HB1722

SECTION 1. The purpose of this Act is to promote the State's economic development by establishing within the department of agriculture, an aquacultural area lease program for the purpose of identifying state facilities, state lands, and state marine waters that are suitable for use as commercial agricultural areas and leasing them to be used for aquaculture.

SECTION 2. Chapter 141, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

"§141- Aquacultural area lease program. (a) There is established within the department an aquacultural area lease program for the purpose of identifying state facilities, state lands, and state marine waters that are suitable for use as aquacultural areas and authorizing the department to issue commercial leases to use the areas for aquacultural purposes. The department shall manage and administer the program and aquacultural areas it leases in consultation with the department of land and natural resources, the agribusiness development corporation, and any other agency having jurisdiction over the aquacultural areas.

(b) The program shall identify and select as aquacultural areas to be leased pursuant to this section, state facilities, state lands, and state marine waters that the program deems suitable for commercial aquacultural purposes; provided that the identification and selection process shall:

(1) Be subject to chapter 92, and the department shall hold at least one public meeting in the community in which the proposed aquacultural area is situated;

(2) Take into consideration comments from the department of land and natural resources, agribusiness development corporation, and any other agency having jurisdiction over the proposed aquacultural area; and

(3) Be completed by June 30, 2024.

(c) Notwithstanding any other law to the contrary, the board may lease the aquacultural areas identified for the program; provided that:

(1) The lessee obtains all necessary federal, state, and county permits to establish and conduct the proposed aquacultural activities in the aquacultural area, including a conservation district use permit issued by the board of land and natural resources pursuant to section 183C-6 or 190D-11, as applicable, if the aquacultural area includes lands within the state land use conservation district or state marine waters;

(2) The board and the lessee enter into an aquacultural area lease pursuant to this section for the lessee's proposed aquacultural activities in the aquacultural area;

(3) The lessee uses the leased aquacultural area only for aquacultural activities that are approved by the board, authorized by the permits obtained pursuant to paragraph (1), and set forth in the lease executed pursuant to paragraph (2);

(4) The lessee's aquacultural activities in the aquacultural area does not have an adverse impact on existing programs of the department or other state departments or agencies, including the project facility program and agricultural projects implemented by the agribusiness development corporation and the marine life conservation district program, shoreline fisheries management area program, and the natural area reserve program administered by the department of land and natural resources;

(5) The lessee's aquacultural activities in the aquacultural area does not abridge, alter, conflict with, or impair konohiki fishing rights recognized in chapter 187A, including the right to sublease private konohiki fishing grounds for marine activities;

(6) The leasing of the aquacultural area does not adversely impact the public's use and enjoyment of the reefs in the state marine waters;

(7) The lessee is in compliance with all applicable federal, state, and county statutes, ordinances, and rules;

(8) The board makes a determination that the lease is for commercial use; and

(9) Any lease entered into by the department pursuant to this section shall be fully executed no later than June 30, 2032.

(d) Leases issued by the board shall contain the following terms and conditions:

(1) Each lease shall specify the term of the lease and the nature of the exclusive use of the area being granted;

(2) Each lease shall specify the aquacultural activities permitted to be conducted in the aquacultural area pursuant to the lease; provided that the lease may be issued only for aquacultural activities that are approved by the board and permitted in the permits obtained pursuant to subsection (c)(1);

(3) Each lease shall specify an annual rent set by the board for the leased aquacultural area. The basic rental charged in the lease may be supplemented by royalty payments;

(4) Leases may specify that failure of the lessee to perform substantially the activities for which the lease was granted shall constitute grounds for revocation of the lease and forfeiture to the State of all structures and all aquatic plants or animals cultivated, in and upon the leased area;

(5) Each lease shall require that the lessee execute a bond conditioned upon the substantial performance of the activities described in the lease. The amount of the bond so executed shall be appropriate to the size, scale, and risk of the activity for which the lease is granted, and shall be sufficient to protect the public interest in the removal of all structures and all aquatic plants or animals cultivated, as well as to restore or remediate the facilities, lands, and waters to the satisfaction of the department in and upon the leased aquacultural areas, if the lease is forfeited for nonperformance or the board requires the removal or eradication of aquatic plants or animals pursuant to paragraph (11);

(6) Each lease shall specify that if a lessee abandons a leased area, the board may order the removal or sale at public auction of all improvements, assets, aquatic plants or animals, and equipment remaining in and upon the leased area, and shall transmit to the state general fund the entire amount received from any public auction and any proceeds received from the lessee's performance bond. Alternatively, the board may permit the use of the improvements, assets, plants or animals, and equipment for purposes which benefit the general public;

