Canadian seafood giant Clearwater was convicted of "gross violation" of fisheries regulations last fall after senior management ignored federal government warnings to change the way the company conducts its monopoly offshore lobster fishery, CBC News has learned.

The decision to prosecute North America's largest shellfish producer occurred amid a lengthy and still ongoing lobby effort by Clearwater to change the rule it broke: a Canadian requirement that fishing gear at sea must be tended every 72 hours.

Clearwater company CS ManPar was convicted for storing 3,800 lobster traps on the ocean bottom off the Nova Scotia coast for upward of two months in the fall of 2017 — for 17 consecutive days on one occasion, 31 consecutive days on another.

The Department of Fisheries and Oceans (DFO) says the practice poses a "serious conservation risk" because lobster and other species can be unintentionally caught.

"This was a gross violation," federal Crown prosecutor Derek Schnare told provincial court in Shelburne, N.S., on Sept. 20.

CBC News has obtained the submitted evidence and audio recording in the case, which has not been publicly reported.

A Clearwater spokesperson would not comment on the company's conduct.

720-tonne monopoly

Halifax-headquartered Clearwater has exclusive rights to Lobster Fishing Area 41, which starts 80 kilometres from shore and runs to the 200-mile limit, extending from Georges Bank to the Laurentian Channel between Cape Breton and Newfoundland.

The company fishes entirely off southern Nova Scotia. Unlike every other lobster fishery, there is no season and Clearwater has been awarded a quota of 720 tonnes, which it says represents about 15 per cent of all lobster it sells.

The Randell Dominaux is shown at dock. (Robert Short/CBC)

During the fall of 2017, Clearwater's only offshore lobster vessel, the Randell Dominaux, was either tied up or carrying out a scientific scallop survey for the University of Maine. Schnare said leaving the traps on the ocean floor was cheaper than taking them ashore.

The offence was made worse because in 2016, DFO explicitly warned senior Clearwater management to stop its long-standing practice of storing traps offshore.

The first warning was delivered in a PowerPoint briefing by fishery officers in June 2016 and later in an August 2016 followup letter to Christine Penney, vice-president of sustainability and public affairs for Clearwater Seafoods and CS ManPar.

The PowerPoint presentation by DFO's conservation and protection branch detailed widespread non-compliance by Clearwater. It said that in 2014, the company left 8,500 traps in the water for 68 days while the Randell Dominaux was in dry dock.

In December that year, DFO carried out an at-sea boarding of the Randell Dominaux that revealed "a significant marine resource loss directly linked to the fishing practices."

Two trawls, which are strings of traps, that had been "soaking" for 13 days contained 128 dead lobsters, 53 weak and bitten lobsters, 60 claws and 18 groundfish.

Even traps stored at sea unbaited and with escape panels removed still continued to fish, DFO said. In one case, 3,400 traps that were unbaited were hauled and found to contain 15,000 pounds (6,804 kg) of lobster.

The written followup from DFO Maritimes regional director Doug Wentzell contained more detail. It noted that in 2015, the company failed to tend gear for a period of 98 days and numerous trawls went untended for 15 days or more. Wentzell also said the traps were stored without required buoy markings.

"Two prior warnings were given by DFO to stop the practice of unlawfully storing gear at sea," Schnare told the court in September. "Despite this warning, however, the practice continued."

The warnings were not passed on to the two captains of the Randell Dominaux, a decision criticized by Schnare as a failure of corporate responsibility.

'Serious conservation risk'

Evidence presented in court included impact statements from DFO Maritimes Region managers Sara Quigley and Cathy Merriman outlining the threat posed by untended traps, from potential entanglements with whales to unintended catches of lobster and other species.

"As these impact statements illustrate, the practice of leaving untended traps in the oceans represents a serious conservation risk to Canada's marine resources, both commercial and non-commercial species," Schnare told provincial court Judge Claudine MacDonald.

