Ocean leasing for Hawaii

[From the U.S. Government Printing Office, www.gpo.gov]

OCEAN
LEASING
for
HAWAII
COASTAL ZONE
INFORMATION CENTER

EPARTMENT OF PLANNING AND ECONOMIC DEVELOPMENT

Z/49

OCEAN LEASING FOR HAWAII

I.S. DEPARTMENT OF COMMERCE NOAA
COA` AL SERVICES CENTER
2236 S(ITH HiPSON AVENUE
CHARLESTON, SC 29405-2413

prepared by:

Gerald S. Clay, Esq., Principal Author
Sherry Broder, Esq., Author, Editor
Ronald Turner, Author, Editor
Don S. Kitaoka, Author
Gregory L. Rhodes, Author
Dennis K. Yamase, Student Intern

Property of csc Lieby
for

~s >� ~Aquaculture Development Program,
- so Department of Planning and Economic Development
iL~ e~ ~ Division of Fish and Game,
d A) - Department of Land and Natural Resources
%< ry~~ ~ State of Hawaii

Project Managers:
LL
NJb~ LJohn S. Corbin and William A. Brewer
Department of Planning and Economic Development

The preparation of this document was financed in part
by the Coastal Zone Management Act of 1972, as amended,
administered by the Office of Coastal Zone Management,
National Oceanic and Atmospheric Administration,
United States Department of Commerce.

January 1981

This report has been cataloged as follows:
Hawaii. Department of Planning and Economic Development.
Ocean leasing for Hawaii. Prepared by Gerald S. Clay, et al.
for the Aquaculture Development Program, Dept. of Planning &
Economic Development and the Div. of Fish & Game, Dept. of Land
& Natural Resources, State of Hawaii. Honolulu: Dept. of
Planning & Economic Development, State of Hawaii, 1981.

1. Marine resources and state-Hawaii. 2. Mariculture-Hawaii.
3. Ocean thermal power plants-Hawaii. 4. Buoys. I. Clay,
Gerald S. II. Hawaii. Department of Land and Natural Resources.
III. Title.
GC1021.H3H354 (x fr. Hawaii. Aquaculture Development
Program.
Hawaii. Division of Fish and Game)

Cost of the study (contract): $33,800.00

Cover photo credit: "Morning spear fishing --- Molokai,"
by Frank Sojka.
Copyrighted. Used by permission of
Mr. Charles E. Clowe Jr., Island Import
Company, Inc., Honolulu, Hawaii.

FOREWORD

Hawaii's people are surrounded by a bountiful ocean rich in
mineral, food, energy and other resources. To the ancient Hawaiians,
the ocean was a natural extension of the land -- a place to work,
play, and travel. In the past decade, Hawaii has again turned its
gaze "makai" -- toward the sea -- to generate new ocean-related jobs
and revenues in scientific research, food production, energy and the
gathering of minerals.

The research, development and demonstration of viable ocean
technologies is moving forward rapidly in the Islands. Prospects
for additional major private commercial investments appear promis-
ing. Floating and submerged sea-farming operations may produce many
tons of fish, shellfish, and sea plants. Electricity for Island
homes, and a host of useful by-products, may be derived from the
ocean's thermal gradient through OTEC -- Ocean Thermal Energy Con-
version -- while barren surface waters are fertilized with nutrient-
rich effluents. Sea-fishery harvests may be increased to major
proportions through widespread placement of already successful fish-
aggregating devices. Manganese nodules with considerable content of
copper, cobalt, manganese and other minerals may be gathered from
the sea floor, and processing facilities may be located in the
Islands. Technologies not yet engineered may be used to make the
oceans more hospitable for living and working.

For such developments to become reality or expand, careful
study and planning are essential. This new volume, Ocean Leasing
for Hawaii, makes an important contribution toward furthering
rational development of Hawaii's ocean resources. it is a compre-
hensive study which examines the state-of-the-art of three advanced
ocean technologies -- mariculture, OTEC, and fish-aggregation de-
vices. It also assesses the major policy issues related to ocean
development, constraints to fostering commercial ocean activities,
and current legal and regulatory issues which govern State juris-
diction over ocean areas.

The report also makes significant legislative proposals which,
address the legal and policy issues, and the recommendations related
to them. Some are timely and merit immediate consideration. Others
are excellent for future consideration as technologies and private
investment develop. All most certainly provide excellent food for
thought for interests in both the public and private sectors.

Hawaii is an ocean State. Its future will depend largely on
the ability of Hawaii's people to understand this more fully, and to
make wiser use of their ocean resources. Opportunities and chal-
lenges abound. Many questions must still be answered, many assur-
ances given, many cautions observed, and many other steps taken
before the vision of achieved ocean riches becomes reality.

But the basic course is now clear: Encourage ocean-use activ-
ities which are environmentally sound, which carry out the goals,
objectives, policies and priority directions of the Hawaii State
Plan, and which enhance the quality of life in the Islands. This
far-reaching report on Ocean Leasing for Hawaii should be read and
absorbed by all interested in seeing Hawaii become truly one with
the sea.

Hideto Kono
Director, State Department of
Planning and Economic Development

PREFACE

This report on Ocean Leasing for Hawaii is the culmination of
various political, governmental, and private-sector work. The 1978
State of Hawaii Constitutional Convention authorized the State
Legislature to enact guidelines for mariculture operations. There-
after, in 1979, the State of Hawaii House of Representatives passed
H.R. 474 which directed the State Administration to analyze the
state of the law and develop guidelines for the licensing of mani-
culture operations in state marine waters.

The State of Hawaii Department of Planning and Economic Devel-
opment and State Department of Land and Natural Resources sought
out and obtained funding for such a project from the Federal Office
of Coastal Zone Management.

As interest in the study increased, it was requested that the
parameters of the study be broadened to include an investigation
and analysis of ocean leasing, which would necessarily encompass
ocean thermal energy conversion devices as well as fish aggregation
buoys. The Aquaculture Development Program of the Department of
Planning and Economic Development acted as Manager of the study.

The Department of Planning and Economic Development selected
Gerald S. Clay of the law offices of Stanton and Clay, Honolulu,
Hawaii, as consultant to prepare the report. A team of individuals
with broad backgrounds in ocean research and legal matters involv-
ing the ocean was assembled and a framework was developed to solicit
a broad base of input.

The team was committed to obtain input from local, national,
and international resources. Over 300 requests were sent to uni-
versities and research institutions, governmental agencies, and
private businesses, soliciting input regarding guidelines for
proposed ocean leasing legislation. Approximately 100 responses
were received. In addition, numerous interviews of local interests
were conducted.

To augment the correspondence and interviews, extensive
research was conducted into the legal history, case law develop-
ment, statutes, constitutional provisions, and unique Hawaii legal
requirements.

A multi-disciplinary committee with special expertise and
knowledge in this area was asked by the Department of Planning and
Economic Development to review, analyze and comment on the draft
material. Fifteen committee members accepted appointment for this
review and advisory task. Their comments and critiques of the
final draft of this report have been included in Appendix B herein.
At the request of the Advisory Committee, a section on policy
issues was prepared which focuses on the planner's viewpoint of
alternatives regarding ocean leasing.

In order to apprise the reader of the technological aspects of
ocean leasing, the Department of Planning and Economic Development
and the Department of Land and Natural Resources prepared a "Tech-
nology Assessment of the State of the Art of Mariculture, Ocean
Thermal Energy Conversion, and Fish Aggregation Buoys." A conden-
sation of this analysis is found in Section II of this report, and
a series of detailed supplements are available for the reader upon
request from the Aquaculture Development Program of the Department
of Planning and Economic Development. The supplements address the
following subjects: Mariculture, Ocean Thermal Energy conversion
and Related Devices, and Fish Aggregation Buoys.

After research and analysis, the consultant team made a series
of recommendations to the State of Hawaii and, by analogy, to any
other states desiring to develop their marine waters. These recom-
mendations are contained in Section III herein, "Commercial Devel-
opment."

In addition, legislative proposals were developed for use by
Hawaii's legislators and other legislators to provide a framework
for full dialogue in discussing an ocean leasing legislative pro-
gram. The proposed legislative program is annotated to sections of
the report for further analysis and reasoning.

it is my opinion that there will be commercial development of
the marine waters of the State of Hawaii. Orderly, systematic,
and positive development of the ocean requires understanding, ana-
lysis and discussion by as wide a scope of interested persons as
possible. It is my hope that this report will provide the catalyst
for this discussion and orderly development of the marine waters.

Gerald S. Clay, Esq.
Honolulu, Hawaii

January 1, 1981

ACKNOWLEDGMENTS

This report on Ocean Leasing for Hawaii is the product of
contributions by numerous individuals who provided invaluable
assistance and tireless effort. The following individuals are
acknowledged for their special contributions to this report:

Ronald Turner is a student at the Davis School of Law,
University of California. He has co-authored a study on
coastal zone management educational programs.

Sherry Broder is a practicing attorney in Honolulu,
Hawaii. Her background includes Deputy Chief Attorney for the
Hawaii State Constitutional Convention, 1978, and Attorney/
Consultant on various Sea Grant projects.

Don S. Kitaoka is a student at the University of Hawaii
School of Law.

Gregory L. Rhodes is a professor at the College of
Education, University of Hawaii. He has co-authored a study
on coastal zone management educational programs. Mr. Rhodes
is principally responsible for the Policy Issues Section of
this report.

Dennis K. Yamnase is a student at the University of Hawaii
School of Law.

John S. Corbin and William A. Brewer of the Department of
Planning and Economic Development's Aquaculture Development
Program provided invaluable assistance to the authors as
managers of the project. Their extensive knowledge of ocean
technology, environmental science, and governmental processes
greatly assisted the work.

Kent Keith is with the Office of the Director, Department
of Planning and Economic Development. His knowledge of the
law, of technology, and especially of the commercialization of
OTEC, was instructive and exceptionally meaningful.

Numerous hours of work were given voluntarily by an
Advisory Committee of 15 individuals from the Hawaii community.
They met with the authors to give their input regarding the
draft during its preparation. Further, certain members of the
committee provided their analyses, comments, and viewpoints
concerning this report. (These commentaries are found in
Appendix B herein.) Members of the Advisory Committee are:

John S. Corbin
State of Hawaii
Department of Planning and Economic Development

Dr. John Craven
University of Hawaii
Marine Programs/Marine Affairs Coordinator

James Detor
Land Management Administrator
State of Hawaii
Department of Land and Natural Resources

Kenji Ego
Director, Fish and Game Division
State of Hawaii
Department of Land and Natural Resources

Roger Evans
Conservation District Planner
State of Hawaii
Department of Land and Natural Resources

Kent Keith
Coordinator, Office of the Director
State of Hawaii
Department of Planning and Economic Development

Kenneth Kupchak
Attorney at Law

George Lindsey
Attorney at Law

Dr. James Maragos
Chief, Environmental Resources Section
U.S. Army Corps of Engineers

James McCormick
Deputy Director
Water Transportation Facilities Division
State of Hawaii
Department of Transportation

Frank McHale
Project Manager-OTEC
Hawaiian Dredging and Construction Company
The Dillingham Corporation

Richard Poirier
Chief, Long-Range Plans Branch
Planning Division
State of Hawaii
Department of Planning and Economic Development

Taylor (Tap) Pryor
President
Systemculture, Inc.

Guy Rothwell
Senior Engineer
Oceanic Institute

Justin Rutka
Fisheries Advisor

Renne T. Takamori deserves a special commendation and
"Mahalo" for her patience and perseverance in manuscript
typing and preparation.

TABLE OF CONTENTS

P REFACEi
ACKNOWLEDGMENTS iv
TABLE OF CONTENTS vii

I. EXECUTIVE SUMMARY

A. State-of-the-Art - Technology Assessments
B. Commercial Development of Ocean Resources: Concerns,
Needs and Recommendations
C. State Management of Offshore Resources: Policy
Issues
D. State Authority over Offshore Resources: The Legal
Issues

II. STATE-OF-THE-ART - TECHNOLOGY ASSESSMENTS/AN OVERVIEW

A. Mariculture
B. Ocean Thermal Energy Conversion and Ocean Thermal
Energy Conversion Related Activities
C. Fish Aggregation Devices

III. COMMERCIAL DEVELOPMENT OF OCEAN RESOURCES: CONCERNS,
NEEDS AND RECOMMENDATIONS.

A. Property Rights
B. Security of Tenure
C. Government Regulation
D. Financing/Insurance
E. Summary

IV. STATE MANAGEMENT OF OFFSHORE RESOURCES: POLICY ISSUES

A. Introduction
B. Problem Identification

1. Multiple Impacts
2. Proximity to Site
3. Multiple Group Loyalties
4. Unanticipated Outcomes

C. Goals and Objectives
D. Alternative Resource Management Systems

1. Public Research, Development, and Production
of Offshore Resources

vii

TABLE OF CONTENTS (Cont'd)

2. Private Owne~rship and Production
3. Public/Private Ownership and Development
V. STATE AUTHORITY OVER OFFSHORE RESOURCES: THE LEGAL
ISSUES

A. State Ownership of Offshore Resources

1. The Historical Background
2. Proprietary Rights Granted to the States by
the Submerged Lands Act

B. State Regulation of Offshore Resources

1. Police Powers of the States
2. Regulatory Powers Granted by Federal Legisla-
tion
3. The Exerci se of State Jurisdiction Beyond State
Boundaries
4. The State of Hawaii's Archipelagic Claim

C. Constitutional and Federal Limitations Upon State
Authority

1. The Constitutional Powers of the Federal Gov-
ernment
2. Federal Preemption
3. The Commerce Clause
4. The Privileges and Immunities Clause
5. The Equal Protection Clause
6. State Ownership of Natural Resources

D. Common Law and State Law Restrictions Upon State
Authority

1. The Public Trust Doctrine/Hawaii State Consti-
tution
2. Konohiki Fisheries/Native Hawaiian Rights
3. Riparian Rights

E. Conclusions

VI. THE CURRENT REGULATORY FRAMEWORK

A. Introduction
B. Department of Land and Natural Resources Regulations
and State Law

viii

TABLE OF CONTENTS (Cont'd)

1. State Land Use Law
2. Conservation District Use Permit
3. Historic Site Review
4. Enforcement Procedures

C. Department of Transportation/Department of
Health Permits
D. Environmental Impact Requirement
E. Department of Agriculture Quarantine Law
F. County Permit Authority

VII. PROPOSALS FOR LEGISLATION FOR OCEAN LEASING

A. Introduction to Legislative Proposals
B. Legislative Proposals

VIII. APPENDICES

A. Survey of Mariculture and Ocean Leasing Laws of
Other States

Introduction to Tables 1, 2, and 3

Table 1 - Mariculture Laws of California, Maine,
Florida, and Rhode Island

Table 2 - Coastal States Provisions for Leasing of
Tide and Submerged Lands

Table 3 - Coastal States Licenses and Permits for
the Regulation of Shellfish, Fisheries,
and Aquaculture

B. Critique of Report by Members of the Advisory
Committee

SECTION9
1

EXECUTIVE SUMMARY I(A)

A. STATE-OF-THE-ART - TECHNOLOGY ASSESSMENTS

The state-of-the-art of three fixed-location technologies
which are or may be deployed in Hawaii's ocean waters--mariculture,
OTEC, and fish aggregation devices--are examined.