(7) Each lease shall specify that the aquatic plants or animals described in the lease to be cultivated and contained within the leased area are the exclusive harvest of the lessee; provided that any plant or animal that escapes from the leased area and is not clearly identifiable as the property of the lessee, shall become common property and may be taken or caught by any person, subject to the fishing laws of the State, without violating the rights of the lessee;

(8) Each lease shall specify that:

(A) The lessee is responsible for the removal of any cultivated aquatic plants or animals found outside the leased area but within state facilities, state lands, or state marine waters, if removal is required to protect the environment or public health and safety, and removal is demanded by the board;

(B) The lessee is solely responsible for all costs of removal of such aquatic plants or animals; and

(C) If action must be taken by the department to eradicate escaped aquatic plants or animals, all costs of eradication shall be borne by the lessee; provided that the costs borne by the lessee shall be no greater than the amount of the bond required under paragraph (5);

(9) Leases may specify that the lessee shall construct and maintain gates, openings, or lanes at reasonable distances from one another throughout a leased area that includes surface waters and in which any type of enclosure is an obstacle to free navigation, unless public transit in or through the enclosed waters will cause undue interference with the operation being conducted by the lessee within the leased area;

(10) Leases may require, where necessary, that:

(A) All lessees mark off the areas under lease by appropriate ranges, monuments, stakes, buoys, fences, or any other devices placed so that they do not interfere unnecessarily with navigation and other traditional uses of the water surface;

(B) All lessees identify the area under lease and the names of the lessees on signs appropriately placed pursuant to specifications established by the board; and

(C) All limitations upon the use by the public of an aquacultural area under lease shall be clearly posted by the lessee pursuant to specifications established by the board;

(11) Leases shall specify that if the chairperson finds or has reasonable cause to believe that an activity conducted by the lessee in or upon the area described in the lease is causing an immediate danger to human or marine life, or the environment of the aquacultural and surrounding areas, the chairperson may direct a temporary or permanent suspension of research, commercial, or stocking activities in the affected area. The chairperson shall then notify the board. The board shall immediately order the lessee or lessees affected by such notice to show cause why their activities should not be terminated, or why any structures, cultivated aquatic plants or animals, or equipment should not be removed from the aquacultural area. The board shall proceed to hold a public hearing and issue its order with respect to such hearing within a reasonable period. In its order following the hearing, the board may direct a temporary or permanent suspension of commercial or research activities in the affected area, removal of equipment or cultivated aquatic plants or animals, or such other measures as the board deems appropriate for protection of human or marine life and environment of the aquacultural area, including forfeiture to and destruction by the State of any aquatic plant or animal species;

(12) Each lease shall specify that the lease may be assigned in whole or in part, or amended, only if the board determines that such assignment or amendment is in the public interest and meets the provisions of this section and consents to the assignments. The board may consent to the mortgage of a lease pursuant to section 171-22;

(13) Each lease shall specify that the lease may be revoked by the board for violation of any lease provision. The board shall deliver a written notice of the breach or default of any lease agreement by registered or certified mail to the party in default and to each holder of record having any security interest in the state marine waters covered by or subject to the lease, making demand upon the party to cure or remedy the breach or default within sixty days from the date of receipt of the notice. Upon failure of the party to cure or remedy the breach or default within sixty days from the date of receipt of the notice, or within such additional period the board may allow for good cause, the board may revoke the lease;

(14) Each lease shall contain a statement describing the degree of exclusivity or access to the site by the public that will be based on an analysis of the user listing and descriptions provided in the application, and comments made by the public and in consideration of, but not limited to the following: compatibility of the operation with existing uses, perceived liability to the lessee and the public, and perceived risk to the lessee's investment; and

(15) Each lease may include other terms and conditions as the board deems advisable to effectuate the purposes of the state constitution and this section.

(e) The chairperson or chairperson's authorized agents shall have the authority to enter and inspect any and all areas leased by the board for the purpose of determining compliance with the terms and provisions of any lease issued under this section.

(f) A person who wishes to obtain a lease for an aquacultural area pursuant to this section shall request an aquacultural area lease from the board. Upon receipt of a completed application and authorization of a lease, the board shall:

(1) Negotiate with and grant a lease to the applicant; or

(2) Conduct a public auction and grant the lease to the highest qualified bidder.

