HAKE INSHORE TRAWL ALLOCATIONS – FISHING INDUSTRY NEWS (MAR 2019)


THE NEVER ENDING STORY – HAKE INSHORE TRAWL ALLOCATIONS

 

Growing up one would often wonder when the “Rocky” movies would come to an end or whether they would somehow manage to squeeze out another sequel.  The FRAP 2015/16 Hake Inshore Trawl (HIT) allocations appear to be no different.

With the launch of the latest High Court review application by Seavuna Fishing Company (Sea Harvest) and others on the 1st of March 2019, this brings the total number of court cases in the sector since the Delegated Authority’s (DA’s) allocations in December 2016 to no less than 8.

Whilst one would have anticipated that the Category A allocations in the sector would have been put to bed in July 2017 (the first appeal results), they appear to have been inadvertently opened up by the Minister with his Category B and C appeal decisions in December 2018. It would appear he was forced to reduce Category A allocations in order to provide quantum for additional successful new entrants in Categories B and C.  The Sea Harvest review seeks to restore the 70/30 split of the HIT quantum on the basis that the Minister’s decision in July 2017 in respect of the split was not set aside by the Court Orders relating to the Category B and C allocations and as such the Minister is functus officio on the 70/30 principle.  It is also argued inter alia by the Category A’s that in any event an appeal decision by the Minister such as the December 2018 decision clearly affected Category A’s interests and in terms of section 80(3) of the MLRA they should at least have been given an opportunity to comment prior to such decisions having been made.

Consequently, not only does this latest review seek to restore the 70/30 principle but at the same time also seeks to set aside the December 2018 decisions on the category B and C appeals. This means that if the Sea Harvest review is successful, the court orders granted in respect of Category B and C whereby the July 2017 B and C appeals are set aside (and must be decided again) become effective. The Minister will then need to go through the process of deciding these appeals once again.

Looking back at the FRAP 2015/16 process a positive aspect was the publishing of provisional decisions which allowed comment from interested parties prior to final decisions being taken.  Whether or not the final decisions properly took into account these comments is another question.  However, the principle is solid and allows for the decision maker to obtain comments across the board from interested parties and make final and informed decisions thereafter.

This positive element of the FRAP 2015/16 process appears to be now manifesting itself in the Minister’s appeal process where the Minister’s latest appeals advisor is sending out individual letters to appellants inviting comment on a provisional appeal decision which the Minister intends taking.  Granted the wording and setting out of these letters has room for improvement but this appears to be a step in the right direction.

Whereas the process for publishing provisional decisions by the Delegated Authority is specifically provided for in the policy, with regard to requesting comment on provisional appeal decisions or aspects of appeals it is submitted section 80(3) of the MLRA empowers this process.  The section reads as follows:

“The Minister shall consider any matter submitted to him or her on appeal, after giving every person with an interest in the matter an opportunity to state his or her case.”  [Underlining added for emphasis]

Therefore, under this section it would permissible for the Minister prior to making final decisions on appeal to publish provisional decisions on appeal together with a provisional GPR containing the reasoning for such decisions.  This would allow interested parties to be able to comment in a wholistic manner not only on the individual appeal decisions but also on issues related to the allocation of quantum for instance.

Had such a wholistic approach been adopted prior to the December 2018 decisions in the HIT sector, the Minister would have had the benefit of interest parties’ comments prior to making these final decisions on appeal. Such comments may have affected the Minister’s final decisions on various issues such as for example the 70/30 principle.

Adding this further substantive leg to the end of the appeal process does of course require further time and effort but in the context of already 8 court cases in 1 sector, it is submitted that this would be a wise and prudent approach going forward by the Minister to gather as much information and to be as transparent as possible prior to final decisions on appeal.

Incidentally by the time this column is published the appeal decisions in the Horse Mackerel sector may or may not have been made.  However, this would be an ideal opportunity to test this approach and for the Minister to publish provisional Horse Mackerel decisions in a wholistic manner (not just with individual letters to rights holders) together with a provisional appeals GPR, and to request detailed comment thereon by interested parties. Such parties would then be able to view not only the individual provisional decisions and scoring of applicants but would also be privy to the quantum allocation mechanism and how it was applied and calculated in arriving at the provisional decisions.  Any errors substantive or clerical could hopefully be picked up in this process and rectified prior to the final decisions been taken.  All this done under the auspices of section 80(3) of the MLRA.

