REPORT TITLE:
Ocean leasing

DESCRIPTION:
Clarifies various sections of chapter 190D, HRS, dealing with
leasing of State marine waters for aquaculture and mariculture
purposes.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO OCEAN LEASING.




BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Section 190D-2, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "[[]§190D-2[]]  Findings and purpose.  Article XI of the
 
 4 Constitution of the State of Hawaii relating to the conservation,
 
 5 control, and development of resources, provides in section 6 that
 
 6 the State shall have the power to manage and control the marine,
 
 7 seabed, and other resources located within the boundaries of the
 
 8 State, including its archipelagic waters, and reserves to the
 
 9 State all such rights outside state boundaries not specifically
 
10 limited by federal or international law.
 
11      The legislature finds that the State's marine waters [and
 
12 submerged lands] offer the people of Hawaii sources of energy,
 
13 minerals, food, and usable space.  The legislature further finds
 
14 that the proper management and development of these ocean
 
15 resources require defined rights of usage and tenure.
 
16      The purpose of this chapter is to establish procedures for
 
17 the leasing of state marine waters [and submerged lands] and to
 
18 guarantee property rights and protection for any activities
 
19 approved under these procedures."
 

 
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 1      SECTION 2.  Section 190D-3, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      1.  By adding a new definition to be appropriately inserted
 
 4 and to read:
 
 5      ""Economic unit" means the water column, submerged lands
 
 6 beneath the water column, and water surface above the water
 
 7 column which shall be treated as one economic unit."
 
 8      2.  By amending the definitions of "mariculture", "marine
 
 9 activities", "noncommercial lease", and "state marine waters" to
 
10 read:
 
11      ""Mariculture" means the aquaculture, cultivation, and
 
12 production for research, development, [and] demonstration, and
 
13 commercial purposes of aquatic plants and animals within [the
 
14 State's] state marine [environment.] waters, but excludes
 
15 floating structures that are not anchored.
 
16      "Marine activities" means ocean thermal energy conversion
 
17 (OTEC); mariculture; and other energy or water[,] research,
 
18 scientific, and educational activities in, on, or under state
 
19 marine waters [or submerged lands.], which are exclusive, non-
 
20 transient in nature, and which occupy a discrete area of state
 
21 marine waters.
 
22      "Noncommercial lease" means a lease of state marine waters
 
23 [or submerged lands] for marine activities not designed for
 

 
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 1 profit.  [The maximum size of the lease for mariculture shall not
 
 2 exceed four acres.]
 
 3      "State marine waters" means all waters of the State,
 
 4 including the water column [and], water surface, and submerged
 
 5 lands, extending from the upper reaches of the wash of the waves
 
 6 on shore seaward to the limit of the State's police power and
 
 7 management authority, including the United States territorial
 
 8 sea, notwithstanding any law to the contrary."
 
 9      SECTION 3.  Section 190D-11, Hawaii Revised Statutes, is
 
10 amended to read as follows:
 
11      1.  By amending subsections (a), (b), and (c) to read:
 
12      "(a)  Any person desiring to lease state marine waters [or
 
13 submerged lands] shall submit to the board [a conservation
 
14 district use] an application for specific activities in any
 
15 specific area or areas.  Applications made pursuant to this
 
16 chapter shall contain:
 
17      (1)  An environmental assessment or, if required, an
 
18           environmental impact statement which shall be prepared
 
19           and accepted in compliance with the rules adopted under
 
20           chapter 343;
 
21      (2)  A description of the location and boundaries of the
 
22           state marine waters [and submerged lands] to be used
 
23           and a description of the nature of the use desired;
 

 
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 1      (3)  A statement of the reasons for selecting the proposed
 
 2           location;
 
 3      (4)  A description of the activities to be conducted,
 
 4           including a specification as to whether such activities
 
 5           are commercial or noncommercial, a timetable for
 
 6           construction, deployment, and operation of facilities,
 
 7           and planned levels of production;
 
 8      (5)  Where the application is for mariculture, a description
 
 9           of the species to be cultivated and produced;
 
10      (6)  A statement on the extent to which the proposed
 
11           activities will interfere with the use of the state
 
12           marine waters for the purposes of navigation, fishing,
 
13           and public recreation;
 
14      (7)  A description of any enclosure, fences, stakes, buoys,
 
15           or monuments proposed to mark off the desired area; and
 
16      (8)  Other information which the board determines to be
 
17           necessary or appropriate, including financial and
 
18           technical information.
 