Public auctions shall be conducted in accordance with chapter 171. If an auction is held and the applicant submitting a completed application is not the highest qualified bidder, the board shall require the highest qualified bidder to indemnify the applicant for all legitimate costs incurred in the preparation of any environmental assessment or environmental impact statement included in the application pursuant to chapter 343 and the rules adopted thereunder. In establishing and following internal procedures for lease applications, the board shall attempt to minimize costs to those applicants submitting completed applications. The board shall not revoke or modify its approval of an application in a way that invalidates, impairs, limits, or affects, directly or indirectly, in whole or in part, the rights of a lessee as set forth in the lease granted to the lessee pursuant to this section.

(g) The program may use the moneys in the aquaculture development special fund established by section 141-2.7 to carry out the purposes of this section, including hiring the necessary employees, specialists, and consultants. The revenues obtained from the leasing of aquacultural areas pursuant to this section shall be deposited into the aquaculture development special fund; provided that the portion of revenues subject to chapter 10, shall be deposited into the public land trust fund as provided by law.

(h) Nothing in this section shall preclude the department from working with and receiving assistance from any other department or agency in carrying out the purposes of this section. If state facilities, state lands, and state marine waters under the control and management of other agencies are required by the department for purposes of enforcing this section, the agency having the control and management of those required facilities, lands, and waters, upon request by the department, may lease the lands and waters to the department upon such terms and conditions as may be agreed to by the parties. Notwithstanding the foregoing, no public lands shall be leased to the department if the lease would impair any covenant between the State or any county, or any department or board thereof, and the holders of bonds issued by the State or the county, department, or board.

(i) Any person who conducts, in an aquacultural area, any aquacultural activity that is not permitted by a lease granted to that person by the board, or who conducts these activities in or upon aquacultural areas without having obtained the approval of the board, shall be fined not more than $10,000 for each separate offense. Each day of violation shall constitute a separate offense. Any action taken to impose or collect the penalty provided for in this section shall be considered a civil action.

(j) Any person who wilfully or recklessly damages, disturbs, or interferes with any aquacultural activity that has been permitted in a lease granted by the board, or who wilfully or recklessly damages, disturbs, interferes with, takes, or possesses any improvements, assets, aquatic plants or animals, or equipment in an aquacultural area leased to a person, without the permission of that person, shall be subject to civil proceedings initiated by any person damaged thereby, notwithstanding the result in any criminal proceedings commenced under subsection (k).

(k) Any person who negligently or wilfully damages, disturbs, or interferes with any aquacultural activity that has been permitted in a lease granted by the board, or who negligently or wilfully damages, disturbs, interferes with, takes, or possesses any improvements, assets, aquatic plants or animals, or equipment in an aquacultural area leased to a person, without the permission of that person, shall be treated in accordance with the applicable provisions of chapter 708.

(l) Nothing in this section shall be held in any way to interfere or conflict with any vested rights under or arising out of any grant, lease, or license of or concerning any government lands or water rights, or rights-of-way; nor shall anything in this section be construed to change any rights in or concerning any water upon or flowing from or through any land set apart or surrendered as a forest reserve, or as depriving or limiting any state officer from exercising any existing power or authority or any power that may hereafter be created to deal with such water or water rights, or rights-of-way.

(m) The department shall adopt rules to effectuate the purposes of this section in accordance with chapter 91 and subject to approval by the board.

(n) As used in this section, unless the context clearly requires otherwise:

"Agency" means any federal, state, local, or foreign government or any entity of any such government.

"Aquacultural area" means state facilities, state lands, or state marine waters identified by the program as being suitable for commercial aquaculture and may include public lands transferred from the department of land and natural resources to the department as non-agricultural park lands pursuant to chapter 166E; provided that "aquacultural areas" shall not include facilities, lands, or waters designated as being necessary for national defense purposes, as determined by the department of land and natural resources in consultation with the appropriate federal agencies.

"Aquaculture" means the propagation, cultivation, or farming of aquatic plants and animals in controlled or selected environments for commercial purposes, including research, stocking, aquaponics, or any growing of plants or animals with aquaculture effluents.

"Board" means the board of agriculture of the department.

"Chairperson" means the chairperson of the board of agriculture.

"Commercial lease" means a lease of an aquacultural area to conduct aquacultural activities engaged in for profit.

"Department" means the department of agriculture.

"Facility" means a building or buildings or similar structure owned or leased by, or otherwise under the jurisdiction of, an agency.

"Lease" means the right to possess and use an aquacultural area pursuant to this section for a term of years.

"Lessee" means the holder of a valid aquacultural area lease granted by the board pursuant to this section.

