Ocean leasing

Clarifies various sections of chapter 190D, HRS, dealing with
leasing of State marine waters for aquaculture and mariculture
purposes.  (SD2)

THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 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; provided
13 further that this exemption shall not apply to easements for
14 cables used for interisland electrical transmission or slurry
15 pipelines used for transportive materials, mined at sea, or waste
16 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 to read as follows:
22      1.  By adding a new definition to be appropriately inserted
23 and to read:

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

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 1 including the water column [and], water surface, and submerged
 2 lands, extending from the upper reaches of the wash of the waves
 3 on shore seaward to the limit of the State's police power and
 4 management authority, including the United States territorial
 5 sea, notwithstanding any law to the contrary."
 6      SECTION 4.  Section 190D-11, Hawaii Revised Statutes, is
 7 amended to read as follows:
 8      1.  By amending subsections (a), (b), and (c) to read:
 9      "(a)  Any person desiring to lease state marine waters [or
10 submerged lands] shall submit to the board [a conservation
11 district use] an application for specific activities in any
12 specific area or areas.  Applications made pursuant to this
13 chapter shall contain:
14      (1)  An environmental assessment or, if required, an
15           environmental impact statement which shall be prepared
16           and accepted in compliance with the rules adopted under
17           chapter 343;
18      (2)  A description of the location and boundaries of the
19           state marine waters [and submerged lands] to be used
20           and a description of the nature of the use desired;
21      (3)  A statement of the reasons for selecting the proposed
22           location;
23      (4)  A description of the activities to be conducted,

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

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 1 under this chapter].  Within sixty days after the submission of
 2 [a conservation district use] a completed application with a
 3 request for a lease for marine activities in state marine waters
 4 [or 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]:
 8      (1)  The state marine waters [or submerged lands, or both,]
 9           for which application has been made[, the];
10      (2)  The nature of the exclusive use sought[,]; and [the]
11      (3)  The purpose for which the application has been made.
12 The notice shall be given on three separate days statewide and in
13 the county nearest the state marine waters [or submerged lands]
14 for which application has been made.  The public notice shall
15 invite public comment.
16      (c)  Notice of hearings shall be provided and hearings shall
17 be conducted in accordance with department rules regarding
18 [conservation district use] applications.  If the area described
19 in the application adjoins any private property or adjoins or
20 overlaps, above or below, any leased state marine waters [or
21 submerged lands], or if the proposed activity will affect the
22 property or property rights of private property owners or lessees
23 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]:
 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      2.  By amending subsection (e) to read:
10      "(e)  The board shall not approve an application unless it
11 finds that:
12      (1)  [the] The applicant has the capacity to carry out the
13           entire project; and
14      (2)  [the] The proposed project is clearly in the public
15           interest upon consideration of the overall economic,
16           social, and environmental impacts."
17      SECTION 5.  Section 190D-21, Hawaii Revised Statutes, is
18 amended by amending subsections (a), (b), (c), (d), and (e) to
19 read as follows:
20      "(a)  The board may lease state marine waters [and submerged
21 lands] for marine activities upon compliance with section 171-53
22 and with the concurrence of the director of transportation.
23 Leases may be issued only for marine activities which are allowed

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

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

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

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 1      (3)  Each lease shall specify an annual rent set by the
 2           board for the leased [marine waters or submerged
 3           lands.] area.  The basic rental charged in a commercial
 4           lease may be supplemented by royalty payments.  No
 5           royalty shall be charged in a noncommercial lease[.];
 6      (4)  Leases may specify that failure of the lessee to
 7           perform substantially the activities for which the
 8           lease was granted shall constitute grounds for
 9           revocation of the lease and forfeiture to the State of
10           all structures and, in the case of mariculture
11           activities, all plants or animals cultivated, in and
12           upon the leased [marine waters and submerged lands.]
13           area;
14      (5)  Each lease shall require that the lessee execute a bond
15           conditioned upon the substantial performance of the
16           activities described in the lease.  The amount of the
17           bond so executed shall be appropriate to the size,
18           scale, and risk of the activity for which the lease is
19           granted, and shall be sufficient to protect the public
20           interest in the removal of all structures and, in the
21           case of mariculture activities, all marine plants or
22           animals cultivated, as well as to restore or remediate
23           the water 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 nonperformance or the board requires the removal or
 4           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 the 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 fund the entire amount received from any public
12           auction and any proceeds received from the lessee's
13           performance bond.  Alternatively, the board may permit
14           the use of the improvements, assets, marine plants or
15           animals, and equipment for purposes which benefit the
16           general public[.];
17      (7)  Each lease for mariculture shall specify that the
18           marine plants or animals described in the lease to be
19           cultivated and contained within the leased area are the
20           exclusive harvest of the lessee; provided that any
21           marine plant or animal which escapes from the leased
22           area and is not clearly identifiable as the property of
23           the lessee, shall become common property and may be