Three Clearwater companies were in court that day, charged with violating Section 115.2 of the Atlantic Fishery Regulations:

Clearwater Seafood Inc.

Clearwater Seafood Limited Partnership.

CS ManPar Inc., the corporate entity that owns the vessel.

CS ManPar pleaded guilty and charges against the two other Clearwater entities were dropped.

Lobster traps are shown in Eastern Passage, N.S., on Wednesday, Jan. 9, 2019. (Robert Short/CBC)

Schnare told the court Clearwater's offence was mitigated because in this case, which dealt with the 2017 violations, the traps were not baited and escape panels were removed.

"This offence would be considered much more serious in the Crown's view if the traps were left soaking while baited and fully functional," he said.

That fact did not, he said, remove the risk of bycatch or lobster spoilage, and had no impact on the risk of lost traps or gear conflict with other fishermen.

The company was fined $30,000. ​Schnare suggested the amount was chosen to limit a tax benefit for Clearwater. In a statement to CBC News, Clearwater said it would not be able to deduct any fine.

Clearwater conduct 'seems arrogant'

Environmentalist Shannon Arnold of the Ecology Action Centre in Halifax applauds the Department of Fisheries for acting.

"It just seems arrogant to ignore the regulator like that," she said in an interview. "I think it's important the government gets out there and shows that there is a level playing field and they aren't going to let different parts of the fleet and different corporations versus independent fishermen play by different rules."

Arnold raised conservation concerns in 2016 and 2017 about Clearwater storing traps with both DFO and the Marine Stewardship Council, which certifies the Clearwater offshore lobster fishery as environmentally sustainable.

In 2017, the company employed by MSC to audit Clearwater — Acoura — accepted Clearwater's word that it was not storing traps, telling Arnold the company had confirmed it was not doing so.

"Clearwater might as well have been certifying themselves," said Arnold.

She wants evidence Clearwater has ended the practice.

Halifax-headquartered Clearwater has a monopoly in Lobster Fishing Area 41 off Nova Scotia. (Andrew Vaughan/Canadian Press)

That is an assurance Clearwater would not provide when asked by CBC News. Instead, Penney, the vice-president, said DFO has admitted the 72-hour rule is "impractical." In an email, she said DFO "has initiated a regulatory amendment to provide the flexibility around the 72 hour gear tending rule."

"The updated regulations will provide flexibility for cases such as offshore lobster where evidence exists that conservation outcomes are not compromised by such flexibility."

DFO said it's reviewing the rule, but harvesters are expected to comply with the 72-hour rule while the review is underway.

"Fishery officers will continue to enforce these regulations as appropriate," said DFO spokesperson Debbie Buott-Matheson in an email.

The case for throwing the rule overboard

Clearwater has already carried out the first phase of a science study on the effects of different soak times on lobster and bycatch species like cod in the offshore lobster fishery.

According to MSC auditors, the company said its findings have shown longer soak times do not increase bycatch, one of the conservation concerns.

"The study was not a factor for DFO in pursuing an amendment to Section 115.2 of the Atlantic Fishery Regulations," Buott-Matheson said.

Shannon Arnold is the marine policy co-ordinator with the Halifax-based Ecology Action Centre. (CBC)

That study has not been made public on the grounds it contains proprietary data. DFO said it has not yet issued a science licence for the next phase of Clearwater's 72-hour soak-time study.

Arnold objects to secrecy surrounding science that is being used to justify a rule change.

"This company has been given a huge swath of public resources that the government manages on behalf of Canadians and you shouldn't be using privacy rules to stop Canadians from therefore knowing about what's happening out there."

MSC, the environmental certification group, said it learned of the Clearwater conviction from CBC News. Its Canadian director, Jay Lugar, said the conviction occurred after the most recent certification audit in August 2018, and Acoura will take it into account in the 2019 audit.

"The certifier deemed that the fisheries activities did not negatively impact the health of bycatch species and thus did not alter the fishery's score," Lugar said in the email.