One would of course now have a longer process for rights allocations in that the delegated authority would first publish provisional decisions and a provisional GPR and allow for comment thereon before making decisions.  Thereafter appeals would be lodged and the Minister would process and publish provisional decisions requesting comment. Having received such comments, he would thereafter only make final decisions on appeal.  Bearing in mind that rights allocations are for the maximum 15 years, this more lengthy and transparent approach is warranted and should be conducted properly and consistently with robust legal advice where necessary in order to arrive at more rational and defendable decisions in the long run.

Looking forward to FRAP 2020, adopting such a further step now makes it even more critical for the draft policies and the consultations surrounding such policies to commence as soon as possible so that there is sufficient time for: robust consultation on policies; the invitation, submission and lodgement of applications; the considering of applications and the announcement of provisional decisions; the submission of comments on the provisional decisions and the consideration of such comments; the making of final decisions by the Delegated Authority; the submission of appeals on the DA’s decisions, the consideration of such appeals and the publishing of provisional decisions on such appeals; and in conclusion the final decisions on appeal by the Minister.  As has been stated on countless occasions, it is ideal if this entire process could be concluded prior to the termination of the current fishing rights to avoid the position commonly experienced where parties are operating on the “new” rights allocated by the Delegated Authority while still awaiting decisions on appeal by the Minister. The Minister’s decisions on appeal could of course change the identity of the rights holders – this creates great uncertainty amongst applicants with the shuffling of rights holders post allocation.

In conclusion one must therefore look at matters positively and on reflection of the “never ending story” in the HIT sector there are valuable lessons which can lead to the adoption of a more thorough allocation and appeal process in the future.



FOCUS ON RIGHTS ALLOCATIONS BY PETER EDWARDS – FISHING INDUSTRY NEWS (DEC 2018)


RECENT ALLOCATIONS

This is an apt publication in which to review recent developments and topical issues relating to the granting of fishing rights both recently and in the future.

The 2016 rights allocations (FRAP 2016) were of course a roller coaster ride particularly in the Hake Inshore Trawl and Horse Mackerel sectors.  In fact there are appeals still outstanding in the Horse Mackerel sector and recently in December 2018 the redeciding of the category B and C appeals (after a number of court orders) looks to create further controversy and court applications – in essence the category A right holders’ quanta have been further reduced to accommodate additional new entrants in the B and C categories.  Accordingly whilst we are at the end of the year 2018, the 2016 allocations have yet to be finalised.

The mayhem started with allocations of Hake Inshore Trawl which resulted in the urgent High Court interdict application of Viking Fishing which was initially successful in January 2017 and then overturned by a full bench (two judges to one) of the Cape High Court on the 7th of July 2017.  The roller coaster did not end there with the decisions on appeal (through the Minister’s appeal advisory team) ultimately finding that the quantum allocation mechanism was in fact unlawful (contrary to the Court’s finding) and re-instating Viking’s quantum to levels comparable with its previous allocation.

Finalising the 2016 appeals in the Hake Inshore Trawl and Horse Mackerel sector must now be an extreme priority for the Minister in order to move forward with the FRAP 2020 process.  Out of all of this a key lesson for the Department is that in future they should ensure that the delegated authority finalise the initial allocations with sufficient time prior to the expiry of current rights for a full appeal process to take its course.  This will then prevent urgent interdict applications and the unnecessary disruption of industry pending appeals.

LOOKING FORWARD

Overlap of small scale and commercial

Two vitally important allocation processes which will be unfolding in the next few years will be the 2020 commercial fishing rights allocations (FRAP 2020) and of course the small scale fishing allocations.  It is not overstating matters to claim that FRAP 2020 and the upcoming small scale allocations will shape the road of the fishing industry for at least the next two decades.

To a large extent these processes run parallel but there are some very important intersections where small scale meets or clashes (depending on your perspective) with commercial allocations.  This becomes critical in that the Department has made it clear that they have approximately 22000 registered small scale fishers falling under approximately 300 odd co-operatives which have been registered.  This process of registration and verification by the Department has occurred by and large without any input or consultation requested from the commercial sector.  Arguably consultation with the existing commercial sectors should have been paramount in that the larger the small scale sector the greater the impact on certain of the commercial sectors – in particular the West Coast Rock Lobster sector and now it would appear the Squid sector (not to mention the Line Fish sector).  The greater the size of the small scale sector the greater the portion of the relevant TAC or TAE which will be required to be apportioned off for the small scale sector.  As such if the Department has not properly verified and recognised small scale fishing communities and their underlying fishers, it is possible that a greater chunk of TAC’s and TAE’s may be apportioned towards small scale than indeed is warranted.