"Program" means the aquacultural area lease program.

"Public lands" has the same meaning as defined in section 171-2; provided that "public lands" include lands to which the department holds title by way of foreclosure, voluntary surrender, or otherwise, to recover moneys loaned or to recover debts otherwise owed the department under chapter 167.

"State lands" includes all public and other lands owned or in possession, use and control of the then Territory of Hawaii or the State of Hawaii, or any of its agencies.

"State marine waters" means all waters of the State, including the water column, water surface, and state submerged lands, extending from the upper reaches of the wash of the waves on shore seaward to the limit of the State's police power and management authority, including the United States territorial sea, notwithstanding any law to the contrary.

"Water column" means the vertical extent of marine waters, including the surface, above submerged lands."

SECTION 3. Section 26-16, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The department shall:

(1) Promote the conservation, development, and utilization of agricultural resources in the State;

(2) Assist the farmers of the State and any others engaged in agriculture by research projects, dissemination of information, crop and livestock reporting service, market news service, and any other means of improving the well-being of those engaged in agriculture and increasing the productivity of the lands;

(3) Administer the programs of the State relating to animal husbandry, entomology, farm credit, development and promotion of agricultural products and markets, and the establishment and enforcement of the rules on the grading and labeling of agricultural products; [~~and~~]

(4) Administer the aquaculture program under section 141‑2.5[.]; and

(5) Administer the aquacultural area lease program under section 141- ."

SECTION 4. Section 141-2.7, Hawaii Revised Statutes, is amended to read as follows:

"[[]§141-2.7[]] Aquaculture development special fund. (a) There is established in the state treasury the aquaculture development special fund into which shall be deposited:

(1) Appropriations from the legislature;

(2) Moneys collected as fees for special microbiological and histological procedures and expert aquaculture-related services;

(3) Moneys collected from the sale of any item related to aquaculture development that is purchased from the department;

(4) Moneys directed to the aquaculture development program from any other sources, including but not limited to grants, gifts, and awards; [~~and~~]

(5) Moneys collected as fees or lease rent under the aquacultural area lease program pursuant to section 141- , notwithstanding section 190D-33; and

[~~(5)~~] (6) Moneys derived from interest, dividend, or other income from the above sources.

(b) Moneys in the aquaculture development special fund shall be used to:

(1) Implement the aquatic disease management programs and activities of the department, including provision of state funds to match federal grants; [~~and~~]

(2) Support research and development programs and activities relating to the expansion of the state aquaculture industry. Research and development programs and activities funded under this paragraph may be conducted by department personnel or through contracts with the University of Hawaii or other qualified persons[.]; and

(3) Implement the aquacultural area lease program pursuant to section 141- , including:

(A) Hiring the necessary employees, specialists, and consultants to carry out the program; and

(B) Paying lease rents to agencies under the aquacultural areas program pursuant to section 141- (h)."

SECTION 5. Section 190D-2, Hawaii Revised Statutes, is amended to read as follows:

"§190D-2 Findings and purpose. Article XI of the constitution of the State of Hawaii relating to the conservation, control, and development of resources, provides in section 6 that the State shall have the power to manage and control the marine, seabed, and other resources located within the boundaries of the State, including its archipelagic waters, and reserves to the State all such rights outside state boundaries not specifically limited by federal or international law.

The legislature finds that the State's marine waters offer the people of Hawaii sources of energy, minerals, food, and usable space. The legislature further finds that the proper management and development of these ocean resources require defined rights of usage and tenure.

The purpose of this chapter is to establish procedures for the leasing of state marine waters and to guarantee property rights and protection for any activities approved under these procedures. Unless otherwise provided, the provisions of this chapter shall not apply to leases administered by the department of agriculture for the aquacultural area lease program pursuant to section 141- ."

SECTION 6. Section 190D-33, Hawaii Revised Statutes, is amended to read as follows:

"§190D-33 Revenues. The revenues obtained from the leasing of state marine waters pursuant to this chapter shall be deposited into the special land and development fund to be used for planning, research, and development of the aquaculture industry; provided that the portion of revenues subject to chapter 10, shall be deposited into the public land trust fund as provided by law[.]; provided further that revenues obtained from the leasing of state marine waters and state submerged lands as aquacultural areas pursuant section 141- shall be deposited into the aquaculture development special fund established under section 141-2.7."

SECTION 7. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 8. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 10. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1722
THIRTY-FIRST LEGISLATURE, 2022
STATE OF HAWAII