Systems used in nearshore and open ocean mariculture activi-
ties vary in construction and operation with the species under
culture and the need for protected waters. Three general types of
systems can be identified: (1) modified natural environments, (2)
surface systems and (3) submerged systems.

Several preliminary statements concerning the potential for
near-term future development of nearshore and open ocean commercial
mariculture in Hawaii can be made. Few Hawaii species appear to
have reached a level of biotechnology and economic feasibility for
commercialization; therefore, near-term development may require
importation of non-indigenous species which are commercially cul-
tured elsewhere, with attendant ecological risks or increased
levels of research on local organisms. Many of the species being
commercially cultured around the world are temperate or cold water
species (e.g., salmon, lobster, abalone, and various seaweeds)
whose adaptability to ambient Hawaii water temperature regimes
(OTEC cold water aside) is not well known. Others of the world's
commercially cultured species (molluscs and seaweeds) require
fertile natural environments for successful production and envi-
ronmental conditions of this nature which are not prevalent in
Hawaii waters. All the mariculture systems discussed in this
Report are potentially applicable to Hawaii conditions, though
materials may differ and those surface systems requiring sheltered
waters may be limited by site availability. An assessment of
potential nearshore and open ocean mariculture sites is needed to
maximize development potential. Finally, Hawaii has a growing
complement of aquaculture researchers and facilities on which a
tropical mariculture research program could be built and which
would benefit the many oceanic countries of the Asian Pacific
Basin.

EXECUTIVE SUMMARY 1(A)

Ocean Thermal Energy Conversion (OTEC) is a particularly
promising energy resource for Hawaii. This resource relies upon
the temperature differential between warm surface and cold deep
waters. In the OTEC system, warm surface water and deep ocean
water are circulated through heat exchangers which contain a low
boiling-point working fluid such as ammonia. The working fluid,
which is evaporated by the warm water, powers a turbine, and is
then condensed by the cold water. OTEC plants could not only
provide a source of continuous 24-hour baseload power, but most
important, no major technological breakthroughs appear necessary
for commercialization. Since OTEC plants are floating systems,
they offer considerable flexibility in utility planning for meeting
future energy needs of the Neighbor Islands and would not involve
any significant foreclosure of coastal land-use options.

OTEC platforms deployed in tropical and subtropical seas offer
a means of tapping the cold, deep, nutrient-rich waters below the
unproductive surface layer and, through artificial upwelling,
making these-nutrients available for controlled plant and animal
culture systems. In addition to the deepwater nutrients (e.g.,
nitrogen and phosphorus), the combination of deep cold water and
warm surface waters (available as a by-product of the OTEC process)
offers the opportunity for producing a broad range of water temper-
atures and enormous water volumes for the growth of a diverse
variety of commercially valuable organisms.

A fish aggregation device is a floating or submerged structure
deployed in the ocean to attract, congregate and hold fishes and
other free-swimming aquatic organisms for harvest by commercial and
recreational fishermen. Pacific Islands, like the Hawaiian Islands,
generally have a relatively narrow band of shallow water areas of
which a large portion are flat and devoid of adequate relief for
supporting fish populations. Moreover, surrounding deep waters are
relatively nutrient poor and low in productivity. Hence fish
aggregation devices have been successful in enhancing fishing
opportunities.

I-2

EXECUTIVE SUMMARY I (B)

B. COMMERCIAL DEVELOPMENT OF OCEAN RESOURCES: CONCERNS, NEEDS
AN4D RECOMMENDATIONS

Mariculture and OTEC are potential new uses of offshore waters
in the State of Hawaii. Since the ocean waters of Hawaii are
nutrient poor, the nutrient rich cold-water ("thermal"1) plume which
will be the effluent waters from OTEC plants may be the necessary
component to allow commercial development of mariculture in Hawaii.
And of course commercial development of OTEC would enable Hawaii
to further its goal of energy self-sufficiency. While government
has taken the initiative in the present research and development
phase, actual commercialization of these new uses, if it occurs at
all, will be carried out by the private sector. It is thus neces-
sary to address at the outset how the concerns and needs of those
who might seek private use of ocean space to establish mariculture
or OTEC operations can be met, recognizing that these private needs
must to some extent conflict with traditional public uses of of f-
shore waters.

The foremost concern and need of the private ocean entrepre-
neur is the establishment and protection of property rights. This
particularly pertains to mariculture activities. The common law
rule that fish become property only when caught would have to be
modified by statute to recognize the new kind of possession a
mariculturist obtains.

A legal distinction must be made between feral (wild) and do-
mesticated (husbanded) marine plants and animals. Plant or animal
species "bred and fed" by a mariculturist within a leased ocean
area can be declared private property without violating federal,
state or common law injunctions against the creation of vested
rights in navigable waters. Cultured marine species can be recog-
nized as the private property of a mariculturist, however, only so
long as confined within a privately leased area.

Fish aggregation buoys, unless part of a true mariculture
system, do not meet the legal tests which justify restriction of

1-3

EXECUTIVE SUMMARY 1(B)

public access. It is therefore recommended that fish aggregation
devices be excluded from ocean leasing legislation at this time.

However such devices will need some type of permission to be
in state marine waters.

A declaration of property rights necessarily obligates the
State to take appropriate measures to protect those rights. Re-
strictions in varying degrees upon public access to mariculture
and OTEC sites will be necessary. The private ocean user, however,
will have to afford the public reasonable transit and use prero-
gatives.

Criminal penalties for unauthorized taking ("poaching") of
cultured species, and for willful interference or damage to mani-
culture or OTEC operations must be included in ocean leasing
legislation. Criminal penalties have been enacted in the maricul-
ture laws of other states. Although enforcement of such protec-
tions at sea will be difficult, deputizing of private citizens as
game wardens by the State Department of Land and Natural Resources
and utilization of Department personnel and enforcement officers
could provide aids to enforcement.

Since the cold-water ("thermal") plume generated as a by-
product of an OTEC facility is predicted to be a valuable resource,
it is important to determine who has the property rights. For rea-
sons of production efficiency and of law, any assignment of user-
privileges to this resource should be made the 'prerogative of the
OTEC operator, or at least subject to the operator's approval.

A second fundamental concern and need which ocean leasing
legislation must address is security of tenure. The maricultur-
ist or OTEC operator will have to spend considerable time and money
obtaining permission to use a specific ocean location which is
suitable to his purposes. Given the fact of fixed-location and the
time-lag between activity initiation and likely commercial viability,
ocean leasing legislation must explicitly authorize a state agency

i-4

EXECUTIVE SUMMARY 1(B)

to lease portions of the ocean surface and the vertical water column,
and for periods long enough to allow private entrepreneurs to rea-
lize the benefits of their investment and work. As with property
rights for mariculturists and OTEC operators, ocean leases would
not create illegal vested rights to ocean space or, if properly
planned, violate the public trust which applies to navigable waters.

it is recommended that there be three types of leases: (1)
Commercial leases would be granted for activities in state marine
waters designed for profit; (2) Administrative leases would also
be granted for activities designed for profit but only where the
lease anticipates gross revenues of no more than $150,000 in a
fiscal year and requires- no more than one acre of state marine
waters; (3) Experimental leases would be granted for those activ-
ities designed for research, scientific endeavors, or educational
purposes. The State might be involved in partnership with the pri-
vate sector in this type of lease since the State has expressed
interest in all these activities. The State would impose the most
rigorous requirements on the application for a commercial lease
and would put the lease out for public auction; however, the
lessee would probably be awarded a longer term lease of up to 20
years (25 years in the case of an OTEC lease). For both adminis-
trative and experimental leases, the permit process might be less
demanding than for the commercial lease. There may even be circum-
stances when these leases need not be offered at public auction.

In order to allow the small-scale entrepreneur to engage in
mariculture, it would be advisable for the State to develop in
partnership with others mariculture parks which would also allow
entrepreneurs to pool their resources, especially for purchase of
equipment and capital investment, and the State to assist them in
various ways. Presumably mariculture parks would enable those who
might not qualify for traditional financing or who lack sufficient
capital to get started in mariculture operations. The State has
begun an analogous management scheme in the form of agricultural
parks.

I-5

EXECUTIVE SUMMARY I(B)

It is recommended that the maximum length of an ocean lease
be conditioned upon the nature of the activity--whether experimental
or commercial--and upon the level of capitalization. An OTEC lease
should be long-term with a maximum period of 25 years which con-
forms with the term under federal legislation. A small-scale sea-
weed culturing lease might be annually renewable. Experimental
leases should run no longer than five years, with one option to
renew for an additional ten-year period. Commercial leases should
run no longer than 20 years, but absent any finding by the State
that the operation has become environmentally unacceptable or that
the public interest requires the area leased to be used for other
purposes, the commercial mariculturist should have no restriction
upon the option to renew. A commercial lease should be renegoti-
ated at the time of each renewal to assure the State a fair return.

State law now requires all Conservation District leases to be
granted by public auction. This creates uncertainties in tenure
which may be alleviated by amending H.R.S. 171-58 to include mari-
culture and OTEC as uses for which leases may be granted without
public auction, or by providing in new ocean leasing legislation a
"sunken cost" clause. Such a clause would require that an entre-
preneur who is out-bid at public auction be reimbursed by the higher
bidder for expenses incurred in obtaining needed state permits
prior to the auction. Such permits would then automatically pass
to the high bidder.

A third need which should be addressed by the Legislature is
appropriate government regulation. In many states, government
over-regulation is a serious impediment to the successful develop-
ment of new water-related industries. in Hawaii, a successful
effort has been made to streamline the regulatory process with
regard to aquaculture. Aquaculturists have responded to the favor-
able institutional climate which has been created, with the result
that continuing growth is forecasted for the industry, in contrast
to the situation in some other states.

i-6

EXECUTIVE SUMMARY 1(B)

Authority to approve Conservation District uses presently
rests with the State Board of Land and Natural Resources (BLNR).
it is recommended that the Legislature explicitly delegate to
BLNR the responsibility to evaluate and approve or deny applica-
tions for private use of ocean space, applying the existing Con-
servation District Use Permit (CDUP) procedure. Guidelines for
such approval or denial must also be adopted by the Legislature
pursuant to Article XI, Section 6, of the State Constitution.
These guidelines should be cast in positive terms and should stress
realistic environmental goals. Judgment of environmental impact
should center upon an "acceptable-unacceptable'' determination,
reached after consideration of public gains and losses from a com-
prehensive viewpoint. It is important that responsible, rather
than ".zero-risk" safeguards of the public interest be pursued.
Mariculture activities are necessarily intensive; there will be
significant environmental effect within and near any areas in which
commercial culturing activities are being conducted. An unquali-
fied "no significant adverse effect" guideline would effectively
stop all development.

The State of Hawaii can continue the effort to expedite the
regulatory process by designating a liaison officer to coordinate
state/federal permit approvals. The State has recognized this
need with regard to aquaculture by establishing the highly success-
ful Aquaculture Development Program and by adopting a joint hear-
ing and approval process for the CDUP and the State Department of
Transportation's s"~Permit for Work within Shores and Shore Waters."
An expedited process can be of the most benefit to the small entre-
preneur who cannot afford the legal and technical consultants that
regulatory paperwork and permits can require.

The interface between state and federal regulations needs
attention. The present situation with regard to the importation
of non-indigenous species needs to be reviewed to ensure that native
species are adequately protected and to allow reasonable and safe
introductions for maricultural purposes.

i-7

EXECUTIVE SUMMARY I(B)

One further aspect of government regulation which has great
practical significance is the EA/EIS requirement. The question
here is whether all costs of environmental research should be borne
by the permit applicant. Government agencies should bear some
responsibility to make available to private entrepreneurs informa-
tion and expertise. A liaison officer could serve to expedite the
flow of information and services. There is also the concern to
allow the small-scale operator into the field, particularly in the
area of seaweed cultivation. Provision should be made to allow
agency discretion to conduct environmental surveys and to assess
an appropriate portion of the costs of such services upon the per-
mit applicant.

