must be submitted in a form acceptable to the Minister and contain the following information in respect of the operations of the aquaculture facility during the calendar year:

  • (a) for each deposit of a drug or pest control product during the year,
    • (i) the product name of the drug or pest control product or the common chemical names of its active ingredients,
    • (ii) the purpose of the deposit,
    • (iii) the date, quantity and geographic coordinates of the deposit, and
    • (iv) the record of consideration of alternatives referred to in paragraph 5(c) or 6(c);
  • (b) a description of any measures taken under paragraph 5(b) or section 7;
  • (c) in the case of a facility referred to in section 8, the concentrations of free sulfide referred to in that section;
  • (d) if a fishery officer was notified of unusual fish morbidity or mortality in accordance with paragraph 9(a),
    • (i) the information recorded under paragraph 9(b), and
    • (ii) the results of the tissue, water and substrate sediment analysis referred to in paragraph 9(d); and
  • (e) in the case of a marine aquaculture facility that cultivates finfish and either commences operations on or after the day on which these Regulations come into force or has been permitted, during the five years before the day on which the report is submitted, to increase the maximum quantity of fish cultivated by more than 10%,
    • (i) the predicted contours of the footprint of the biochemical oxygen demanding matter deposited by the facility,
    • (ii) underwater surveys of the waters surrounding the facility that identify macrofauna and macrophytes,
    • (iii) the bathymetry of the seabed surrounding the facility, and
    • (iv) in the case of a facility located over a soft bottom, the information that is specified in the Monitoring Standard concerning the composition of the seabed.

Due date of report

(2) An annual report must be submitted to the Minister on or before April 1 of the year following the year that is the object of the report.

Information prior to coming into force

(3) For greater certainty, an owner or operator of an aquaculture facility is not required to include information in an annual report in respect of any period before the day on which these Regulations come into force.

CANADIAN FOOD INSPECTION AGENCY

Paragraph 35(2)(a) of Act

13. (1) For the purposes of paragraph 35(2)(a) of the Act, the killing of fish by the President of the Canadian Food Inspection Agency for the purposes of fish pathogen or pest control and the Health of Animals Act is prescribed.

Deposit of deleterious substance

(2) The President of the Canadian Food Inspection Agency may, for the purposes of fish pathogen or pest control and the Health of Animals Act, deposit a deleterious substance referred to in paragraph 2(a) or (b) in any water or place referred to in subsection 36(3) of the Act.

COMING INTO FORCE

Registration

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

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