Impact of the WWF judgment

The crossing of paths of commercial sectors and the small scale sector is no better illustrated than in the West Coast Rock Lobster sector.  In particular the recent WWF High Court review application resulting in the declaration of the West Coast Rock Lobster TAC as being unlawful is an example of such a clash.  With the West Coast Rock Lobster stocks declining and the scientists recommending a TAC of around 790 tons, the Department was clearly under pressure to keep as high a TAC as possible in order to allow sufficient tonnage for the small scale sector (and nearshore rights holders) despite the fact that such a large TAC was (according to scientists) not sustainable.

The WWF judgment was also of vital importance for the cause of consultation which is imbedded in the Marine Living Resources Act and now confirmed by this judgment.  As such with the sector policies and TAC/TAE declarations in the commercial sectors eminent, the Department is under a heightened pressure to implement meaningful consultation with interested and affected parties.

CAF to be implemented

Staying with the consultation theme, the Department has announced that it is in the process of complying with its obligations in terms of the MLRA to appoint a Consultative Advisory Forum (“CAF”).  The Department and the Minister have been in breach of this obligation for many years and it is submitted that this has greatly impacted on the ability of the Minister and the Department to make informed decisions on various issues in the fishing industry and in particular relating to rights allocations, TAC/TAE declarations and the effect thereof on the industry/resource.  It is hoped that the persons appointed to the CAF are independent, broadly representative and multi-disciplinary as is legally required in terms of the MLRA.  The CAF performs a vital part of the consultation process as set out in the MLRA and in particular is obliged to give consideration to submissions made by registered industrial bodies and interest groups before consulting with the Minister.  The Minister in turn is obliged to allow the Forum to consult the Minister on wide ranging issues which would of course include sector policies, general policies, the issues surrounding the TAC/TAE declarations, rights allocations  and the like.

Squid TAE issue

With reference to TAE declarations a particular upcoming issue which is looming and which needs resolution is the apparent proposal by the Department to apportion 25% of the Squid TAE towards the small scale sector.  This is despite the fact that the Squid commercial sector is not a small scale sector in that the vessels are sophisticated vessels with blast freezers which go to sea for three weeks at a time (i.e. the nature of this type of fishing does not fall within the legal definition of small scale).  Any Squid rights which could be allocated to the small scale could only possibly be small scale rights which would be exercised on small vessels such as ski-boats on day trips.  As such this should be a vital factor when determining a TAE in the Squid sector.  Consultation between the Department and the Squid commercial sector is therefore of considerable importance going forward and should this be lacking, a very lucrative and important commercial fishery in South Africa which provides thousands of much needed jobs in the Eastern Cape could be at risk.  In a nutshell the danger is that the squid commercial sector is overly restricted with regard to effort in order to provide small scale Squid rights which will not be able to be utilised as effectively as the commercial rights due to the legal  restrictions on the small scale sector (i.e. small vessels, day trips and squid preserved on ice and not in blast freezers).

New Entrants

This then leads to a further issue for the commercial sectors and that is to what degree TAE’s and TAC’s will be apportioned towards the admission of new entrants.  Certainly for the Squid sector having an apportionment towards small scale and then again for new entrants will provide a double whammy from which there may be no return.

The issue of new entrants is traditionally motivated by DAFF in order to increase the levels of transformation in the various sectors.  However, before rushing to decide that there is a need for new entrants in any of the sectors, what the Department and the policy teams should be doing is researching the detailed current level of transformation in these commercial sectors (which has developed since the inception of the MLRA in 1998) to determine whether in fact and to what extent new entrants are actually required to enhance transformation.  There does not appear to be any such proper research currently being conducted.  As such it would also be advisable for the various industry associations to conduct their owned detailed research on this aspect in order to assist the Department during the consultation process so that informed policies are created and adopted.

A prime example of blindly advocating the need for new entrants can be seen in the 2016 allocations where a proper analysis of say the Hake Inshore Trawl sector would have evidenced that the sector has transformed considerably since the advent of the MLRA in 1998 and the bringing in of new entrants in fact prejudiced 100% black owned existing rights holders who had invested and performed for the past 20 years.  Certain of these rights holders received no increase in their allocation despite their 100% transformation and investment. The most recent appeal decisions in  Category B and C has further exacerbated this issue for transformed category A rights holders who have now lost further quantum.

