REPORT TITLE:
Ocean Leasing; Commercial


DESCRIPTION:
Amends ocean leasing statutes to facilitate the development of
open ocean mariculture for commercial purposes.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           712
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 171-53, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (c) to read as follows:
 
 3      "(c)  The board, with the prior approval of the governor and
 
 4 the prior authorization of the legislature by concurrent
 
 5 resolution, may lease submerged lands and lands beneath tidal
 
 6 waters under the terms, conditions, and restrictions provided in
 
 7 this chapter; provided that the authorization of the legislature
 
 8 shall not be required for leases issued under chapter 190D; and
 
 9 provided further that the approval of the governor and
 
10 authorization of the legislature shall not be required for any
 
11 grant of easement or lease of submerged lands or lands beneath
 
12 tidal waters used for moorings, cables, or pipelines[;], except
 
13 [provided further] that this exemption shall not apply to
 
14 easements for cables used for interisland electrical transmission
 
15 or slurry pipelines used for transportive materials, mined at
 
16 sea, or waste products from the processing of the same.
 
17      The lease shall provide that the lands shall be reclaimed at
 
18 the expense of the lessee.  Title to the reclaimed lands shall
 
19 remain in the State."
 

 
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 1      SECTION 2.  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."
 
20      SECTION 3.  Section 190D-3, Hawaii Revised Statutes, is
 
21 amended as follows:
 
22      1.  By amending the definition of "commercial lease" to
 

 
 
 
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 1 read:
 
 2      ""Commercial lease" means a lease of state marine waters [or
 
 3 submerged lands] for marine activities designed for profit."
 
 4      2.  By amending the definitions of "mariculture", "marine
 
 5 activities" and "non-commercial lease" to read:
 
 6      ""Mariculture" means the cultivation and production for
 
 7 research, development, [and] demonstration, and commercial
 
 8 purposes of plants and animals within [the State's] state marine
 
 9 [environment.] waters, but excludes floating structures that are
 
10 not anchored.
 
11      "Marine activities" means ocean thermal energy conversion
 
12 (OTEC); mariculture; and other energy or water[,] research,
 
13 scientific, and educational activities in, on, or under state
 
14 marine waters [or submerged lands.], which are exclusive, non-
 
15 transient in nature, and which occupy a discrete area of state
 
16 marine waters.
 
17      "Non-commercial lease" means a lease of state marine waters
 
18 [or submerged lands] for marine activities not designed for
 
19 profit.  [The maximum size of the lease for mariculture shall not
 
20 exceed four acres.]"
 
21      3.  By amending the definition of "state marine waters" to
 
22 read:
 

 
 
 
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 1      ""State marine waters" means all waters of the State,
 
 2 including the water column [and], water surface, and submerged
 
 3 lands, extending from the upper reaches of the wash of the waves
 
 4 on shore seaward to the limit of the State's police power and
 
 5 management authority, including the United States territorial
 
 6 sea, notwithstanding any law to the contrary.  For purposes of
 
 7 this chapter only, the water column, submerged lands beneath the
 
 8 water column, and water surface above the water column shall be
 
 9 treated as one economic unit."
 
10      SECTION 4.  Section 190D-11, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "§190D-11  Conservation district use application.(a)  Any
 
13 person desiring to lease state marine waters [or submerged lands]
 
14 shall submit to the board [a conservation district use] an
 
15 application for specific activities in any specific area or
 
16 areas.  Applications made pursuant to this 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
 

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

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

 
 
 
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 1 shall notify the owners or lessees of the adjoining, overlapping,
 
 2 or affected property.  Notice shall be given in writing, by
 
 3 personal service or by registered or certified mail, and shall
 
 4 describe the state marine waters [or submerged lands, or both,]
 
 5 for which application has been made, the nature of the exclusive
 
 6 use sought, and the purpose for which the application has been
 
 7 made.
 