Two further problems presently place a heavy restraint on the
commercial development of mariculture: (1) the mariculturist's
limited access to capital, and (2) high insurance premiums. Both
these problems stem from the high-risk "pioneering" nature of the
activity. Without supportive governmental action in this area, a
mariculture industry is unlikely to develop. There is clear jus-
tification for government encouragement of innovative industries,
which play a key role in economic growth. Mariculture operations
are most likely to be pioneered by entrepreneurs with minimum
investments in the neighborhood of $250,000. The passage of the
National Aquaculture Act of 1980 demonstrates federal recognition
of the financing need. However, federal programs still do not
directly address the capital needs of the high-risk mariculture
venture. The State should address these needs, by providing loans
to innovative small to mid-sized companies.

The State of Hawaii has initiated its own Aquaculture Loan
Program. The statutory definition of aquaculture presently does
not include mariculture operations, however. This definition should
be amended to qualify State-licensed mariculture operations for
participation in this program.

I-8

EXECUTIVE SUMMARY 1(B)

It is also recommended that the Legislature consider enacting
a State-backed insurance program to mitigate the casualty risks
faced by the mariculturists. A State-supported insurance or insur-
ance subsidy program, if adopted, should be implemented as a tem-
porary measure only, to aid the first generation of mariculturists.

A final factor which will significantly affect the calculus
of commercial development is the negotiation of actual lease fees
between the mariculturist and the State. The impact of rents on
overhead costs could make the difference between viability and
early failure for a mariculturist. It is recommended that base
rents for ocean leases initially be set at low or nominal levels,
with percentage fees to be paid upon gross receipts or productiv-
ity. Percentage fees might increase if an enterprise matures eco-
nomically. This approach would fairly distribute the risks and
the potential gains for both the entrepreneur and the State.

Another approach might be for the State to grant an initial
start-up lease without charging fees. Instead the State could
require the mariculturist to allow the State unlimited access to
the operation and the technical information relied upon in the
operation for the purpose of State research. This arrangement
would furnish the State with a research facility at no cost to
the taxpayer and at the same time assist the mariculturist in re-
ducing his initial costs.

If the private sector is to be presented an opportunity to
apply its ingenuity and perseverance to the difficult task of com-
mercial development of offshore resources, the legal, r egulatory
and financial framework in which this development is to occur must
be created. Experience will point out mistakes in detail. Bal-
anced against such risks of mistake is the prospect that ocean
leasing may bring far-reaching benefits to the private sector, the
public and ultimately the protein-poor and energy-poor populations
of the world.

1-9

EXECUTIVE SUMMARY 1(C)

C. STATE MANAGEMENT OF OFFSHORE RESOURCES: POLICY ISSUES

The State of Hawaii is committed to the general goal of devel-
opment of marine resources. Past policy statements, however, while
specifying various goals and objectives, do not establish a resource
allocation system through which development may occur in an orderly,
rational manner.

Since extensive commercial development of offshore areas is
still some years away at best, the State presently has an excellent
opportunity to review existing policies and to evaluate the strengths
and weaknesses of new policy options. The formulation of an "ocean
management plan," a process now underway under the general direc-
tion of the Hawaii Coastal Zone Management Program, should result
in an integrated management program for the State. The study herein
only surveys broad questions of management approach to commercial
development of offshore resources.

Extensive development of fixed-location ocean activities will
create problems whose individual definition will vary according to
the present or potential interests one has in the use of ocean
space. The responses of ocean users to commercial development of
offshore waters will be complicated by several factors, including
(1) multiple impacts of new uses (some impacts will be seen as
"1good," some as "bad"); (2) proximity to site (those far from an
activity site will judge impacts differently than those near the
site); (3) multiple group loyalties (most people do not have one
overwhelming user-group association; their definition of any "prob-
lem" will change as they consider their different concerns as ocean
user, taxpayer, employee, etc.); and (4) unanticipated outcomes
(these produce impacts which may alter initial perspectives).

The State has already established through the Hawaii Coastal
Zone Management Program, the State Plan and the Conservation Dis-
trict Use Permit procedure employed by the Department of Land and
Natural Resources which presents a policy framework which addresses
potential problems such as restrictions upon public access,

1-10

EXECUTIVE SUMMARY I (C)

interference with existing uses, and aesthetic enjoyment of the
shoreline. Any future policies or laws enacted by the State regard-
ing the use of offshore resources will have to be compatible with
these existing policies.

There are potential problems raised by the prospect of offshore
commercial development, however, which present policy and law do
not address: (1) fixed-location ocean activities require the adop-
tion of a new offshore legal regime to grant private property
rights within a traditionally public domain resource area; and
(2) development of offshore waters for private enterprise may yield
significant direct benefits to only a small segment of the popula-
tion.

The policy goals and objectives chosen to guide the implemen-
tation of a future offshore development scheme must address these
latter problems as well as be compatible with existing policies.
offshore development thus raises two policy questions: (1) Should
the amount and types of activities allowed in offshore waters be
limited? How? Upon what criteria? and (2) Who should be encour-
aged to participate in the development of these new activities?

The projected benefits of both OTEC and mariculture activi-
ties are many, but this does not necessarily prove that the State
should embark on a policy of maximum development. The carrying
capacity of the ocean resource has yet to be determined for either
activity, and further, present policy mandates a multiple-use
approach to the ocean.

Regarding the desired mix of commercial operators, present
State policy toward aquaculture development favors a diversity of
participants. Both large-scale and small-scale, in-state and out-
of-state companies are expanding the aquaculture industry's base.
A similar mix can be encouraged by appropriate economic policies
in mariculture development, although it appears unlikely that
large corporations will be taking the lead in such development.

1-11

EXECUTIVE SUMMARY I(C)

Open sea mariculture will simply remain too risky for the next
decade or longer to interest very large-scale operators. Innova-
tive entrepreneurs will pioneer the industry, if it develops at
all.

OTEC development, in contrast, because of its requirements of
scale, advanced technology and high capitalization will necessarily
be limited to a small range of participants, if not to a single
consortium.

OTEC policy options center upon favoring local or out-of-
state participants. A policy favoring local companies might bring
more direct economic benefits to the people of Hawaii, but OTEC
commercialization is likely to proceed faster if a policy favoring
out-of-state contractors is pursued. At present, both local and
mainland companies are involved in OTEC research and development.

The State may consider three allocation models for managing
offshore resource development and use: (I1) public research, devel-
opment and production of offshore resources (state monopoly); (2)
private ownership and production; and (3) mixed public/private
ownership and development.

The first model offers advantages of complete control, less
conflicts over siting, the likelihood of increased environmental
protection, and total revenue accrual to the State. Disincentives
include philosophical objections to State ownership of commerical
enterprises, objections of unfair competition with private suppli-
ers, and objections to the financial burden the State would have
to carry in developing and establishing these admittedly high-risk
enterprises. Cut-backs in other State programs might be necessary
to finance offshore commercial monopolies. Contrariwise, if such
cut-backs are politically unacceptable, offshore resource develop-
ment would languish.

The second model appears neither practical nor legal. The
State may not sell "ocean space." Such alienation is prohibited

T-12

EXECUTIVE SUMMARY 1(C)

under public trust law. Moreover, the State has already committed
itself to assistance in the research and development of OTEC and
mariculture. A modified scenario which might pass minimum tests
of legality and utility would be for the State to grant long-term
leases, hold back few offshore areas for preservation, relax envi-
ronmental quality controls, and restrict State-supported research
and development. Such an approach might bring considerable eco-
nomic benefit to the State, but this advantage would be negated
by the disincentives that (1) development would be dominated by a
few very large corporations; (2) the environmental costs would be
unacceptably high; (3) user conflicts would be endemic; and (4)
public opposition would be certain. It is difficult to see any
real viability in even this modified scenario. It does not meet
present policy goals, and it is politically untenable, given its
conflicts with powerful interest groups such as the tourism indus-
try, local commercial and sport fishermen, and recreational ocean
users.

The last model, a mixed public/private management scheme, is
familiar as the policy framework presently used in making most
land-use decisions. Applying this model to ocean management, the
State would retain ownership of existing ocean resources, but
would grant user privileges, limited property rights, and leases
of varying lengths to private entrepreneurs. Appropriate condi-
tions could be set upon each use suitable to the type of activity
and the public's continued rights. Preferential treatment to
encourage a diversity of industry participants could be exercised.

The public/private model also offers flexibility in utiliz-
ing some type of water zoning plan to minimize user conflicts and
"piecemeal" development. In the research and development area,
government initiative in stimulating and supporting the first phases
of technological advance, combined with the existence of an appro-
priate commercialization framework, has proven highly successful
in diverse industries. Land-based aquaculture in Hawaii is but
one relevant example.

I-13

EXECUTIVE SUMMARY I(C)

The public/private model thus provides the greatest continu-
ity with present policy goals, offers substantial flexibility in
responding to new needs or problems, and carries the strongest
likelihood of general public support.

I-14

EXECUTIVE SUMMARY I (D)

D. STATE AUTHORITY OVER OFFSHORE RESOURCES: THE LEGAL1 ISSUES

In developing a state legislative scheme for the regulation
and control of new commercial activities in State marine waters,
it is necessary first to identify, what powers the State has over
the area, and secondly what the limitations are to the exercise
of such powers. The State possesses two kinds of state authority:
(1) proprietary or "ownership" rights, and (2) police powers.

The long-standing proprietary claims of coastal states in the
marginal sea had been accepted by the federal government until the
1930's. in 1947, the U.S. Supreme Court held in U.S. v. California
that the Federal Government had full dominion over ocean waters,
including the oil and minerals which reposed in the lands beneath.
Congress in turn ceded back to the states all federal proprietary
interests in the marginal sea by the passage in 1953 of the Sub-
merged Lands Act (SLA). This Act explicitly granted to the States
"the right and power to manage, administer, lease, develop, and
use the said (submerged] lands and natural resources all in accor-
dance with applicable State law."

The SLA grants to states the power to lease areas of the sea-
bed; however, the SLA makes no mention of the water column or water
surface. Mariculture and other fixed-location ocean activities
require some degree of exclusive use of ocean space in the water
column. These new ocean uses were not contemplated at the time
the SLA was enacted. Yet an assertion of State'ownership rights
to the water column, as a basis for State leasing of such, would
be well grounded. The following considerations are persuasive:
(1) The SLA's grant of authority to the states is very broad; (2)
The Supreme Court has consistently allied ownership of submerged
lands with the superjacent waters, and vice-versa; (3) The SLA spe-
cifically retained certain federal prerogatives but did not reserve
to the Federal Government ownership rights to the water column;
(4) The legal definition of land includes everything above and
below it (exceptions to this may limit but do not negate the

I-15

EXECUTIVE SUMMARY I(D)

principle); and (5) Many states have exercised leasing powers over
the water column either explicitly or effectively without success-
ful challenge.

In addition to proprietary rights, a state also possesses
broad police powers to regulate, restrict or promote activities
within its boundaries in the interest of public health, safety and
welfare. Valid exercises of state police powers in the marginal
sea include: (1) Regulation of navigation--a state may remove or
authorize erection of structures in ocean waters; (2) Land and
water use control--through zoning and planning, a state may impose
areawide restrictions on permissible land and water uses. (3)
Environmental protection--a state may validly impose reasonable
pollution regulations and controls. (4) Conservation and/or devel-
opment of natural resources--a state may take measures to prevent
depletion of a natural resource, or to encourage the development
of such a resource. (5) Aesthetic controls--although a state reg-
ulation based solely on aesthetic considerations is of question-
able validity, aesthetic considerations can at least be taken into
account in state legislation. (6) Preservation and protection
of historic sites.

The orderly use and development of Hawaii's coastal resources
depends upon the proper exercise of the State's proprietary and
police powers. As a function of its proprietary powers, Hawaii
can establish a mechanism for the leasing of ocean space to accom-
modate new ocean activities such as mariculture, OTEC and other
fixed-location activities. As a function of its police powers,
Hawaii can regulate or prohibit activities in the marginal sea in
the interest of the public's welfare. Through the exercise of both
its proprietary and police powers, Hawaii can allocate ocean space
in a manner that assures the highest economic or social benefits.

Several federal statutes have recently been enacted which in-
crease the scope of State authority to regulate offshore activities.
The federal Water Pollution Control Act (FWPCA), as amended by the

1-16

EXECUTIVE SUMMARY 1(D)

Clear Water Act of 1977, places basic responsibility to control
water quality with the states. The Fisheries Conservation and
Management Act CFCMA) of 1976 extends to the states a limited role
in the management of the 197-mile fishery conservation zone beyond
State marine waters. The Coastal Zone Management Act (CZMA) of
1972 grants states which have a federally approved CZM program (as
does Hawaii) an effective veto power over the issuance of federal
permits, licenses, or federal assistance grants for activities
occurring within a state's defined coastal zone.

The CZMA was amended in 1976 to require that any new activi-
ties proposed for the outer continental shelf be consistent with
a state's CZM program, if that activity may produce effects within
the state's coastal zone. The Deepwater Ports Act of 1974 allows
an adjacent coastal state to veto the issuance of a deepwater port
license. The recently enacted Ocean Thermal Energy Conversion Act
of 1980 likewise requires that the governor of an adjacent coastal
state shall approve any OTEC project before a federal license will
be issued.