19      (b)  The department shall process the [conservation district
 
20 use] application pursuant to chapter 183C [and rules adopted
 
21 under this chapter].  Within sixty days after the submission of
 
22 [a conservation district use] a complete application with a
 
23 request for a lease for marine activities in state marine waters
 

 
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 1 [or submerged lands] and the receipt of the related environmental
 
 2 assessment or environmental impact statement, the department
 
 3 shall issue a public notice that the application has been
 
 4 received.  The public notice shall describe [the]:
 
 5      (1)  The state marine waters [or submerged lands, or both,]
 
 6           for which application has been made[, the];
 
 7      (2)  The nature of the exclusive use sought[,]; and [the]
 
 8      (3)  The purpose for which the application has been made.
 
 9 The notice shall be given on three separate days statewide and in
 
10 the county nearest the state marine waters [or submerged lands]
 
11 for which application has been made.  The public notice shall
 
12 invite public comment.
 
13      (c)  Notice of hearings shall be provided and hearings shall
 
14 be conducted in accordance with department rules regarding
 
15 [conservation district use] applications.  If the area described
 
16 in the application adjoins any private property or adjoins or
 
17 overlaps, above or below, any leased state marine waters [or
 
18 submerged lands], or if the proposed activity will affect the
 
19 property or property rights of private property owners or lessees
 
20 of state marine waters [or submerged lands], the department also
 
21 shall notify the owners or lessees of the adjoining, overlapping,
 
22 or affected property.  Notice shall be given in writing, by
 
23 personal service or by registered or certified mail, and shall
 

 
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 1 describe:
 
 2      (1)  The state marine waters [or submerged lands, or both,]
 
 3           for which application has been made[, the];
 
 4      (2)  The nature of the exclusive use sought[,]; and [the]
 
 5      (3)  The purpose for which the application has been made."
 
 6      2.  By amending subsection (e) to read:
 
 7      "(e)  The board shall not approve an application unless it
 
 8 finds that:
 
 9      (1)  [the] The applicant has the capacity to carry out the
 
10           entire project; and
 
11      (2)  [the] The proposed project is clearly in the public
 
12           interest upon consideration of the overall economic,
 
13           social, and environmental impacts."
 
14      SECTION 4.  Section 190D-21, Hawaii Revised Statutes, is
 
15 amended by amending subsections (a), (b), (c), (d), and (e) to
 
16 read as follows:
 
17      "(a)  The board may lease state marine waters [and submerged
 
18 lands] for marine activities upon compliance with section 171-53
 
19 and with the concurrence of the director of transportation.
 
20 Leases may be issued only for marine activities which are allowed
 
21 pursuant to an approved [conservation district use] application.
 
22 The board shall make a determination that each lease is a
 
23 commercial or noncommercial lease.
 

 
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 1      (b)  The board shall not lease state marine waters [or
 
 2 submerged lands] when existing programs of the department, such
 
 3 as the marine life conservation district program, shoreline
 
 4 fisheries management area program, or the natural area reserve
 
 5 program will suffer adverse [impact] impacts as a consequence of
 
 6 the proposed activities; provided [further] that no lease shall
 
 7 be awarded within state marine waters designated as being
 
 8 necessary for national defense purposes, as determined by the
 
 9 department in consultation with the appropriate federal agencies.
 
10      (c)  The board shall not lease state marine waters [or
 
11 submerged lands] unless the board finds that a lease for the
 
12 proposed activity is clearly in the public interest upon
 
13 consideration of the overall economic, social, and environmental
 
14 impacts and consistent with other state policy goals and
 
15 objectives.
 
16      (d)  The board shall not lease state marine waters [or
 
17 submerged lands] unless the board finds that the applicant for a
 
18 lease has complied with applicable federal, state, and county
 
19 statutes, ordinances, and rules.
 
20      (e)  The board may require any person who has obtained
 
21 approval of [a conservation district use] an application for
 
22 marine activities or the operation of an OTEC facility in state
 
23 marine waters [or submerged lands] to enter into a lease for the
 

 
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 1 conduct of those activities."
 
 2      SECTION 5.  Section 190D-22, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "[[]§190D-22[]]  Leasing procedure.(a)  Any person who
 
 5 wants to obtain a lease for marine activities in state marine
 
 6 waters [or submerged lands] shall request a lease from the board
 
 7 at the time of filing [a conservation district use] an
 
 8 application.
 
 9      (b)  Upon [approval of a conservation district use] receipt
 
10 of a complete application[,] and authorization of a lease, the
 
11 board [may either:] shall:
 
12      (1)  Negotiate with and grant a lease to the applicant; or
 
13      (2)  Conduct a public auction and grant the lease to the
 
14           highest qualified bidder.
 
15      Public auctions shall be conducted in accordance with
 
16 chapter 171.  If an auction is held and the applicant [who has
 
17 gone through the conservation district use] submitting a complete
 
18 application is not the highest qualified bidder, the board shall
 
19 require the highest qualified bidder to indemnify the applicant
 
20 for all legitimate costs incurred [by the applicant to obtain
 
21 approval of the conservation district use application.] in the
 
22 preparation of any environmental assessment or environmental
 
23 impact statement included in the application pursuant to chapter
 

 
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 1 343 and the rules adopted thereunder.  In establishing and
 
 2 following internal procedures for lease applications, the board
 
 3 shall attempt to minimize costs to those applicants submitting
 
 4 complete applications.
 
