SB3166

SECTION 1. The department of land and natural resources (department) division of boating and ocean recreation is responsible for ocean recreation management in state ocean waters, among other responsibilities. Public safety and marine natural resources can be impacted by a variety of environmental factors and emerging ocean recreation technologies, some of which may change rapidly and frequently. This Act is part of a comprehensive ocean recreation management package put forth by the department to ensure effective natural resource protection by providing better management and enforcement tools.

In a relatively quick timeframe over recent years, commercial ocean activity has substantially increased such that there is over-commercialization in many areas around the State, to the detriment of ocean users and marine natural resources. Overcrowding as a result of over-commercialization often causes conflict between recreational users and commercial operators. While the department has attempted to reduce commercial use permit counts by attrition, permittees' current ability to sell a company that holds a permit without causing the permit to terminate effectively precludes any reduction of permit numbers by attrition. The department is also not adequately funded to proactively address impacts of rules-based commercial activity, such as overcrowding and marine ecosystem damage, forcing a more reactionary approach that does little to address issues.

Therefore, the purposes of this Act are to (1) revise the fees applicable to commercial ocean operators and the way some of these fees are assessed; (2) prevent commercial use permits from being transferred upon the change in legal ownership of a permitted business entity, except for transfers to spouses and first-generation lineal descendants; (3) allow the department to issue new commercial use permits by public auction; and (4) allow the department to use the public auction process to reduce commercial use permit counts in ocean recreation management areas or state boating facilities where an applicable permit limit is exceeded.

SECTION 2. Section 200-10, Hawaii Revised Statutes, is amended to read as follows:

"§200-10 Permits and fees for state small boat harbors[;], coastal areas, and ocean waters; permit transfers. (a) No person shall moor a vessel in a state small boat harbor without:

(1) First obtaining [~~a use permit~~] written authorization from the department; [~~and~~]

(2) Being the owner of the vessel[.]; and

(3) Paying appropriate fees set by subsection (c).

(b) In order to obtain [a] any use permit or [a] use permit renewal, the owner of a vessel shall provide, at the owner's own expense:

(1) A marine surveyor's inspection or a vessel inspection by the department, no more than two years old, certifying that the vessel has been inspected and fulfills the requirements set by the department;

(2) Documentation that the person is the owner of the vessel. The documentation shall meet requirements established by the department; and

(3) Satisfactory proof that the person has attained the age of eighteen years prior to obtaining [a] any use permit or being placed on the waitlist for [a] any use permit.

(c) [~~The~~] A permittee shall pay [~~moorage~~] fees to the department for [~~the~~] a use permit that shall be based on but not limited to the [~~use of the vessel, the vessel's effect on the harbor, use of facilities, and the cost of administering the mooring program;~~] impact of the permitted activity on natural resources, impact of the activity on public access to and use of state boating facilities and waters of the State, and the cost of administering the small boat harbor and coastal areas programs; provided that:

(1) Except for commercial maritime activities in which a tariff is established by the department of transportation, moorage fees shall be established by appraisal by a state-licensed appraiser approved by the department;

(2) For commercial maritime activities in which a tariff is established by the harbors division of the department of transportation, the department may adopt the published tariff of the harbors division of the department of transportation or establish the moorage fee by appraisal by a state-licensed appraiser approved by the department;

(3) An application fee shall be collected when applying for [~~moorage in state small boat harbors~~] any use permit and shall thereafter be collected annually when the application is renewed; provided that the application fee shall be set by the department;

(4) If a recreational vessel is used as a place of principal habitation, the permittee shall pay, in lieu of the moorage fee required by paragraph (1), a monthly liveaboard fee that shall be two times the moorage fee that would otherwise be assessed for a vessel of the same size;

(5) If [~~a vessel is used for commercial purposes from the vessel's permitted mooring,~~] the permittee is engaging in commercial activity, the permittee shall pay[~~, in lieu of the moorage fee required by paragraph (1),~~] a monthly fee that shall be the greater of:

(A) [~~Three~~] Six per cent of the gross revenues derived from [~~the use of the vessel;~~] the permitted activity; or

(B) [~~$1.50~~] For vessel-based commercial activity:

(i) Six per cent of the gross revenues derived from the use of the vessel; and

(ii) $3.00 per passenger carried for hire; or

(C) [~~Two times the moorage fee that would~~ ~~otherwise be assessed for a recreational vessel of the same size;~~] $2,000;

If a permittee is using a vessel for commercial purposes from the vessel's permitted mooring, the fee required by this paragraph shall be in lieu of the fee required by paragraph (1) for that vessel;

(6) The department is authorized to assess and collect utility fees, including, but not limited to, electrical and water charges, and common-area maintenance fees in state small boat harbors; and

(7) All fees established by appraisal pursuant to this subsection shall be set at fair market value.

(d) The department shall not renew or issue [a] any use permit to a person who is not the owner of the vessel [~~which~~] that is moored or [~~which~~] that the person desires to moor in a state small boat harbor. No use permit may be transferred unless specifically provided by law. Any individual who is an owner of a vessel used for commercial purposes, including commercial fishing as a principal means of livelihood, and who possesses a valid [~~mooring~~] commercial use permit [~~or commercial permit, or both,~~] in accordance with the rules adopted by the chairperson pursuant to chapter 91, may transfer ownership of the vessel from personal ownership to corporate or other business ownership without terminating the right to moor or operate the vessel under the commercial use permit [~~or permits~~]. [~~The~~] Any existing use permit or permits held by the transferring individual shall be reissued in the name of the transferee corporation or other business entity.