Coastal states may also influence the conduct of federal activ-
ities through the National Environmental Policy Act (MEPA). The
State may significantly delay any ocean project which it opposes
by judicially challenging the project's compliance with NEPA. The
threat of delay itself can provide political leverage to the State.

The exercise of a coastal state's proprietary and police
powers is, however, subject to various legal constraints. One such
constraint is the exercise of paramount federal power to control
ocean activities which affect federal interests. The powers re-
served to the Federal Government by the U.S. Constitution include
control over national defense, international affairs, and inter-
state and foreign commerce. The Commerce Clause of the U.S. Con-
stitution provides the Federal Government with broad powers to
regulate and control navigation and the production of water power.
The Commerce Clause permits the Federal Government to also regulate

I-17

EXECUTIVE SUMMARY I(D)

ocean activities on the bases of conservation and ecological pro-
tection of navigable waters.

Several federal statutes give the U.S. Army Corps of Engineers
broad jurisdiction over activities occurring in navigable waters.
The National Environmental Policy Act requires that environmental
impact statements be filed for all major federal actions signifi-
cantly affecting the environment. The Clean Water Act establishes
water quality guidelines. other federal laws have been enacted to
conserve and manage ocean wildlife resources.

States cannot enact legislation which interferes with or by-
passes federal statutory requirements. If a state law conflicts
with a federal law, the federal law prevails. Also, where federal
legislation in a particular field is intended to be exclusive,
state legislation in the field is invalid. The granting of a fed-
eral license, such as the licensing of a vessel, usually confers
the right to perform the licensed activity. However, states are
allowed to impose upon federal licensees reasonable and evenhanded
conservation and environmental protection measures.

Any state ocean leasing scheme must conform to federal stat-
utory requirements. Therefore, any scheme adopted must be coordi-
nated with federal regulatory procedures.

The Commerce Clause acts as a bar to any state regulation
that unduly burdens interstate commerce. In establishing a stat-
utory scheme for the development of offshore resources, the State
cannot adopt any regulations which impede the flow of goods in
coimmerce. A state ocean leasing scheme cannot discriminate against
out-of-state businesses or shield local businesses from out-of-
state competition. The State cannot favor consumption of local
products by restricting the importation of out-of-state products.
Nor can the State restrict commercial products resulting from of f-
shore development to consumption and use only within the state in
order to satisfy state needs. Finally the State may not impose

1-18

EXECUTIVE SUMMARY 1(D)

undue restrictions on the vehicles or facilities necessary for the
transportation of goods.

The Privileges and immunities Clause of the U.S. Constitution
acts as another constraint upon the exercise of state authority.
Any state statute which (1) discriminates against non-residents,
and which (2) in doing so affects a fundamental right, is unconsti-
tutional. A discriminatory statute is valid only where activities
of non-residents can be proven to constitute a peculiar source of
evil, and where there is a reasonable relationship between the dan-
ger represented by non-residents and the discrimination practiced
upon them. Under these tests, the State cannot attempt to allocate
or conserve its offshore resources by reserving to its own citizens
alone the right to conduct commercial ocean activities. The State
cannot deny an ocean lease for commercial purposes to any applicant
on the basis of non-residency.

The Equal Protection Clause of the U.S. Constitution similarly
requires that any legislative discrimination between classes of
persons must bear a rational relationship to a legitimate state
interest or purpose. However, if the discriminatory legislation
involves a " suspect'" classifi cation or affects a ''fundamental"'
right, such legislation is subjected to a higher test and is only
valid if it can be proven necessary to promote a compelling state
interest. Thus a State ocean resource allocation or regulatory
scheme may not discriminate on the basis of race or alien status.
Nor may such a scheme penalize the exercise of a fundamental right.
For instance, an ocean leasing scheme which imposes a durational
residency requirement in order to qualify an applicant for a lease
would be challengeable as placing a penalty upon the exercise of
the right to travel.

Proprietary rights and police powers may also be limited by
the common law, state statutes, and/or the State Constitution.
The major constraint upon State allocation of public resources is
the public trust doctrine. Hawaii's offshore lands and waters are

1-19

EXECUTIVE SUMMARY I(D)

held by the State in trust for its citizens. Any legislative scheme
which allocates and restricts the use of ocean space must recognize
the general right of the public to use and enjoy the State's ocean
resources.

Under the public trust doctrine, courts generally employ a
cost-benefit analysis which balances the conflicting private, gov-
ernment and public interests. The State, as trustee, cannot allo-
cate its trust resources in a manner that unreasonably interferes
with existing public uses. Therefore, any conveyance of public
resources in the marginal sea must be in support of activities
which are necessarily water-related, must provide a net benefit
to the public, and must not significantly reduce the public's use
and enjoyment of the whole of the trust resource.

The public trust doctrine recognizes that the State Legisla-
ture has the prerogative to establish an ocean leasing program,
so long as the Legislature publicly debates the policy issues
involved and finds that such a program would serve the public
interest.

The public trust doctrine requires that the State Legislature
make explicit the public policy governing priorities in the use of
marine resources within the State, and that thorough planning pre-
cede any reallocation of resources in order to achieve the best
allocation of those resources.

In consideration of the public trust doctrine, likely opposi-
tion from competing ocean users and simple good planning, any
ocean leasing program ought to contain c learly stated self-limita-
tions, such as a designation of suitable and unsuitable zones for
leasing, or some other planned development formula which gives
assurance of the program's bounds. The Legislature might direct
the Department of Land and Natural Resources to develop a site
assessment which would specify leasable and non-leasable areas or
zones. The Legislature should itself ratify such a plan, and
should provide for its periodic review.

I-20

EXECUTIVE SUMMARY I(D)

The public trust doctrine requires that public access to
ocean resources be protected to the maximum extent practicable.
Provision should be made to guarantee that leases for mnariculture
or OTEC activities be no more extensive, and the degree of exclu-
siveness granted be no broader, than is required by the nature of
the private commercial operation.

The public trust doctrine requires that administrative guide-
lines be carefully drawn by the Legislature, and be rigorously
followed by the state agency with delegated authority to lease
ocean areas. Administrative procedures must protect public rights
and ensure that any specific allocation of ocean resources be made
in the public interest.

The Hawaii State Constitution contains explicit provisions
which protect public interests in the State's marine resources.
The State Constitution is not, however, a major impediment to the
establishment of an ocean leasing program. Article XI, Section
6, of the Hawaii Constitution, as amended in 1978, specifically
excepts fish ponds, artificial enclosures and state-licensed mani-
culture operations from those fisheries in seawaters which shall
be free to the public. Article XI, Section 6, also mandates that
the Legislature sets guidelines for the licensing of mariculture
activities in state waters, "which shall protect the public's use
and enjoyment of the reefs." The report of the Constitutional
Convention Committee on Environmental, Agriculture, Conservation
and Land concerning Article XI suggests that ocean leasing for
mariculture activities in Hawaii would be a practical application
of public trust purposes from the viewpoint of optimal resource
utilization. Article XI, Section 1, provides a general statement
regarding the conservation and development of State natural re-
sources. It provides that the State "shall promote the development
and utilization of these resources in a manner consistent with
their conservation and in furtherance of the self-sufficiency of
the State."

1-21

EXECUTIVE SUMMARY I(D)

In Hawaii, there is a unique system of exclusive fishing rights,
known as "konohiki fisheries," which may act as a restriction upon
the state's ability to lease marine waters. Konohiki fishing rights
are private rights derived from ancient Hawaiian custom and usage
and are presently recognized by statute. In ancient Hawaii the
konohikis were the landlords of the various ahupua'a which consti-
tuted the basic land division at the time. Each ahupua'a was a
pie-shaped strip of land running from the mountain tops to the sea.
The konohiki had exclusive fishing rights in the ocean waters ad-
jacent to the ahupua'a.

When Hawaii was annexed by the United States in 1900, the
Hawaii Organic Act directly attacked the legal basis for the kono-
hiki fisheries. Finding the concept of such exclusive fisheries
repugnant to public trust principles, Congress in Section 95 of
the Act repealed all laws conferring exclusive fishing rights,
"subject, however, to vested rights." Section 96 required any
claimant of such rights to register his claim through a petition
filed in the circuit court within two years of the Act. The Ter-
ritory was then to condemn and purchase each adjudicated fishery.
The intent of Congress was to eliminate private fishing rights.
All fisheries not registered in accordance with the Act became
open to the public. On the other hand, the registration of kono-
hiki fisheries legally validated the private vested rights of the
konohikis. Vested konohiki rights therefore continue to be recog-
nized and regulated in state statutes. Only 101 fisheries were
registered, and many of these were subsequently condemned by the
State or by the federal government. By one count, at present only
42 konohiki fisheries remain, the majority of them located around
Oahu.

In addition to konohiki rights, state law recognizes tenants'
rights. Ahupua'a residents, or hoa'aina, also had fishing privi-
leges in the adjacent ocean waters. The konohiki held the private
fisheries for the equal use of themselves and of their tenants, to

1-22

EXECUTIVE SUMMARY I(D)

the exclusion of all others. The Hawaii Supreme Court originally
defined "tenants" as every person lawfully occupying any part of
an ahupua'a. However, the court subsequently held that those per-
sons who became tenants after the passage of the Organic Act did
not have any "vested" rights within the meaning of the Act and
therefore the repealing clause was operative as against them. In
other words, since the Organic Act repealed all laws conferring
exclusive fishing rights, only those rights which were vested at
the time of the Act could be recognized. No fishing rights could
be conferred upon persons becoming tenants after the passage of
the Organic Act. Therefore, under state case law, very few tenant
claims in konohiki fisheries exist today.

A conflict exists, however, between state court and federal
court rulings. A Federal District Court held that by statute, the
konohiki held the private fisheries for themselves and in trust on
behalf of the tenants. Therefore, any present tenant of ahupua'a
land adjacent to a registered konohiki fishery holds the same
vested right which any tenant of 1900 held.

The Hawaii State Constitution, as amended in 1978, recognizes
the continuing validity of ahupua'a tenants' rights. Article XII,
Section 7, provides that the "State reaffirms and shall protect all
rights, customarily and traditionally exercised . . . and possessed
by ahupua'a ten-ants who are descendants of native Hawaiians who
inhabited the Hawaiian Islands prior to 1778." Under the Hawaii
State Constitution, hoa'aina rights pass by descent, not by stat-
ute or by trust. Therefore, present ahupua'a tenants who can
claim Hawaiian descent may possess hoa'aina rights.

The extent to which konohiki and hoa'aina rights limit the
State from leasing ocean space is not clear. Certainly, the State
may not lease any portion of the ocean lying within a konohiki fish-
ery for any fishing activity. Since konohiki rights include only
exclusive fishing rights, however, non-fishing uses are not in con-
flict with konohiki rights, if the non-fishing use does not substan-
tially interfere with the ability of the konohiki, his agents, or

1-23

EXECUTIVE SUMMARY I(D)

his tenants to conduct fishing activities. Whether a mariculture
activity could rely on a state lease to operate within a konohiki
fishery would then depend upon legislative and judicial declarations
that mariculture is or is not "fishing." If the Legislature desires
to prohibit state leases for mariculture activities within private
konohiki fisheries, mariculture should be explicitly defined in any
ocean leasing legislation as a fishery; or alternatively, a provi-
sion of the legislation should explicitly state that leases may not
be granted by the state for mariculture operations (and other ocean
uses requiring ocean leases, if that is also desired) within pri-
vate fisheries. If the Legislature desires to not so restrict the
State's options, mariculture should be distinguished from "fishing,"
and specific provision made to allow mariculture or other non-fish-
ing leases within private fishery bounds, subject to the preserva-
tion of all konohiki and hoa'aina fishing rights.

The State is not limited to the alternatives of either prohib-
iting or allowing ocean leasing within konohiki areas. The State
could (1) complete the condemnation program intended in the Hawaii
Organic Act of 1900, or (2) attempt to open for public use the re-
maining konohiki fisheries which have not been policed and used
for many years by their owners, on the basis of implied dedication
or adverse possession by the public. With regard to the first
alternative, condemnation of the remaining konohikis would be
opportune at this time. The success of the second alternative is
in no way assured, but such an approach does bear consideration.

Riparian or littoral owners may have certain rights incident
to their location next to a body of water. Riparian rights are
common law rights as modified by state statute.

One riparian right applicable to ocean waters which seems to
be almost universally recognized is the right of access to the
water. A riparian owner may also be entitled to the reasonable
use of the waters adjacent to his land for swimming, bathing, fish-
ing, etc. The right of a riparian owner to an unobstructed view

1-24

EXECUTIVE SUMMARY I(D)

of or over adjacent waters has been recognized in a few cases. A
few jurisdictions also recognize a common law right to build a pier~
or wharf out to the point of navigability.

If any action of the State substantially impairs a recognized
riparian right, just compensation must be paid to the riparian
owner. However, if the impairment of riparian rights is not sub-
stantiated or where the State clearly is acting in the public in-
terest, compensation may not be required.

in Hawaii, neither the State Legislature nor the Hawaii courts
have addressed the issue of ocean littoral rights. Whether Hawaii
would recognize any of the aforementioned riparian rights remains
to be seen.

In sum, the State may lease ocean waters. As trustee of the
State's ocean resources, the Legislature may take virtually any
action it deems necessary to protect the public trust or to fur-
ther its purposes. A legislative determination that a particular
allocation of a trust resource is in the public interest is pre-
sumptively valid. It appears unlikely that the Hawaii courts would
invalidate a legislatively enacted ocean leasing program contain-
ing explicit public interest protections.