Accordingly the approach should rather be that existing rights holders who have transformed significantly over the period of their rights as well as performed and invested should in fact be rewarded with increased allocations (which will increase black ownership of fishing rights in the sector and accordingly enhance transformation).  The introduction of new entrants should only be as a last resort to increase transformation after an internal look at existing rights holders and their transformation efforts.  Fragmenting the rights further where there are already great transformation strides in a particular sector will just place the investment and jobs in the sector at risk- and create “paper quota holders”.

Accordingly, the need for new entrants and transformation in the sectors should be researched properly and to place in perspective should be compared to other sectors of industry in the country to determine whether the fishing industry is lagging behind or is ahead in its efforts.

New Sector Policies

In the commercial sectors the next key event is the publication of draft sector policies which will be the guide for the FRAP 2020 allocations.  These are expected early next year (2019) and it is important for all interested parties to be involved in the comment process and for the Department to engage in meaningful consultation on key issues.

FTC back

An interesting development is the recent announcement that the Fisheries Transformation Council (FTC) will be brought back into play.  The MLRA provides for the FTC to lease fishing rights to certain applicants in order to enhance transformation.  The conditions of these allocations and the process of leasing will be novel and interesting to follow bearing in mind that the FTC only made a very brief appearance when the MLRA was first passed but then disappeared after its initial allocations were set aside.

New Transfer Policy

It would also appear that the current Rights Transfer Policy of 2009 is to be replaced which is a positive step in that the current policy has certain material lacunae which have created uncertainty over the years.  Certainty regarding the conditions for the transfer of a right or shares in a rights holding company is key for both large and small entities in the fishing industry.

CONCLUSION

 

With so many issues up in the air at the moment and with the next two years in the industry being pivotal to the future shape of the various sectors, industry associations need to step up, get involved and play their part in the allocation process both in the support of their members and to provide much needed information to the Department so that informed decisions can be taken. The  introduction of a competent CAF as an additional consultative body in theory should enhance this process.



WWW TAC JUDGEMENT UNPACKED – FISHING INDUSTRY NEWS (OCT 2018)


INTRODUCTION

 

“…. One cannot allow the resource of the many to be exhausted for the benefit of the few (I speak relatively of the “few” current participants in the lobster sector against all of those who will come after them)”.

These are the words by Rogers J in his Judgment (under case number: 11478/18) handed down on the 26th September 2018 in the matter of WWF South Africa vs The Minister of Agriculture Forestry and Fisheries and the DDG and other respondents.

It would not be a miss to state that this must be one of the most important judgments granted in South Africa with regard to the preservation of marine living resources and in particular relating to the determination of TAC’s and TAE’s in terms of Section 14 of the MLRA.  The judgment is thorough, well-motivated and clear as to how an official such as the DDG should go about determining a TAC or TAE in a particular fishing sector.

RELIEF GRANTED

The Court granted an order that the DDG’s determination of the total allowable catch (TAC) for West Coast Rock Lobster for the 2017 / 2018 fishing season is inconsistent with the Constitution as read with section 2 of the National Environmental Management Act (NEMA) and section 2 of the MLRA and is accordingly declared invalid.

 It would be impossible to include in this article all the important principles and issues traversed in this judgment.  I nevertheless attempt to summarise certain of the court’s important findings.

RELEVANT STATUTORY PROVISIONS

In determining this matter, the court not only referred to the MLRA as the governing legislation, but as a starting point referred to section 24 (b) of the Constitution, which entrenches everyone’s environmental right “to have the environment protected, for the benefit of present and future generations, through reasonable legislative and other measures ….”. Thereafter, the court set out the applicable environmental principles contained in NEMA (in particular section 2 (1)) which principles apply throughout South Africa to the actions of all organs of state that may significantly affect the environment.

The objectives set out in section 2 of the MLRA where of course also dealt with in some detail  by the court and in particular the objectives at paragraph (a), (b), (c), (d), (h), (i) and (l).

With regard to the objective at paragraph (i) of the MLRA, the court further found that South Africa was bound by certain international legislation such as the United Nations Convention on the Law of the Sea (UNCLOS) and the Southern African Development Community Protocol on fisheries which further provides principles on how a coastal state must determine the allowable catch taking into account the best scientific evidence available to it.

SCIENTIFIC WORKING GROUP RECOMMENDATIONS

The key evidence upon which the court was able to give its ruling was the scientific working group (SWG) recommendations concerning the TAC and in particular the fact that these recommendations were underpinned by the SWG “scientific complement” all of whom had extensive experience in the development of scientific and management advice for the particular resource.  In fact their evidence in the proceedings could not meaningfully be contested by the Department or the Minister.