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 1           taken or caught by any person, subject to the fishing
 2           laws of the State, without violating the rights of the
 3           lessee[.];
 4      (8)  Each lease for mariculture shall specify that [the]:
 5           (A)  The lessee is responsible for the removal of any
 6                cultivated marine plants or animals found outside
 7                the leased area but within state marine waters [or
 8                submerged lands] if removal is required to protect
 9                the environment or public health and safety, and
10                removal is demanded by the board; [that the]
11           (B)  The lessee is solely responsible for all costs of
12                removal of such marine plants or animals; and
13                [that if]
14           (C)  If action must be taken by the department to
15                eradicate escaped marine plants or animals, all
16                costs of eradication shall be borne by the lessee;
17                provided that the costs borne by the lessee shall
18                be no greater than the amount of the bond required
19                under paragraph (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
23           which includes surface waters and in which any type of

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 1           enclosure is an obstacle to free navigation, unless
 2           public transit in or through the enclosed waters will
 3           cause undue interference with the operation being
 4           conducted by the lessee within the leased area[.];
 5     (10)  Leases may require, where necessary, that [all]:
 6           (A)  All lessees mark off the areas under lease by
 7                appropriate ranges, monuments, stakes, buoys, [or]
 8                fences, or any other devices placed so that they
 9                do not interfere unnecessarily with navigation and
10                other traditional uses of the water surface; [that
11                all]
12           (B)  All lessees identify the area under lease and the
13                names of the lessees on signs appropriately placed
14                pursuant to [rules of] specifications established
15                by the board; and [that all]
16           (C)  All limitations upon the use by the public of an
17                ocean area under lease shall be clearly posted by
18                the lessee pursuant to [rules] specifications
19                established by the board[.];
20     (11)  Leases shall specify that if the chairperson finds or
21           has reasonable cause to believe that an activity
22           conducted by the lessee in or upon the area described
23           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[.];
23     (12)  Each lease shall specify that the lease may be assigned

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

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 1           public that will be based on an analysis of the user
 2           listing and descriptions provided in the application,
 3           and comments made by the public and in consideration
 4           of, but not limited to the following:  compatibility of
 5           the operation with existing uses, perceived liability
 6           to the lessee and the public, and perceived risk to the
 7           lessee's investment."
 8      SECTION 8.  Section 190D-32, Hawaii Revised Statutes, is
 9 amended to read as follows:
10      "[[]190D-32[]]  Rules.  The board [shall] may adopt such
11 rules as are necessary and appropriate to carry out the purposes
12 and provisions of this chapter.  The adoption of these rules
13 shall be in accordance with chapter 91."
14      SECTION 9.  Section 190D-33, Hawaii Revised Statutes, is
15 amended to read as follows:
16      "[[]190D-33[]]  Revenues.  The revenues obtained from the
17 leasing of state marine waters [and submerged lands] pursuant to
18 this chapter shall be deposited into the [general fund;] special
19 land and development fund to be used for planning, research and
20 development of the aquaculture industry; provided that the
21 portion of revenues subject to chapter 10, shall be deposited
22 into the public land trust fund as provided by law."
23      SECTION 10.  Section 190D-34, Hawaii Revised Statutes, is

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 1 amended to read as follows:
 2      "[[]190D-34[]]  Penalties.  Any person who conducts any
 3 mariculture or OTEC activities prohibited by a lease granted by
 4 the board, or who conducts these activities in or upon state
 5 marine waters [or submerged lands] without having obtained the
 6 approval of the board, shall be fined not more than $10,000 for
 7 each separate offense.  Each day of violation shall constitute a
 8 separate offense.  Any action taken to impose or collect the
 9 penalty provided for in this section shall be considered a civil
10 action."
11      SECTION 11.  The amendments made to chapter 190D, Hawaii
12 Revised Statutes, by this Act shall be repealed five years after
13 the effective date of this Act; provided that sections 190D-2,
14 190D-3, 190D-11, 190D-21, 190D-22, 190D-23, 190D-32, 190D-33, and
15 190D-34 shall be reenacted in the form in which they read on the
16 day before the approval of this Act.  The leases granted during
17 the period in which this Act is effective, in addition to any
18 terms agreed to therein, shall remain in force throughout the
19 term of the lease and shall not be affected by the repeal of this
20 Act upon the tolling of the five-year drop dead period.
21      SECTION 12.  Statutory material to be repealed is bracketed.
22 New statutory material is underscored.
23      SECTION 13.  This Act shall take effect upon its approval.