1-25

SECT ION9
2

TECHNOLOGY ASSESSMENTS: AN OVERVIEW II(A)

II. STATE-OF-THE-ART - TECHNOLOGY
ASSESSMENTS: AN OVERVIEW

This Section on Technology Assessments is designed to give the
reader a basic foundation to evaluate subsequent discussions con-
cerning commercial development, policy considerations and legal
aspects of Ocean Leasing. The State of Hawaii Department of Plan-
ning and Economic Development has prepared three in-depth Techno-
logy Assessment Supplements for the reader who wishes a more de-
tailed analysis of the current technology. These Supplements are
available upon request from the Aquaculture Development Program of
the Department of Planning and Economic Development. The titles of
each of the three technology assessments are: Mariculture; Ocean
Thermal Energy Conversion and Ocean Thermal Energy Conversion
Related Activities; and Fish Aggregation Devices.

A. MARICULTURE

Aquaculture is defined as the propagation and cultivation of
aquatic animals and plants for profit or social benefit. The aqua-
culture activities which take place in brackish water or seawater
are termed mariculture.1

Major reasons for encouraging worldwide mariculture develop-
ment include: (1) food production, (2) enhancement of natural
stocks of sport or commercial species, (3) production of bait, (4)
production of ornamental fish, (5) waste treatment or reclamation
of waste products and (6) production of industrial products.2

Fewer than one hundred animal and plant species are widely
3
cultured for food and other purposes. Perhaps one-third of these
species are cultured in saltwater and hence can be considered
mariculture.

Four groups of organisms are cultured around the world: Fish,
molluscs (e.g. oysters and clams), crustacea (e.g., shrimps and

II-1

TECHNOLOGY ASSESSMENTS: AN OVERVIEW II(A)

crabs) and seaweed. Generally, commercial culture is most feasible
if these species possess certain biotechnical and economic charac-
teristics.

Worldwide mariculture activities were examined to determine
which major species are candidates for, or are being, commercially
cultured. Nineteen groups of marine or brackish water species were
identified.4 Many of the species do not exhibit all the desirable
biotechnical characteristics. Some have not demonstrated favorable
production economics for particular rearing systems, but all are
marketable either locally, regionally or worldwide. There are
numerous species for which various important desirable biotechnical
characteristics are not demonstrated, yet commercial production is
being carried out. This is due, in large part, because specific
(often site-specific) species, rearing systems or market character-
istics allow less efficient and cost-effective production processes
to be profitable.

It has been concluded that: (1) life cycle control, seed
stock availability and feed development are major constraints to
expansion of mariculture of marine fish; (2) emphasis in crustacean
mariculture has been on land-based systems rather than offshore
systems; (3) expansion of mollusc and seaweed mariculture will
largely depend on the availability of sites with adequate supplies
of natural productivity (foods) and/or nutrients or on the develop-
ment of cost effective feeding and fertilization techniques for
open systems; and (4) many private and public research institutions
around the world are working on life cycle control, seed produc-
tion, engineering of culture systems and other bottlenecks to
mariculture; thus near-term availability of increasing numbers of
species and systems for commercial mariculture is imminent.5

11-2

TECHNOLOGY ASSESSMENTS: AN OVERVIEW II(A)

Modified natural environments include natural stock enhance-
ment or ocean ranching, habitat enhancement and habitat enclosure.
These are extensive culture systems in which there is minimal
manipulation of the stock or the-rearing environment by man.

open ranching is a method which involves the release of arti-
ficially propagated juvenile fish into marine waters to grow on
natural foods to harvestable size, e.g., salmon ranching. Har-
vesting usually occurs when the stock is captured by conventional
fishing gear.6

Habitat enhancement occurs when natural environments or sub-
strates are improved to increase the natural production of the
area. one example of this technique is planting seaweeds in an
appropriate area where they will receive adequate nutrients and
grow to harvestable size. No man-made structures are used in this
method.

Habitat enclosure commronly refers to fencing off a portion of
a nearshore marine environment, such as a bay, to permit contain-
ment of a mobile stock, e.g., shrimp or fish. Impoundment can be
suspended nets, anchored to the bottom or by wire fences. Supple-

mental feeding is often necessary.7

Surface systems can be characterized as either; (1) cages made
of flexible or rigid materials or (2) ropes, baskets or other
materials which are suspended from the surface so that non-mobile
stock can be attached or contained. 8Surface systems are for the
most part designed for nearshore sheltered areas with adequate
water circulation.

Recently the Japanese developed a submerged net cage which is
suspended from buoys on the water surface. This system can be used

in less sheltered areas.9

Suspension of a cultured organism from a raft or buoy is
called hanging culture. Three variations of hanging culture are
utilized: String, basket and tray culture. Flotation materials

II-3

TECHNOLOGY ASSESSMENTS: AN OVERVIEW I1(A)

and frame structures for rafts used in hanging culture are similar
to that used for cage culture. 10

Molluscs cultured by these methods must feed on the naturally
occurring plant and animal material (natural production) at the
site. Cleaning and harvesting is generally carried out by hoisting
the strings, baskets or trays into a boat."1

Submerged systems are located on the ocean bottom or are
floated in mid-water but are attached to the bottom. These systems
may be placed so that they are totally submerged at all times or
periodically submerged by tidal action. Three types are identi-
fied: (1) submerged cages, (2) minor structures for attaching or
containing stock, and (3) major structures for attaching or con-
taining stock. The third type is related to OTEC and artificial
upwelling systems and is discussed under the OTEC section of this
report.

Submerged cages resemble floating cages in structure and func-
tion. They have the advantage of being able to be deployed in open
ocean areas exposed to strong wind and short and long period waves.
Surface components for these systems may not be necessary or may be
reduced to a few marker buoys.12

Large-scale, deep submerged cage culture is experimental.
Significant work is going on at the Oceanic Institute, Makapuu
Point, Hawaii. Experiments suggest that large cages can be made
from galvanized steel pipe and plastic mesh. Preliminary data
suggest a system of 15 such cages may be an economically viable
unit. 13-

Submerged culture utilizing minor structures for attaching or
holding stock are characterized by a diverse array of activities.
one set involves seaweeds, which are attached to nets, lines and
stakes in shallow tidal areas. Crops are continuously harvested by
hand; that is, they are trimmed and allowed to grow back. 14

Another set of activities involves on-bottom post, rack or
tray culture of molluscs. These systems are similar in principle

II-4

TECHNOLOGY ASSESSMENTS: AN OVERVIEW II(A)

to hanging culture using strings, baskets or trays; however, rather
than being suspended from the surface, the stock is supported off
the bottom. 15

Deployment and operation of various types of mariculture
technologies in coastal and offshore waters will cause some envi-
ronmental impacts on the ocean surface, water column and/or on the
underlying substrate. The type and magnitude of the impact will
largely be dependent on the type and scale of the operation. Four
general areas are discussed; habitat, freedom of passage, non-
indigenous species, and aesthetics.

mariculture operations may have a physical and/or broader
ecological impact in the surrounding ocean environment. Potenti-
ally reversible physical impacts (changes in structure) can be
expected if a system is anchored to or rests on the ocean sub-
strate.

Uneaten feed and unabsorbed fertilizers in the form of partic-
ulate and dissolved nutrients will be released into the water
column or deposited on the substrate. Additional nutrient inputs
can be expected from the particulate and dissolved waste products
of animal stocks. Such nutrient inputs into an oceanic nutrient-
poor environment will cause some biostimulation, i.e., growth of
planktonic and substrate living animals and plants.

As with the case of other fixed-location ocean technologies
under consideration in this study, mariculture structures can be
expected to attract and/or concentrate naturally occurring orga-
nisms, particularly fishes and benthic invertebrates. Baseline
data concerning aggregation characteristics of fixed-location
objects will be needed to anticipate results with acceptable
accuracy.

Placement of mariculture activities may necessitate restric-
tions on activities occurring in the vicinity of a particular site.
Surface structures such as rafts or buoys and submerged structures

11-5

TECHNOLOGY ASSESSMENTS: AN OVERVIEW II(A)

such as cages or anchor lines will necessitate rerouting of commer-
cial and recreational activities. For submerged structures, restric-
tions may be periodic such as during harvesting or maintenance.
Operations located close to shore may necessitate restriction of
activities on shore.

if an economically important and commercially feasible native
mariculture species does not exist in an area, then it may be
desirable to import non-indigenous species. Consideration must be
given to the possibility of escape of non-indigenous species into
the natural environment and perhaps the eventual establishment of
breeding populations. Potential positive and negative ecological
consequences should be weighed along with potentially positive and
negative socioeconomic results.

Mariculture operations permanently located at the ocean's
surface will have a super-structure, and hence may be considered as
impacting on the ocean view-scape. Current technologies indicate
surface structures such as rafts and buoys will be single level,
and support vehicles will probably resemble conventional boats.
Noises eminating from mariculture activities during routine oper-
ation or harvesting may be similar to ship operation noise.

Historically, mariculture activities in Hawaii have primarily
taken place on the land or in ancient coastal fish ponds. ocean
oriented development has been limited to a small scale natural
stock enhancement program for oysters and numerous laboratory
research projects to determine culture potential of various local
and non-indigenous species. Research results indicate several
species have mariculture potential for nearshore and open ocean
systems; however, biotechnical problems, costs of production and
16
market demand need further study. To date there have been no
attempts at pilot scale or full scale commercial mariculture in the
nearshore or offshore environments of Hawaii.

There are, however, increasing amounts of private investment
in land-based mariculture systems which suggests that biotechnology

II-6

TECHNOLOGY ASSESSMENTS: AN OVERVIEW II (B)

and economics of certain marine species have progressed to a point
where risks appear manageable. Recent passage of the National
Aquaculture Act may substantially increase the level of research on
mariculture species and systems in the United States.

In conclusion, several preliminary statements concerning the
potential for near-term future development of nearshore and open
ocean commercial mariculture in Hawaii can be made from the pre-
vious examination of the state of technology. Few Hawaii species
appear to have reached a level of biotechnology and economic fea-
sibility for commercialization; therefore, near-term development
may require importation of non-indigenous species which are com-
mercially cultured elsewhere with their attendant ecological risks
or increased levels of research on local organisms. Many of the
species being commercially cultured around the world are temperate
or cold water species (e.g., salmon, lobster, abalone, and various
seaweeds) whose adaptability to ambient Hawaii water temperature
regimes (OTEC cold water aside) is not well known. others of t he
world's commercially cultured species (molluscs and seaweeds)
require fertile natural environments for successful production and
environmental conditions of this nature are not prevalent in
Hawaii waters. All the mariculture systems discussed are poten-
tially applicable to Hawaii conditions, though materials may differ
and those surface systems requiring sheltered waters may be limited
by site availability. 17Clearly, assessment of potential sites for
nearshore and open ocean mariculture is needed for informed discus-
sion of development potential. Finally, Hawaii has a growing
complement of aquaculture researchers and facilities on which a
tropical mariculture research program could be built which would
benefit the many oceanic countries of the Asian Pacific Basin.

B. OCEAN THERMAL ENERGY CONVERSION AND OCEAN THERMAL ENERGY CON-
VERSION RELATED ACTIVITIES

Ocean Thermal Energy Conversion (OTEC) offers a particularly
promising energy resource for Hawaii. This resource relies upon
the temperature differential between warm surface and cold deep

11-7

TECHNOLOGY ASSESSMENTS: AN OVERVIEW II(B)

18
waters. In the OTEC system, warm surface water and deep ocean
water are circulated through heat exchangers which contain a low
boiling-point fluid such as ammonia. The working fluid is evapo-
rated by the warm water, powers A turbine, and is then condensed by
the cold water. OTEC plants could not only provide a source of
continuous 24-hour baseload power, but most important, no major
technological breakthroughs appear necessary for commercialization.
Since OTEC plants are floating systems, they offer considerable
flexibility in utility planning for meeting future energy needs of
the Neighbor Islands and would not involve any significant fore-
closure of coastal land-use options.

The ultimate success of OTEC energy production in Hawaii waters
will depend more on resolving problems of materials compatibility,
seawater corrosion, biofouling control, mooring of large offshore
structures, and the legal-regulatory climate, than on the efficacy
of the OTEC process itself.

There are several OTEC projects of national and international
significance that have been planned for or implemented in Hawaii
waters: Mini-OTEC conclusively proved the feasibility of operating
OTEC plants in an ocean environment.19 OTEC-1 is ocean-based test
platform designed for testing large heat exchangers and biofouling
countermeasures. The Seacoast Test Facility (STF) is a land-based
OTEC research and development facility now under development at
Keahole Point, Hawaii.20 STF is designed as a-long-term test faci-
lity to develop data essential to the design and reliable operation
of large ocean-based OTEC plants.

The recently signed "Ocean Thermal Energy Conversion Research,
Development, and Demonstration Act" (P.L. 96-310) has provided the
mandate for OTEC technology development well into the 21st century
by establishing national OTEC-energy production goals through the
year 1999. The national goals call for demonstration of at least
100 MW of electrical capacity or energy product equivalent by 1986;
500 MW by 1989; 10,000 MW by 1999.21 In establishing these goals,
Congress recognized that certain energy intensive products such as

II-8

TECHNOLOGY ASSESSMENTS: AN OVERVIEW 11(B)

amm~onia, hydrogen, electrometals, and aquaculture products could be
produced in lieu of or as a by-product of the OTEC process.

There appear to be four major classes of environmental con-
cerns associated with the deployment and operation of large OTEC
platforms. These include changes in oceanic properties, chemical
pollution, operation of a manned platform, and secondary impacts
associated with site selection, construction, and operation of OTEC
plants. Ongoing studies sponsored by the State and Federal govern-
ments are providing data on the scope and severity of each real or
potential problem so that remedial procedures and appropriate miti-
gation strategies can be developed.