 5      (c)  The board shall not revoke or modify its approval of [a
 
 6 conservation district use] an application in such a way as to
 
 7 invalidate, impair, limit, or affect, directly or indirectly, in
 
 8 whole or in part, the rights of a lessee as set forth in the
 
 9 lease granted to the lessee pursuant to this chapter."
 
10      SECTION 6.  Section 190D-23, Hawaii Revised Statutes, is
 
11 amended by amending subsection (a) to read as follows:
 
12      "(a)  Leases issued by the board shall be drawn up in
 
13 accordance with the following requirements, in addition to any
 
14 [others] other requirements determined by the board:
 
15      (1)  Each lease shall specify the term of the lease and the
 
16           nature of the exclusive use of the area being
 
17           granted[.];
 
18      (2)  Each lease shall specify the marine activities or other
 
19           resources which may be cultivated, produced, harvested,
 
20           removed, or used pursuant to the lease[.];
 
21      (3)  Each lease shall specify an annual rent set by the
 
22           board for the leased [marine waters or submerged
 
23           lands.] area.  The basic rental charged in a commercial
 

 
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 1           lease may be supplemented by royalty payments.  No
 
 2           royalty shall be charged in a noncommercial lease[.];
 
 3      (4)  Leases may specify that failure of the lessee to
 
 4           perform substantially the activities for which the
 
 5           lease was granted shall constitute grounds for
 
 6           revocation of the lease and forfeiture to the State of
 
 7           all structures and, in the case of mariculture
 
 8           activities, all plants or animals cultivated, in and
 
 9           upon the leased [marine waters and submerged lands.]
 
10           area;
 
11      (5)  Each lease shall require that the lessee execute a bond
 
12           conditioned upon the substantial performance of the
 
13           activities described in the lease.  The amount of the
 
14           bond so executed shall be appropriate to the size,
 
15           scale, and risk of the activity for which the lease is
 
16           granted, and shall be sufficient to protect the public
 
17           interest in the removal of all structures and, in the
 
18           case of mariculture activities, all marine plants or
 
19           animals cultivated, as well as to restore or remediate
 
20           the water and submerged lands to the satisfaction of
 
21           the department in and upon the leased state marine
 
22           waters [and submerged lands], if the lease is forfeited
 
23           for nonperformance or the board requires the removal or
 

 
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 1           eradication of marine plants or animals pursuant to
 
 2           paragraph (11)[.];
 
 3      (6)  Each lease shall specify that if a lessee abandons a
 
 4           leased area, the board may order the removal or sale at
 
 5           public auction of all improvements, assets, marine
 
 6           plants or animals, and equipment remaining in and upon
 
 7           the leased area, and shall transmit to the state
 
 8           general fund the entire amount received from any public
 
 9           auction and any proceeds received from the lessee's
 
10           performance bond.  Alternatively, the board may permit
 
11           the use of the improvements, assets, marine plants or
 
12           animals, and equipment for purposes which benefit the
 
13           general public[.];
 
14      (7)  Each lease for mariculture shall specify that the
 
15           marine plants or animals described in the lease to be
 
16           cultivated and contained within the leased area are the
 
17           exclusive harvest of the lessee; provided that any
 
18           marine plant or animal which escapes from the leased
 
19           area and is not clearly identifiable as the property of
 
20           the lessee, shall become common property and may be
 
21           taken or caught by any person, subject to the fishing
 
22           laws of the State, without violating the rights of the
 
23           lessee[.];
 

 
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 1      (8)  Each lease for mariculture shall specify that [the]:
 
 2           (A)  The lessee is responsible for the removal of any
 
 3                cultivated marine plants or animals found outside
 
 4                the leased area but within state marine waters [or
 
 5                submerged lands] if removal is required to protect
 
 6                the environment or public health and safety, and
 
 7                removal is demanded by the board; [that the]
 
 8           (B)  The lessee is solely responsible for all costs of
 
 9                removal of such marine plants or animals; and
 
10                [that if]
 
11           (C)  If action must be taken by the department to
 
12                eradicate escaped marine plants or animals, all
 
13                costs of eradication shall be borne by the lessee;
 
14                provided that the costs borne by the lessee shall
 
15                be no greater than the amount of the bond required
 
16                under paragraph (5)[.];
 
17      (9)  Leases may specify that the lessee shall construct and
 
18           maintain gates, openings, or lanes at reasonable
 
19           distances from one another throughout a leased area
 
20           which includes surface waters and in which any type of
 
21           enclosure is an obstacle to free navigation, unless
 
22           public transit in or through the enclosed waters will
 
23           cause undue interference with the operation being
 

 
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 1           conducted by the lessee within the leased area[.];
 