(e) For the purposes of this section, "person" means any individual, firm, partnership, corporation, trust, association, joint venture, organization, institution, or any other legal entity, and "owner" includes the legal owner of a vessel where there is no security interest held by anyone on the vessel, a buyer under a purchase money security interest, a debtor under any security interest, a demise charterer of a vessel, or a lessee or charterer of a vessel under a lease or charter which provides the lessee or charterer with exclusive right to possession of the vessel to the exclusion of the lessor or the person from whom the vessel is chartered. "Controlled group" means parent-subsidiary corporations, brother-sister corporations, or constructive owner. "Transfer" includes any change in control, by whatever means, of any entity that owns or controls, directly or indirectly, a use permit. No permittee shall be allowed to moor a leased vessel in a berth unless the terms of the lease are set at fair market value. A "legal owner" includes a person who holds unencumbered title to a vessel or is a secured party under a security interest in the vessel. An owner who is issued a mooring permit [~~to moor a vessel in a state small boat harbor~~] shall notify the department in writing of a transfer of interest or possession in the vessel within seven days of transfer.

(f) [~~Any person who owns an interest in a corporation or other business entity or is part of a controlled group possessing a valid~~] No commercial use permit issued by the department[, in accordance with rules adopted by the chairperson pursuant to chapter 91, may transfer any or all stock or other interest to another person without terminating the right of the corporation or business entity to retain or renew its commercial permit or any other permit issued to it by the department; provided that:] shall be transferable, such that whenever a permittee transfers any interest in the commercial use permit, or whenever any person who owns an interest in a business entity or who is part of a controlled group possessing a valid commercial use permit transfers any interest to another person, the commercial use permit shall automatically terminate, and both the transferor and transferee shall have no right to use the commercial use permit; provided that any person who owns an interest in a business entity or who is part of a controlled group possessing a valid commercial use permit may transfer the person's interest only to a spouse or first-generation lineal descendant without automatically terminating the commercial use permit; provided further that

[~~(1)~~ ~~The corporation or~~] the business entity has been engaged in the same commercial vessel activity, as defined in section 200-9, for a minimum of one year[;

~~(2)~~ The seller shall pay the department a business transfer fee based on the passenger-carrying capacity of the vessels owned or operated by the corporation or business entity as provided by rules adopted by the chairperson pursuant to chapter 91, except for transfers of stock or interest in a corporation or other business entity between spouses or first-generation lineal descendants; and

~~(3)~~ ~~In the case of a controlled group, the transferee shall retain eighty per cent control of the transferor~~].

Any person possessing a commercial use permit shall be required to meet minimum revenue standards[,] as set forth in rules adopted by the department pursuant to chapter 91, as a condition of retaining or renewing the commercial use permit.

When an application for renewal of a commercial use permit is made at least sixty days prior to expiration of the commercial use permit, the department shall review the application and, within thirty days of receipt of the application, shall renew the commercial use permit or notify the applicant that the application is incomplete or cannot be renewed and explain any reasons for nonrenewal. Within thirty days of receipt of the applicant's amended application, the department shall either renew the commercial use permit or notify the applicant that the commercial use permit will not be renewed.

If [~~the holder of~~] a commercial [~~permit~~] use permittee fails to timely [~~obtain renewal of a~~] renew their commercial use permit, the [~~holder of the permit shall automatically be granted a~~] permittee may make a written request to the department for a one-time thirty-day extension from the date of the existing commercial use permit's expiration to obtain a commercial use permit renewal. Any such extension request must be received by the department no later than the expiration date of the commercial use permit.

(g) The department may designate moorage space within state small boat harbors to accommodate commercial fishing vessels and transient vessels.

(h) Except as provided in section 200-37(l), all new commercial use permits issued for commercial ocean recreation activity occurring in an ocean recreation management area, as defined by law or rule, that are not renewals of commercial use permits shall be issued by unsealed public auction.

Within an ocean recreation management area or state boating facility where the department has implemented rules setting a limit on the number of commercial use permits that can be issued at any one time, if the number of commercial use permits issued exceeds the relevant limit, all existing permittees for the area or facility shall be disallowed from renewing their commercial use permits, and the department shall issue new commercial use permits for the area or facility by unsealed public auction up to the relevant limit; provided that only existing commercial use permittees for the area or facility who are otherwise in compliance with existing commercial use permit terms may participate in the auction.

(i) The department may immediately suspend or revoke a commercial use permit without a hearing for any activity that endangers or may endanger the health or safety of passengers or the public, and the department may suspend or revoke a commercial use permit for violation of any rules of the department if, after seventy-two hours notice by the department of the violation, the permittee fails to cure the violation; provided that the permittee shall have five working days from delivery of the notice of suspension or revocation to request in writing an administrative hearing. Unless the notice of suspension or revocation is returned undeliverable, it shall be deemed delivered no later than five working days after mailing. The administrative hearing shall be solely for the purpose of allowing the permittee to contest the basis for the suspension or revocation of the commercial use permit. The hearing shall be held within ten working days of the department's receipt of the written request. The chairperson may adopt rules pursuant to chapter 91 to implement the procedures governing the administrative hearing process. Within ten working days after the conclusion of the hearing, the department shall either:

(1) Lift the suspension;

(2) Continue the suspension of the commercial use permit for up to one year from the date of conclusion of the hearing; or

(3) Revoke the commercial use permit."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

BY REQUEST

THE SENATE	S.B. NO.	3166
THIRTY-SECOND LEGISLATURE, 2024
STATE OF HAWAII