The artificially "upwelled" deep ocean water, as well as the
surface waters, are resources that have potential for the cultiva-
tion of a diverse array of plant and animal species for food,
fiber, fuel, or biomass.

The possibilities for OTEC and OTEC-dependent industries are
great and OTEC could help make Hawaii self-sufficient in energy and
in other energy-intensive products by the end of the century.

There has been increasing interest in the food production
potential of the ocean. Unfortunately, the world's oceans, which
cover approximately 70 percent of the earth, offer only limited
potential for increased food production in their natural state. 22
This limitation is due to the lack of nutrients in surface waters
of the open ocean. 2

OTEC platforms deployed in tropical and subtropical seas offer
a means of tapping the cold, deep, nutrient-rich waters below the
unproductive surface layer and, through artificial upwelling,
making these nutrients available for controlled plant and animal
culture systems. In addition to the deepwater nutrients (e.g.,
nitrogen and phosphorus), the combination of deep cold water and
warm surface waters (available as a by-product of the OTEC process)
offer the opportunity for producing a broad range of water temper-
atures and enormous water volumes for the growth of a diverse
variety of commercially valuable organisms. 24

II-9

TECHNOLOGY ASSESSM4ENTS. AN OVERVIEW 11(C)

Research has shown that microscopic algae grown on artifici-
ally upwelled waters provide an excellent food for filter-feeding
shellfish such as oysters, clams and scallops. 25Early commercial
OTEC-mariculture demonstration systems are likely to focus devel-
opmental efforts around certain high-value carnivorous finfish,
such as salmon and trout. An estimated 100 million pounds of
salmon could theoretically be reared yearly with one moderately
sized OTEC plant. Assuming a market value of $5.00 per pound, the
total market value of such a crop would be $500 million. This
value would far exceed the value of the electrical energy produced
by the OTEC plant. 26

Species selection opportunities would diversify in the future
as OTEC and offshore mariculture, engineering, construction, and
mooring technologies develop. Although the opportunities for the
open-ocean culture of algae, fish and shellfish appear to be prom-
ising, there are still many obstacles yet to be overcome. Among
these are the low oxygen content of deep water and the differing
chemistries between surface and deep waters. The design, deploy-
ment and maintenance of massive offshore farms in a physically
unstable and corrosive environment is likely to be the greatest
impediment to rapid development.

Food, like energy, is an increasingly valuable commodity.
They are both valuable because they are present in limited sup-
plies, and demand often exceeds the supply. This situation will
intensify as the world's population continues to expand. Clearly,
OTEC and the food, biochemicals and biomass associated with devel-
opment of OTEC technologies have the potential for partially satis-
fying the food and energy needs of Hawaii and, perhaps the nation
as a whole.

C. FISH AGGREGATION DEVICES

A fish aggregation device is a floating or submerged structure
deployed in the ocean to attract, congregate and hold fishes and
other free-swimming aquatic organisms for harvest by commercial and

II-lo

TECHNOLOGY ASSESSMENTS: AN OVERVIEW 11(C)

recreational fishermen. Pacific Islands, like the Hawaiian is-
lands, generally have a relatively narrow band of shallow water
areas of which a large portion are flat and devoid of adequate
relief for supporting fish populations. Moreover, surrounding deep
waters are relatively nutrient poor and low in productivity. Hence
fish aggregation devices have been successful in enhancing fishing
opportunities.

Fish aggregating technologies have employed bamboo rafts
(Japan and Philippines), slabs of cork (Mediterranean Sea) and palm
fronds (Indonesia) . Recently in Hawaii, Guam, Northern Marianas,
American Samoa and Palau, special buoy devices made of rope netting,
55-gallon drums and a concrete anchor were tried successfully. 27
The latest generation of buoys in Hawaii is made of large truck
tires filled with flotation material and single anchor lines with
numerous rope streamers hanging from them. Target species for the
devices are popular pelagic fish species. 28

Environmental impacts resulting from extant fish aggregating
buoys are negligible (i.e., deterioration of buoy components,
aesthetics, anchor on ocean floor). Conceivably with widespread
use and uncontrolled development of fish aggregating technologies,
especially by underdeveloped countries, significant environmental
impacts could result such as: navigational hazards, reduction of
certain fishery resources below a sustainable yield level, fisher-
men use conflicts, and entanglement of protected endangered and
threatened pelagic animals. 29

In 1977 the Honolulu Laboratory of the National Marine Fish-
eries Service with the cooperation of the Pacific Tuna Development
Foundation began experimenting with four fish aggregating buoys in
Hawaii waters. These buoys demonstrated their effectiveness in
attracting and holding tuna schools and other pelagic fishes long
enough for Hawaii's fishermen to fish them profitably. 30

In 1979 the State of Hawaii, through the Department of Land
and Natural Resources, Division of Fish and Game, embarked on an

II-II

TECHNOLOGY ASSESSMENTS: AN OVERVIEW 11(C)

ambitious five-year Statewide Fish Aggregation System Program as
part of the Hawaiian Fisheries Development Plan. During the first
year of the program, 26 fish buoys of a unique tire design were
constructed and deployed (April-May 1980). Buoy sites (Oahu-9,
Hawaii-7, Molokai-3, Kauai-3, Lanai-l, Maui-1, Kahoolawe-1,
Niihau-1) were determined as a result of public meetings with
fishermen held statewide and coordinated with the U.S. Navy. The
sites were located three to 25 miles offshore and in 1,200-to-6,000-
31
foot depths. In the first two months of buoy installation,
fishermen reported catching approximately 30,500 pounds of fish
from around the buoys. Primary emphasis during the first two years
of the program is maintaining the buoys on station cost-effectively,
including the installation of additional buoys as funds would
permit.

It is envisioned that by the year 2000, there could be a
Statewide Fish Aggregating System with an optimal number of fish
buoys strategically placed throughout the main and Northwestern
Hawaiian Islands, including deep water sites (1,000 to 2,000
fathoms) within the 200-mile U.S. Fishery Conservation and Manage-
ment Zone. The future buoys may be fitted with radio transmitters
for satellite monitoring, and sound and odor fish-attractant de-
vices. Rising costs of buoy materials, lack of cooperation by the
fishermen, buoy-use conflicts and buoy vandalism are some of the
potential problems and constraints that may impede the development
32
of Hawaii's buoy program.

II-12

TECHNOLOGY ASSESSMENTS: AN OVERVIEW II

FOOTNOTES

1. Aquaculture Development for Hawaii, State Department of Plan-
ning and Economic Development (1978), p. 1.

2. P. A. Sandifer, "The Necessity for Aquaculture Development,"
Marine Technology Society Journal (Vol. 13, No. 3, 1979), p.
35.

3. National Aquaculture Plan, Draft, National Oceanic and Atmos-
pheric Administration, U.S. Department of Commerce (1980), p.
4.

4. This information was compiled from a variety of sources includ-
ing: J. E. Bardach et. al., Aquaculture the Farming and Hus-
bandry of Freshwater and Marine Organisms (John Wiley & Sons:
1972) 868 p.; O. Kinne (ed.), Marine Ecology, Vol III Part 2
Cultivation (John Wiley & Sons: 1977) 1293 p.; F. W. Bell and
E. R. Canterberry, Aquaculture for the Developing Countries
(Ballinger Publishing Company: 1976) 247 p.; Aquaculture
Development for Hawaii, State Department of Planning and Eco-
nomic Development (1978) 222 p.; Advances in Aquaculture, Pro-
ceedings of the FAO Technical Conference on Aquaculture, Kyoto,
Japan, 1976 (Unpub: 1979), 653 p.

5. Natural Aquaculture Plan, Draft, supra, note 3, pp. 28-66.

6. T. R. Rao, "Enhancement of Natural Populations of Moi (Poly-
dactylus sexfilis) in Hawaii through the release of hatchery-
reared juvenile, a feasibility study of sea ranching," (Hawaii
Institute of Marine Biology, University of Hawaii Tech. Rept.
No. 33, 1977), p. 15.

7. D. Moller, "Recent Developments in Age and Enclosure Aquacul-
ture in Norway," FAO Technical Conference on Aquaculture
(FIR:AQ/Conf/76/R. 20, 1976), 12 p.

8. J. E. Bardach, et. al., Aquaculture, the Farming and Husbandry
of Freshwater and Marine Organisms (John Wiley & Sons, Inc.:
1972) 868 p.

9. M. Fujiya, "Coastal Culture of Yellowtail (Seriola quinquer-
adiata) and Red Sea Bream (Sparus major) in Japan," FAO
Technical Conference on Aquaculture (FIR:AQ/Conf/76/E.53,
1976), 10 p.

10. J. B. Glude, "Oyster Culture, A World Revue," FAO Technical
Conference on Aquaculture (FIR:AQ/Conf/76/R.16, 1976), 11 p.

11. Id., pp. 2-7.

II-13

TECHNOLOGY ASSESSMENTS: AN OVERVIEW II

12. J. E. Hugenin and Guy N. Rothwell, "The Problems, Economic
Potentials and System Design of Large Future Tropical Marine
Fish Cage Systems," Proceedings of the Tenth Annual Meeting
of the World Mariculture Society (Louisiana State University,
1979), pp. 162-181.

13. Id., p. 169.

14. J. E. Bardach, et. al., supra, note 8, pp. 790-814.

15. R. Meixner, "Culture of Pacific Oysters (Crassostrea gigas)
in Containers in German Coastal Waters," FAO Technical Con-
ference on Aquaculture (FIR:AQ/Conf/76/E.28, 1976), 4 p.

16. J. S. Corbin, Aquaculture in Hawaii 1976, (State Department
of Planning and Economic Development: 1976), p. 7.

17. J. M. Grace, ed., Marine Atlas of Hawaii, Bays and Harbors,
Sea Grant Miscellaneous Report (UNIHI-SEA GRANT-MR-74-01:
1974), 241 p.

18. William E. Richards and J. R. Vadus, Ocean Thermal Energy
Conversion: Technology Development, Mar. Tech. Soc. Jour.,
14(1), p. 3.

19. This accomplishment is appropriately described in a cable to
President Carter, dated October 3, 1979, from George R.
Ariyoshi, Governor of the State of Hawaii. Portions of the
text of the cable read as follows:

"I am delighted to send to you the good news that Hawaii has
achieved an historic first in energy production. Today, we
are producing approximately 50,000 watts of electricity almost
directly from sun-heated ocean water in the process called
OTEC, or Ocean Thermal Energy Conversion. This is the first
time this has been done anywhere in a closed-cycle, self-
sustaining OTEC system operating at sea. The electric power
is being generated on a loaned Navy barge one and one-half
miles off Ke-ahole Point on the Island of Hawaii. This is a
joint experimental pilot project of the State of Hawaii,
Lockheed Missiles & Space Co., Inc., Hawaii's Dillingham Cor-
poration, Alfa-Laval Thermal, Inc., and other industrial firms
in cooperation with Hawaii County. No fossil fuels are involved.
The process is exceptionally clean, unlike coal, oil or gas.
The electricity comes from a generator turned by a turbine
powered by the expansion of heated ammonia. The ammonia ex-
pansion and pressurization are caused directly by the "fuel"
which is our sun-heated tropical ocean water. The entire
power needs of the barge and its extensive test system are
being provided by the electricity thus generated. Cold water
from 2,700 feet below the barge condenses the ammonia in a
perpetual cycle of electrical energy production. Mr. President,

II-14

TECHNOLOGY ASSESSMENTS: AN OVERVIEW II

this historic breakthrough means, our scientists and techni-
cians tell us, that the OTEC theory has been proven sound. It
can mean that in the not-too-distant future, cities of 100,000
people can be supplied with all the electricity they need by
giant, at-sea OTEC plants. According to present calculations,
such energy can compete with the cost of fossil fuel energy
resources."

20. State Energy Resources Coordinator, 1979 Annual Report, (De-
partment of Planning and Economic Development, State of Hawaii,
1980), p. 37.

21. Energy product equivalent is defined in P.L. 96-310 as an
energy carrier including but not limited to ammonia, hydrogen,
or molten salts or an energy-intensive commodity, including
but not limited to electrometals, fresh water, or nutrients
for aquaculture.

22. John H. Ryther, Photosynthesis and Fish Production in the Sea,
Science 166, (1969), p. 72.

23. J. H. Ryther, W. M. Dunstan, K. R. Tenore and J. E. Huguenin,
Controlled Eutrophication-Increasing Food Production from the
Sea by Recycling Human Wastes, BioScience, 22:3 (1972), p. 144.

24. Oswald A. Roels, From the Deep Sea: Food, Energy and Fresh-
water, Mech. Eng., June 1980, p. 37.

25. Oswald A. Roels, J. B. Sunderlin and S. Laurence, Bivalve
Molluscan Culture in An Artificial Upwelling System. World
Mariculture Society, Honolulu (1979).

26. Dr. Arlo Fast, personal communication, September 26, 1980,
Hawaii Institute of Marine Biology, University of Hawaii.

27. A Statewide Fish Aggregating System (State Department of Land
and Natural Resources: 1978), 19 p.

28. Id., p. 2.

29. Kenji Ego, personal communication, September 19, 1980, Director,
Division of Fish and Game, Department of Land and Natural
Resources.

30. A Statewide Fish Aggregating System, supra, note 27, pp. 1-3.

31. Kenji Ego, personal communication, September 19, 1980, Direc-
tor, Division of Fish and Game, Department of Land and Natural
Resources.