 8      (d)  The board shall consider in its evaluation of each
 
 9 application:
 
10      (1)  The extent to which the proposed activity may have a
 
11           significant adverse effect upon any existing private
 
12           industry or public activity, including the use of state
 
13           marine waters for the purposes of navigation, fishing,
 
14           and public recreation;
 
15      (2)  Whether the proposed activity may have an adverse or
 
16           permanent effect upon the wildlife, aquatic life, or
 
17           environment of the surrounding area; and
 
18      (3)  Other potential uses of the area, including competing
 
19           uses, which may be in the public interest.
 
20      (e)  The board shall not approve an application unless it
 
21 finds that:
 
22      (1)  [the] The applicant has the capacity to carry out the
 

 
 
 
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 1           entire project; and
 
 2      (2)  [the] The proposed project is clearly in the public
 
 3           interest upon consideration of the overall economic,
 
 4           social, and environmental impacts.
 
 5      (f)  The board may impose conditions so that the proposed
 
 6 use or extent of the area in which the proposed activity may take
 
 7 place is no greater than is required to conduct the approved
 
 8 activity properly."
 
 9      SECTION 5.  Section 190D-21, Hawaii Revised Statutes, is
 
10 amended to read as follows:
 
11      "[[]§190D-21[]]  Leasing of state marine waters [and
 
12 submerged lands] for private uses.(a)  The board may lease
 
13 state marine waters [and submerged lands] for marine activities
 
14 upon compliance with section 171-53 and with the concurrence of
 
15 the director of transportation.  Leases may be issued only for
 
16 marine activities which are allowed pursuant to an approved
 
17 [conservation district use] application.  The board shall make a
 
18 determination that each lease is a commercial or non-commercial
 
19 lease.
 
20      (b)  The board shall not lease state marine waters [or
 
21 submerged lands] when existing programs of the department, such
 
22 as the marine life conservation district program, shoreline
 

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

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

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

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

 
 
 
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 1           the department in and upon the leased state marine
 
 2           waters [and submerged lands], if the lease is forfeited
 
 3           for non-performance or the board requires the removal
 
 4           or eradication of marine plants or animals pursuant to
 
 5           paragraph (11).
 
 6      (6)  Each lease shall specify that if a lessee abandons a
 
 7           leased area, the board may order removal or sale at
 
 8           public auction of all improvements, assets, marine
 
 9           plants or animals, and equipment remaining in and upon
 
10           the leased area, and shall transmit to the [state
 
11           general] special land and development fund the entire
 
12           amount received from any public auction and any
 
13           proceeds received from the lessee's performance bond.
 
14           Alternatively, the board may permit the use of the
 
15           improvements, assets, marine plants or animals, and
 
16           equipment for purposes which benefit the general
 
17           public.
 
18      (7)  Each lease for mariculture shall specify that the
 
19           marine plants or animals described in the lease to be
 
20           cultivated and contained within the leased area are the
 
21           exclusive harvest of the lessee; provided that any
 
22           marine plant or animal which escapes from the leased
 

 
 
 
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 1           area and is not clearly identifiable as the property of
 
 2           the lessee, shall become common property and may be
 
 3           taken or caught by any person, subject to the fishing
 
 4           laws of the State, without violating the rights of the
 
 5           lessee.
 
 6      (8)  Each lease for mariculture shall specify that the
 
 7           lessee is responsible for the removal of any cultivated
 
 8           marine plants or animals found outside the leased area
 
 9           but within state marine waters [or submerged lands] if
 
10           removal is required to protect the environment or
 
11           public health and safety, and removal is demanded by
 
12           the board; that the lessee is solely responsible for
 
13           all costs of removal of such marine plants or animals;
 
14           and that if action must be taken by the department to
 
15           eradicate escaped marine plants or animals, all costs
 
16           of eradication shall be borne by the lessee; provided
 
17           that the costs borne by the lessee shall be no greater
 
18           than the amount of the bond required under paragraph
 
19           (5).
 
20      (9)  Leases may specify that the lessee shall construct and
 
21           maintain gates, openings, or lanes at reasonable
 
22           distances from one another throughout a leased area
 

 
 
 
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 1           which includes surface waters and in which any type of
 
 2           enclosure is an obstacle to free navigation, unless
 
 3           public transit in or through the enclosed waters will
 
 4           cause undue interference with the operation being
 
 5           conducted by the lessee within the leased area.
 