 2     (10)  Leases may require, where necessary, that [all]:
 
 3           (A)  All lessees mark off the areas under lease by
 
 4                appropriate ranges, monuments, stakes, buoys, [or]
 
 5                fences, or any other devices placed so that they
 
 6                do not interfere unnecessarily with navigation and
 
 7                other traditional uses of the water surface; [that
 
 8                all]
 
 9           (B)  All lessees identify the area under lease and the
 
10                names of the lessees on signs appropriately placed
 
11                pursuant to [rules of] specifications established
 
12                by the board; and [that all]
 
13           (C)  All limitations upon the use by the public of an
 
14                ocean area under lease shall be clearly posted by
 
15                the lessee pursuant to [rules] specifications
 
16                established by the board[.];
 
17     (11)  Leases shall specify that if the chairperson finds or
 
18           has reasonable cause to believe that an activity
 
19           conducted by the lessee in or upon the area described
 
20           in the lease is causing an immediate danger to human or
 
21           marine life or the environment of the state marine
 
22           waters [or submerged lands], the chairperson may direct
 
23           a temporary or permanent suspension of commercial or
 

 
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 1           research activities in the affected area.  The
 
 2           chairperson shall then notify the board.  The board
 
 3           shall immediately order the lessee or lessees affected
 
 4           by such notice to show cause why their activities
 
 5           should not be terminated, or why any structures,
 
 6           cultivated marine plants or animals, or equipment
 
 7           should not be removed from state marine waters [or
 
 8           submerged lands].  The board shall proceed to hold a
 
 9           public hearing and issue its order with respect to such
 
10           hearing within a reasonable period.  In its order
 
11           following such hearing the board may direct a temporary
 
12           or permanent suspension of commercial or research
 
13           activities in the affected area, removal of equipment
 
14           or cultivated marine plants or animals, or such other
 
15           measures as shall be deemed necessary for protection of
 
16           human or marine life and environment of state marine
 
17           waters [and submerged lands], including forfeiture to
 
18           and destruction by the State of any marine plant or
 
19           animal species[.];
 
20     (12)  Each lease shall specify that the lease may be assigned
 
21           in whole or in part, or amended, only if the board
 
22           determines that such assignment or amendment is in the
 
23           public interest and meets the provisions of this
 

 
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 1           chapter[.] and consents to the assignments.  The board
 
 2           may consent to the mortgage of a lease pursuant to
 
 3           section 171-22[.]; and
 
 4     (13)  Each lease shall specify that the lease may be revoked
 
 5           by the board for violation of any lease provision.  The
 
 6           board shall deliver a written notice of the breach or
 
 7           default of any lease agreement by registered or
 
 8           certified mail to the party in default and to each
 
 9           holder of record having any security interest in the
 
10           state marine waters [and submerged lands] covered by or
 
11           subject to the lease, making demand upon the party to
 
12           cure or remedy the breach or default within sixty days
 
13           from the date of receipt of the notice.  Upon failure
 
14           of the party to cure or remedy the breach or default
 
15           within sixty days from the date of receipt of the
 
16           notice, or within such additional period the board may
 
17           allow for good cause, the board may revoke the lease."
 
18      SECTION 7.  Section 190D-32, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20      "[[]§190D-32[]]  Rules.  The board [shall] may adopt such
 
21 rules as are necessary and appropriate to carry out the purposes
 
22 and provisions of this chapter.  The adoption of these rules
 
23 shall be in accordance with chapter 91."
 

 
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 1      SECTION 8.  Section 190D-33, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "[[]§190D-33[]]  Revenues.  The revenues obtained from the
 
 4 leasing of state marine waters [and submerged lands] pursuant to
 
 5 this chapter shall be deposited into the [general fund;] special
 
 6 land and development fund to be used for planning, research and
 
 7 development of the aquaculture industry; provided that the
 
 8 portion of revenues subject to chapter 10, shall be deposited
 
 9 into the public land trust fund as provided by law."
 
10      SECTION 9.  Section 190D-34, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "[[]§190D-34[]]  Penalties.  Any person who conducts any
 
13 mariculture or OTEC activities prohibited by a lease granted by
 
14 the board, or who conducts these activities in or upon state
 
15 marine waters [or submerged lands] without having obtained the
 
16 approval of the board, shall be fined not more than $10,000 for
 
17 each separate offense.  Each day of violation shall constitute a
 
18 separate offense.  Any action taken to impose or collect the
 
19 penalty provided for in this section shall be considered a civil
 
20 action."
 
21      SECTION 10.  Statutory material to be repealed is bracketed.
 
22 New statutory material is underscored.
 
23      SECTION 11.  This Act shall take effect upon its approval.