32. Id.

II-15

SECTION
3

COMMERCIAL DEVELOPMENT III

III. COMMERCIAL DEVELOPMENT OF OCEAN RESOURCES:

CONCERNS, NEEDS AND RECOMMENDATIONS

Mariculture and OTEC are potential new uses of offshore waters
in the State of Hawaii which may or may not reach a point of com-
mercial viability. Since the ocean waters of Hawaii are nutrient
poor, the nutrient rich cold water ("thermal") plume which will be
the effluent waters from OTEC plants may be the necessary component
to allow commercial development of mariculture in Hawaii. And, of
course, commercial development of OTEC would enable Hawaii to fur-
ther its goal of energy self-sufficiency. One controlling factor
in each case is technological advance, which is dependent upon con-
tinuing biological and engineering research and development (R &
D). At both the national and the State level, this R & D has been
and will likely continue to be funded or conducted primarily by
government. The State of Hawaii has become a leader in commercial
aquaculture because it has committed significant funds for research
programs and facilities. The Hawaii State Legislature appropriated
more than $2.6 million for aquaculture and commercial fisheries
projects in 1978, for example, including $1.25 million to establish
a Tropical Aquaculture Center on the island of Oahu's North Shore.1

Actual commercialization, however, will be carried out by the
private sector. This is recognized by both the Hawaii State Legis-
lature and the present State Administration.2 It is thus necessary
to address at the outset how the concerns and needs of those indi-
viduals or corporations who might seek private use of ocean space
for mariculture and OTEC operations should be met, recognizing that
these private needs must to some extent conflict with traditional
public uses of offshore waters. Private use of ocean waters raises
important legal and policy issues. These are examined in some
detail in Sections IV and V of this report. The present section
will only discuss these issues insofar as they relate to questions
of OTEC or mariculture commercialization.

111-1

COMMERCIAL DEVELOPMENT I11(A)

The ocean entrepreneur has four needs which must be met before
commercial development of ocean resources can progress: (1) prop-
erty rights; (2) security of tenure; (3) appropriate government
regulation; and (4) access to capital and reduction of initial
overhead costs. The first two interests need explicit and direct
protection, which can only be granted by ocean leasing legisla-
tion. The latter two interests necessitate changes in existing
laws, or additional related legislation. It must be noted that
some aspects of the problems and needs faced by the private ocean
user are beyond the scope of State control, but the State may in-
fluence the treatment they receive.

The analyses and recommendations which follow draw upon not
only written sources, but also and more importantly upon interviews
and correspondence with business persons, scientists and govern-
ment administrators in Hawaii who are presently concerned about
OTEC and mariculture development, ocean uses, and dispositions of
State Conservation District lands and waters. National authorities
and entrepreneurs from throughout the United States have also con-
tributed their views.

A. PROPERTY RIGHTS

The foremost problem and need of the private entrepreneur is
the establishment and guarantee of property rights. This particu-
larly pertains to mariculture activities. "A mariculture operation
is pointless without rights of ownership and control of the culti-
vated products." 3At present, living ocean resources are consid-
ered part of the corpus of the "public trust" (a concept analyzed
in detail in Section V of this report), and therefore not suscep-
tible to ownership until caught. The common law view is that "the
fish of the sea .. . belong by an absolute title to him who first
succeeds in obtaining possession of them." 4This rule must be
modified by statute to recognize and protect the kind of "posses-
sion" a mariculturist obtains.

111-2

COMMERCIAL DEVELOPMENT III(A)

Mariculture represents a fundamental change in man's use of
the sea. Changes in attitudes, mariculturists argue, must also
occur. "We can no longer afford to think in terms of preserving
every right we have had in the past." 5One commentator has ob-
served:

"Aquaculture is not merely new, it is contrary
to the historical pattern of western life. The
laws governing aquaculture were devised for a
society of hunters and gatherers. They rest on
the assumption that the sea and its natural re-
sources are not private but public property.
For any system of private culture and husbandry
to function the law must create property rights
in the products of that activity. . . . The Law
has long recognized a distinction between feral
and domestic land animals. Yet it makes no
such distinction in the case of marine animals."

ocean leasing legislation should be enacted which specifically
declares such a distinction. Marine plants and animals approved
by the State for culturing, and cultivated within a leased area by
a mariculturist, may legally be recognized as private property.
In contrast to konohiki fisheries legislation (19th century stat-
utes also discussed in detail in Section V) a united declaration
of property rights would not create vested rights to ocean space.
Such vesting could be invalidated upon challenge, as violative of
both the clear intent of Article 95, Hawaii Organic Act, to des-
troy all private ocean fisheries, and the prohibition of the pub-
lic trust doctrine against irreversible alienation of public re-
sources.

While general ownership rights to ocean waters or to natural
living resources found within those waters may not now be granted,
certain specific property rights can be securely established.
AnImal or plant species specifically "bred and fed" within a leased
area can become private property, if other marine plants and ani-
mals found within a leased area, but not approved by the State for
private culturing and harvesting, remain res nullius, the property

III-3

COMMERCIAL DEVELOPMENT III(A)

of "no one" but seizable by anyone. All State regulations concern-
ing the taking of fish and game continue to apply to such non-
private resources. Public access, however, may be made subject to
the right of a mariculturist to conduct operations without undue
interference. By the same token, cultured marine species can be
recognized as private property only so long as confined within a
privately leased area. Any escapement must subject the plants or
animals once more to the general "capture" rule of the common law.

The establishment of property rights over cultured species
would not violate the public trust doctrine. This legal concept
protects the public's interest in common resources. But cultured
species are introduced into leased marine waters; they do not exist
in commercially exploitable quantities beforehand. Therefore, the
mariculturist establishes a new resource in the leased area. t1Mari-
culture is a form of breeding, not fishing, and once the activity
is established, it is not competing with other fishermen." 7The
public trust concept involves much more than this consideration,
of course. Further analysis of the doctrine will be presented in
Section V.

The "added value" justification is not present, however, when
considering fish attracted to fish aggregation devices. Such
devices by themselves do not enhance fish stocks. Where there is
no active husbandry involved, a declaration of exclusive property
rights to fish which gather in the neighborhood of an aggregation
buoy or artificial reef would be legally very questionable. Such
fish remain ferae naturae ("of a wild nature or disposition"), and
by the common law "the ownership of wild animals and fish, not
reduced to actual possession by private persons, is in the people
of the state in their collective sovereign capacity, or in the
state as representing all people." 8In a true mariculture opera-
tion, "the mariculturist is not preventing the fishermen from
exploiting an ocean resource; he is only preventing them from

III-4

COMMERCIAL DEVELOPM ENT III(A)

using a small area and causing incidental consequences of resource-
area concentration." 9The consequences produced by fish aggrega-
tion devices, however, are not incidental to public fishing. The
public trust doctrine, as well as public policy considerations,
must in this situation restrain (1) any assertion of exclusive
ownership by private parties, or (2) a declaration of such owner-
ship in private parties by the State.

if a fish aggregation device were part of a total culturing
system, the fish specifically cultured could be considered animus
revertendi ("having the intention of returning"), and a recogni-
tion of private rights under common law principles could be made;
but only for the species actually husbanded by the mariculturist. 10
Public rights to fish in the vicinity of a fish aggregation device
so used might need to be restricted, but only if the exercise of
such rights would substantially interfere with cultivation and har-
vesting of the marine species for which exclusive property rights
have been declared. However, this would be the exceptional situa-
tion. The State regulates fish aggregation devices presently by
requiring permit approval for placement of the device. Because
these devices usually do not require exclusion of the public, there
is no need to include them in any ocean leasing program at the
present time.

This balancing of public and private rights applies equally
to any type of mariculture operation. A declaration of property
rights would necessarily obligate the State to take measures to
protect those rights. Restrictions upon public access to maricul-
ture sites will be necessary. "All public uses [at a mariculture
site], however, cannot be denied." 11The mariculturist must afford
the public reasonable transit and use prerogatives, even if this
means redesigning a proposed mariculture activity in significant
ways to accommodate public rights.

It must be noted that the recent ruling of the United States
Supreme Court in the "Kuapa Pond" case (Kaiser Aetna et al. v.

I1I-5

COMMERCIAL DEVELOPMENT II1(A)

United States) 12limits the public's broad right of access to nav-
igable waters under federal law. The Court held the "right to
exclude" to be a fundamental element of property rights, more fun-
damental in some instances than the federal navigational servitude
over navigable waters. 13 This decision must be seen in light of
the particular and fairly singular facts of the case, however. At
issue were public access rights to a private marina developed at
private expense over the area of a former fish pond, in Hawaiian
law a private body of water, and originally separated from the open
ocean by a sandbar. Nonetheless, the Court did rule that the fed-
eral Commerce Clause does not require a blanket application of pub-
lic access or use servitudes over navigable waters. Rather, the
Court pointed out that factual inquiries have been made in past
cases of conflict with such servitudes to consider factors such as
"the economic impact of the regulations, its interference with rea-
sonable investment-backed expectations, and the character of the

governmental a to.14The Court declared that such factors have
"particular significance" and in particular cases, such as that of
Kuapa Pond, public rights may be legitimately restricted. This
ruling would in no way prevent the Hawaii State Supreme Court from
asserting broader public access rights to Hawaiian waters on the
basis of the State's right to protect public resources under the
public trust doctrine.

Property rights, if established, must not only be enumerated,
they must also be protected. "It is essential-that title to grow-
ing crops [at sea] be clearly specified and mechanisms be estab-
lished to enforce laws against trespass, interference, theft,
damage, etc." 15Criminal penalties for unauthorized taking -
"poaching" - of cultured species, and for willful interference or
damage to mariculture operations, must be included in any ocean
leasing legislation. The enactment of such penalties is a proper
exercise of State authority to define and protect property rights. 16
Criminal penalties have been enacted in each of the mariculture
laws passed by other states. 17

I1I-6

COMMERCIAL DEVELOPMENT II1(A)

Enforcement of exclusive property rights can present a serious
problem. on land, the rights of lessees and owners against burg-
lary, rustling and other crimes against real property have been
sustained by well organized law enforcement agencies. At sea, no
such enforcement body exists. A recent survey of shellfish aqua-
culturists in the State of Maine showed that only 52 percent of
the ocean lessees were satisfied with the police protection they
were afforded. 18However, a mechanism does already exist in Hawaii
for dealing with this problem--the deputizing of private citizens
as game wardens by the State Department of Land and Natural Re-
sources and utilization of Department of Land and Natural Resources
personnel and enforcement officers. 19One scientist/entrepreneur
suggests "it would be natural to use this existing mechanism to
deputize the farmer [mariculturisti or his employee after appro-
priate instruction, provided that the ocean leasing law contains
ground rules and sets appropriate limits on deputies' powers." 20

Since the cold-water ("thermal") plume will probably be a
valuable resource to the mariculturist, it is important to deter-
mine who has the property rights to it. The facility itself would
obviously be private. Fish populations attracted to the OTEC facil-
ity area due to OTEC's fixed-location status would have to be con-
sidered public, but public access might be restricted if necessary
to protect the OTEC facility, or what is also likely, if necessary
to protect the safety of the public. 21The cold-water plume, how-
ever, would seem to be in the nature of a private resource, as it
exists only because the OTEC facility brings it into being. It is
recommended that use of this resource by others be made the pre-
rogative of the OTEC operator, or at least subject to the approval
of the OTEC operator. Technologically speaking, this should be
so, for two reasons:

(1) Use of the nutrient-rich cold-water plume for maricul-
ture or for any other purpose is likely to be only possible by di-
rect tie-in with the OTEC system of discharge pipes. Apart and
separate from the matter of private property rights to the pipes

III-7

COMMERCIAL DEVELOPMENT III(B)

themselves, the OTEC operator must have control over such arrange-
ments in order to maintain production efficiencies. "Cold, deep
water passed through a mariculture activity and discharged to warm
surface waters might adversely affect the OTEC 'thermal' resource,
that is, warm surface waters could be cooled enough by the mari-
culture water to reduce the electric plant output . . . a one
degree drop in surface temperatures can cut plant power output to
about 88 percent of nominal capacity."22

(2) The OTEC operation must periodically counter biofouling,
and may experience partial or complete shutdowns at any time.23
The OTEC operator should not be held liable for damage to any state-
licensed mariculture or other cold-water plume-dependent activity
as a result of shutdown or counter-biofouling measures, unless the
OTEC operator has fully taken upon himself such liability. This
situation is akin to aquaculture operations utilizing heated water
effluent from conventional on-shore power generating facilities.
There the power company bears no liability for damages caused by
periodic or accidental shutdown of the power plant.24

Given these considerations, it would seem from a resource
management point of view that the cold-water plume should be rec-
ognized as "quasi-private" property. If the State were to declare
this to be its policy, it could (1) allow the OTEC operator to
negotiate any use of the plume by others, and to specify on its
own accord any damage liability it will hold toward a plume-user,
or (2) the State could leave itself free to negotiate any external
use of the plume, with approval by the OTEC operator as one condi-
tion of any use permit. This latter approach finds less precedent,
as well as less favor from OTEC-development companies.25

B. SECURITY OF TENURE

The second fundamental need which ocean leasing legislation
must address is "security of tenure." Unlike the commercial fish-
erman, who invests his capital in boats and fishing equipment which