Ultimately the court found that the reasoning for SWG’s recommendation of a 790 ton TAC for the 2017 / 2018 season could not be negated by any of the averments of the state respondents and as such the 1 924.45 ton TAC which was declared by the DDG for that season was an irrational and arbitrary determination, and as such was declared invalid.

With regard to the SWG’s recommendations (which were in line with the protection, conservation and sustainable utilisation of the resource), the court found that the DDG had substantially disregarded this evidence, and the objectives and principles to which this evidence related, in favour of social economic considerations.  The court accordingly found that this could not be done rationally or consistently with the binding objectives and principles in the legislation. In this regard the court held;

“As to the alleviation of poverty, this cannot in context mean the short-term provision of a dwindling income to a dwindling number of fishers competing for a dwindling population of lobsters.  The Constitution decrees that the environment must be protected for the benefit of present and future generations.”

PRECAUTIONARY APPROACH

An important ruling of the court was to enforce the risk-averse and precautionary approach mandated by NEMA and the MLRA which is binding on the DDG when taking decisions of this nature.

BROAD AND ACCOUNTABLE PARTICIPATION

Of equal importance, the court also held that the DDG had a legal obligation to pursue proper consultation and participation in decision making with regard to the determination of the TAC.  In particular section 2 of the MLRA states that a decision maker must have regard the need to achieve to the extent practical a broad and accountable participation in the decision-making process.  In the contexts of this matter the court found that this was an important principle and the DDG was not entitled to “snatch and apparently new point of her own out of the blue, without its having been dealt with by the SWG or put to stakeholders for comment.”

The court held that the DDG could not rely on particular reasons for her decision on the TAC without having placed such reasons and any evidence on which they are based before the SWG, officials and other stakeholders.

OTHER IMPORTANT FINDINGS

Failure to exhaust internal remedy

 In its arguments the state tried to convince the court that because the WWF had not appealed the TAC’s determination of the DDG it had not exhausted its internal remedies and according to the Promotion of Administrative Justice Act could not bring a review application.  The court held ultimately that the reference to “affected person” in section 80 of the MLRA (dealing with appeals) did not extend to an applicant such as WWF who was not engaged in the fishing industry.  It was held that the words “affected person” are not to be interpreted widely otherwise anyone would be entitled to exercise the right of appeal.  Accordingly, the WWF’s right to bring the review application would be in terms of section 38 of the Constitution and in particular the right of an organisation to bring proceedings in the public interest where a fundamental right such as the environmental right guaranteed by section 24 of the Constitution is infringed or threatened.

Delay and mootness

Another point which the state respondents argued was that there was an unreasonable delay by WWF in bringing the review application in that a period of 180 days (as stipulated by PAJA) had transpired since the announcement of the determination on the 10th November 2017.  However, an important finding by the court was that because the reasons of the DDG were only furnished on the 8th March 2018 and access to certain requested records relating to such decision had only been furnished on the 15th May, the 180 day period did not run from the date of determination, but from the date when the reasons and documentation had been provided.

A further argument of the state was that the relief requested was “moot” in that it dealt with 2017 / 2018 TAC determination and that the season was already over.  In this regard the court found that the declaring of the 2017 / 2018 determination as unlawful and invalid was not moot in that a recommendation or determination of a TAC has regard to the previous year’s determination and also looks forward to succeeding years.  As such the status of the 2017 / 2018 determination was not moot and was of importance.

In addition, there was the overriding principle of the interests of justice which the court had a discretion to determine would be served by making a ruling even if the practical effect would be moot.  In this regard the court held that the matter raised important questions about non-compliance by the DDG of binding constitutional and statutory objectives and principles.

CONCLUSION

In closing, this ruling raises the bar for decisions made by department officials in terms of the MLRA where they are obliged to take into account and balance out all the objectives set out in the Constitution, NEMA, the MLRA and binding international agreements. Furthermore, there is an obligation to have regard to the best scientific advice which is provided through the body (SWG) formed to make recommendations on TAC determination. In addition, the judgment further binds the department to proper and meaningful consultation in determinations of TAC’s and TAE’s in terms of section 14. In particular any proposed reasons and evidence supporting reasons for a particular determination must be placed before not only her officials but the participants in the scientific working group as well as other stakeholders who are affected by such determination.

With some important years ahead in the fishing industry with regard to future sector policies and allocations, one hopes that the department will view this judgment as a guide (binding in nature) on future decision making and meaningful consultation.