 6     (10)  Leases may require, where necessary, that all lessees
 
 7           mark off the areas under lease by appropriate ranges,
 
 8           monuments, stakes, buoys, [or] fences, or any other
 
 9           devices placed so that they do not interfere
 
10           unnecessarily with navigation and other traditional
 
11           uses of the water surface; that all lessees identify
 
12           the area under lease and the names of the lessees on
 
13           signs appropriately placed pursuant to [rules of]
 
14           specifications established by the board; and that all
 
15           limitations upon the use by the public of an ocean area
 
16           under lease shall be clearly posted by the lessee
 
17           pursuant to [rules] specifications established by the
 
18           board.
 
19     (11)  Leases shall specify that if the chairperson finds or
 
20           has reasonable cause to believe that an activity
 
21           conducted by the lessee in or upon the area described
 
22           in the lease is causing an immediate danger to human or
 

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

 
 
 
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 1     (12)  Each lease shall specify that the lease may be assigned
 
 2           in whole or in part, or amended, only if the board
 
 3           determines that such assignment or amendment is in the
 
 4           public interest and meets the provisions of this
 
 5           chapter[.] and consents to the assignments.  The board
 
 6           may consent to the mortgage of a lease pursuant to
 
 7           section 171-22.
 
 8     (13)  Each lease shall specify that the lease may be revoked
 
 9           by the board for violation of any lease provision.  The
 
10           board shall deliver a written notice of the breach or
 
11           default of any lease agreement by registered or
 
12           certified mail to the party in default and to each
 
13           holder of record having any security interest in the
 
14           state marine waters [and submerged lands] covered by or
 
15           subject to the lease, making demand upon the party to
 
16           cure or remedy the breach or default within sixty days
 
17           from the date of receipt of the notice.  Upon failure
 
18           of the party to cure or remedy the breach or default
 
19           within sixty days from the date of receipt of the
 
20           notice, or within such additional period the board may
 
21           allow for good cause, the board may revoke the lease.
 
22      (b)  The chairperson or chairperson's authorized agents
 

 
 
 
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 1 shall have the authority to enter and inspect any and all areas
 
 2 leased by the board for the purpose of determining compliance
 
 3 with the terms and provisions of any such lease."
 
 4      SECTION 8.  Section 190D-32, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "[[]§190D-32[]]  Rules.  The board [shall] may adopt such
 
 7 rules as are necessary and appropriate to carry out the purposes
 
 8 and provisions of this chapter.  The adoption of these rules
 
 9 shall be in accordance with chapter 91."
 
10      SECTION 9.  Section 190D-33, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "[[]§190D-33[]]  Revenues.  The revenues obtained from the
 
13 leasing of state marine waters [and submerged lands] pursuant to
 
14 this chapter shall be deposited into the [the general fund;]
 
15 special land and development fund to be used for habitat
 
16 monitoring and enforcement, environmental protection, and habitat
 
17 maintenance; provided that the portion of revenues subject to
 
18 chapter 10, shall be deposited into the public land trust fund as
 
19 provided by law."
 
20      SECTION 10.  Section 190D-34, Hawaii Revised Statutes, is
 
21 amended to read as follows:
 
22      "[[]§190D-34[]]  Penalties.  Any person who conducts any
 

 
 
 
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 1 mariculture or OTEC activities prohibited by a lease granted by
 
 2 the board, or who conducts these activities in or upon state
 
 3 marine waters [or submerged lands] without having obtained the
 
 4 approval of the board, shall be fined not more than $10,000 for
 
 5 each separate offense.  Each day of violation shall constitute a
 
 6 separate offense.  Any action taken to impose or collect the
 
 7 penalty provided for in this section shall be considered a civil
 
 8 action."
 
 9      SECTION 11.  Statutory material to be repealed is bracketed.
 
10 New statutory material is underscored.
 
11      SECTION 12.  This Act shall take effect upon its approval.
 
12 
 
13                           INTRODUCED BY:  _______________________