III-8

COMMERCIAL DEVELOPMENT 111(B)

may be used productively anywhere fish are found, the fixed-loca-
tion private ocean-user must spend considerable time and money
gaining permission to use a specific ocean area which is suitable
for his purposes. 26His production equipment is likely to be very
specialized and his investment fairly difficult to liquidate.
Moreover, given the "pioneering" nature of fixed-location ocean
activities, a considerable time lapse must be anticipated between
activity initiation and success-of-concept demonstration. With
regard to mariculture, the State of Hawaii Department of Planning
and Economic Development estimates that "the commercial demonstra-
tion of an undeveloped species may take from five to eight years
or more to realize." 27

These circumstances dictate that ocean leasing legislation,
to be meaningful, must clearly authorize a state agency to lease
portions of the ocean surface and the vertical water column to
private entrepreneurs, and for periods long enough to allow these
entrepreneurs to realize the benefits of their investment and
work. With regard to place, for both mariculture and OTEC,1 it is
the surface and the water column which are the critical environ-
ments, and legislation must clearly state the intent to allow leas-
ing of these water areas. The legal foundation for such legisla-
tion is detailed in Section V of this report. With regard to time,
private ocean activities should not be handled on a conditional
use or month-to-month basis; leases must be granted to provide
adequate "security of tenure." As with the matt er of declaring
property rights to cultured species, granting of leases for fixed-
location ocean activities would not violate the Hawaii Organic Act
by creating vested rights to ocean space, nor would such leasing
in itself breach the public trust doctrine. However, any leases
granted to private users of public waters would remain subject to
navigational and public trust servitudes, and would be terminable
without a need to pay compensation if such a provision were in-
cluded in the lease. 28

1.11-9

COMMERCIAL DEVELOPMENT 111(B)

It is recommended that the maximum length of an ocean lease
be conditioned upon the nature of the activity and upon the level
of capitalization. Thus, an OTEC lease should be for the longest
term, 25 years, to allow for full amortization of the investment.
At the other end of the scale, a half-acre seaweed culturing lease
might be annually renewable.

it is recommended that experimental and administrative leases
be granted only a five-year maximum lease term, in order to pro-
tect the interest of the State in fully utilizing ocean resources.
The permit process may he less rigorous than for a commercial
lease. The Board may find that in some instances it is not nec-
essary to conduct a public auction for the lease. If an experi-
mental operation is making recognizable progress toward commer-
cialization, these leases might be renewed for one additional ten-
year period. After fifteen years, however, a decision should be
made by the lessee to secure a commercial lease or to abandon the
project and make the site available to other potential entrepre-
neurs.

It is recommended that commercial activities be granted a
maximum 20-year lease term, again in order to promote full resource
utilization. 29A commercial lease should be renewable at the end
of each successive lease period, and should be renegotiated upon
each renewal to guarantee that the public will receive fair com-
pensatory benefits, through lease fees and royalties, for the pri-
vate entrepreneur's use of public resources. 30Absent a finding
that the private marine operation is environmentally unacceptable,
or that the public interest now requires that the area leased be
used for other purposes, the commercial lessee should face no re-
striction upon the number of times his commercial lease can be
renewed. Any commercial lessee should also have the right of
first refusal upon a renegotiated lease.

III-lo

COMMERCIAL DEVELOPMENT 111(B)

There is statutory guidance now to support this approach.
The Board of Land and Natural Resources is directed, in the case
of leases of Conservation District lands, "to determine the mini-
mum tenure necessary to support the intended use or uses and the
necessity for periodic rent openings in long-term leases to assure
the state a fair return.",1

State law presently requires all conservation district leases
to be granted by public auction. 32This creates uncertainties in
tenure which can be dealt with in two ways:

(1) It is recommended that the Legislature amend H.R.S. Sec-
tion 171-58, Minerals and Water Rights, Part 3, Special Disposi-
tions: Sales and Leases Permitted Without Public Auction, or H.R.S.
Section 171-59, "Disposition and Negotiation," to include fixed-
location ocean uses, or specifically mariculture and OTEC uses.
The rationale of Section 171-58 is that leases may be granted with-
out auction when there is a finding and declaration of necessity;
the statute presently pertains only to agricultural and residen-
tial uses. A legislative declaration of a special public interest
in encouraging the development of specific private ocean uses
would justify amending either statute. At present, there is little
likelihood that competitive bidding will occur between potential
private ocean users, given the lack of proven commercial success
of mariculture and OTEC technologies thus far and the relatively
few entrepreneurs in the field. The public auction requirement
may initially be simply unnecessary make-work. If an exemption is
accorded, it could be revoked at a later time, when mature tech-
nology and economic viability have made serious competitive bidding
among ocean space users more likely.

(2) It is recommended that the Legislature provide in ocean
leasing legislation a "sunken cost" clause. This would require
that an entrepreneur who is outbid at public auction, and thus
cannot conduct his approved activity, be reimbursed by the higher
bidder for all expenses incurred in obtaining needed state permits

I11-11

COMMERCIAL DEVELOPMENT I11(C)

prior to the auction. All state permits would then transfer auto-
matically to the higher bidder. The successful bidder should not
be required to reimburse the permit-holder for any operational
expenses unrelated to permit acquisition. Such a "sunken cost"
provision would guarantee if not security, at least "fair play."
The entrepreneur in this field would have a reasonable expectation
that he could carry out his plans, or be reimbursed for his time
and efforts.

C. GOVERNMENT REGULATION

A third need which must be addressed directly by the Legisla-
ture is appropriate government regulation. The Director of the
State Department of Planning and Economic Development has stated:

"[Glovernment regulation is essential to protect
the public and to prevent abuse of public trust
in business enterprise. Such regulation--in
moderation--is good for business as well as the
whole community. But when controls strangle
enthusiasm for an honest profit in an honorable
and environmentally compatible enterprise, there
is something seriously wrong."33

In many other states at present, government regulation is a
serious impediment to the successful development of new water-
related industries. Much has been written detailing the regula-
tory problems encountered by aquaculturists. The National Academy
of Sciences has stated:

"Current constraints on aquaculture development
frequently discourage new initiatives, and . .
unless some of these constraints are overcome,
progress will be further impeded. . . . Con-
straints on orderly development of aquaculture
tend to be political and administrative, rather
than scientific and technological.",34

Aquaculturists themselves mince no words. one says: "With-
out a doubt, developing a fish farm on an estuary, especially in
Oregon, has to be the most closely viewed, scrutinized, investi-
gated, debated and downright spied upon operation imaginable. ..
As for separate permits of last count we have eighteen, and there

111-12

COMMERCIAL DEVELOPMENT 111(C)

are more to go." 35 The situation may become worse. Aquacultur-
ists in California are warned that they "must be prepared to per-
severe in an extremely challenging and difficult regulatory envi-
ronment which is constantly becoming more challenging and diffi-
cult with time." 36The question is asked "why our government
should continue to finance the development of science if govern-
ment is simultaneously going to create major structural constraints
preventing its useful application?" 37

This situation has deterred many potential entrepreneurs, 38
and led others to see a "dismal future" for aquaculture in the
United States. 39This conclusion has been reached as a result of
practical experience with government regulation:

"We probably are the most impacted new promis-
ing technology that has ever existed in terms
of government involvement in our decision-making
and operations. In my particular firm, we have
at least 42 different government agencies and
sub-agencies with which to deal. Between 50 and
70 percent of my time is devoted to ministering
to the affairs of government in place of using
this time in the creative process of making aba-
lone culturing a large-scale reality. This is
an insurmountable burden to p lace upon the pio-
neers of a new technology.*"4

The problem here is not only that the "obstacle course" must
be run. it is also, and more importantly perhaps, that an opera-
tion may be "blown out of the water" at any time. A California
aquaculturist states:

"The permit process is quite lengthy and involves
permits from the Army Corps of Engineers; a Water
Pollution Control Board; the State Public Health
officials; the County Public Health officials;
the State Fish and Game; the San Francisco Bay
Conservation and Development Commission; the
Coastal Commission and on to infinity. Fortu-
nately for the Morgan Oyster Company . . . we
have successfully at this moment obtained such
permits. However, as they are annual permits,
from an operator's point of view you never
quite know which one of the multitude of govern-
mental bodies may for one reasob or another shut
your operation down.",41

III-13

COMMERCIAL DEVELOPMENT III(C)

One analyst studied the aquaculture industry in California
"to determine whether the overhead monetary cost attributable to
the regulatory permit process serves as a major barrier to the
development of coastal aquaculture."42 The analyst examined the
permit acquisition experiences of seven aquaculture firms and
found that costs ranged from $400 to $85,000. The acquisition
43
period ranged from 30 days to seven and one-half years! The
analyst concluded that "while the monetary cost of the [permit]
process is indeed a barrier to the development of aquaculture, it
is not a major one. Rather, the real barriers are the length of
the process, the diversion of managerial energy, and the increased
level of risk."44

The question is whether this is necessary. In Hawaii, a
serious and successful effort has been made to streamline the reg-
ulatory process with regard to aquaculture. The state has been
selected by the President's Joint Subcommittee on Aquaculture as
one of ten states to be used as case studies to determine how
45
federal regulations may also be streamlined. Hawaii Governor
George Ariyoshi has stated: "Red tape is often the result of
society's laudable desire to protect its citizens and environment.
We see a crime committed against the environment, and we pass
strict laws or regulations to prevent similar crimes. In the
process, we handcuff desirable activities." 46 Hawaii has revamped
its regulatory system to loosen these handcuffs. Mariculturists
recognize the importance of the favorable institutional climate
47
which has been created. The contrast between the situation in
Hawaii and elsewhere is in some cases startling. An aquaculturist
in Hawaii might have to obtain at worst 15 permits; a salmon oper-
ation in Alaska, on the other hand, would require 120 permits.48
In short, the State of Hawaii has implemented a sound program of
regulation which is tailored to the specific circumstance. This
is a policy clearly needed and one which has already brought aqua-
culturists and the State great benefit.49

III-14

COMMERCIAL DEVELOPMENT III(C)

Authority to approve or deny Conservation District uses now
rests with the State Board of Land and Natural Resources (BLNR),
and is exercised through the Conservation District Use Permit (CDUP)
50
procedure. Although there is a question as to whether the State
Department of Land and Natural Resources, the State Department of
Agriculture, or neither, should be designated the lead agency for
51
aquaculture development, in the matter of licensing fixed-loca-
tion ocean uses, it is the position of this report that there is
no reason to establish either a new permit procedure or a new reg-
ulatory agency at the state level. It is recommended that the
Legislature explicitly delegate to the Board of Land and Natural
Resources the responsibility to evaluate and approve or deny appli-
cations for private use of ocean space, applying the existing CDUP
procedure.

Guidelines for BLNR to act upon in considering ocean leasing
applications must be adopted in accordance with the Hawaii State
Constitution (Article 11, Section 6). If new ocean activities are
to develop, these guidelines must be responsive to commercial via-
bility, must stress realistic environmental goals, and must direct
the Board to find ways to support new commercial developments while
maintaining protections of the ocean environment and public access
to ocean resources. While the CDUP seems appropriate as the pro-
cedure to manage future ocean development, a comprehensive view-
point should be incorporated into the evaluation process which
would lead to consideration of environmental impacts in a broad
context of public gains and losses.

A step in this direction has been taken by BLNR, with the
approval in February 1980 of a CDUP for Brewer Chemical Company to
conduct research on eucheuma seaweed farming in the Honolulu Air-
port lagoon. The Board attached nineteen conditions on the permit,
the most important of which concerned responsibility for eradica-
tion of any escaped strains, and elimination and restoration of
the site should the project be terminated.52

III-15

COMMERCIAL DEVELOPMENT 111(C)

It is recommended that responsible, rather than absolute or
"zero-risk," safeguards of the public interest be pursued. For
example, "requiring the fish farmer to prove beyond doubt that
there will be no adverse effect will stifle development of mani-
culture." 53Mariculture activities are necessarily intensive;
there will be significant environmental effect within and near the
area in which the activity is being conducted. 54An unqualified
"no significant adverse effect" guideline would effectively stop

all development. 55it is recommended that judgments of potential
environmental impact should rather center upon an "acceptable-
unacceptable" determination, based on appropriate criteria devel-
oped by the regulating agencies.

One commentator has cogently stated the basis for such an
approach:

"While eliminating all risk is hypothetically
possible in certain circumstances for the indi-
vidual, it is almost always too expensive for
the incremental return for society. Clean water
and clean air standards represent far less than
total solutions. In improving air quality or
water quality, the initial increments are least
expensive to purchase, purchasing the final in-
crement to gain total purity may be impossible.
. . .The risk-free society is not a realistic
consideration, and attempts by government to
eliminate risk may ultimately entail much greater
cost than are felt to be acceptable.

"Government, then, is faced with the complex di-
lemma of first determining which risks to society
require government intervention, and second, what
level of risk is acceptable.",56

The State of Hawaii should continue its efforts to make the
regulatory process work to everyone' s interest.

The establishment of an ocean resources liaison officer to
inform prospective applicants of the procedures they will have to
follow and requirements they will have to meet and to coordinate
state and federal permit approvals, could provide an important

111-16

COMMERCIAL DEVELOPMENT III (C)

complement for the mariculturist to the new Hawaii streamlined
procedures. However, even in Hawaii there are ntumerous agencies
and regulations to be dealt with. The entrepreneur needs assis-
tance to counterbalance this array of governmental demands. First,
he needs counseling. One aquaculturist has stated: "An added
frustration to the imposing list of needed permits is the frequent
lack of assistance from the regulating agency in helping with your
problems. They set rigid rules or in some cases sliding rules
that you cannot get hold of, and then serve as judge and jury
[If] there is no place to go for counseling in the system[,]
you are on your own to sink or swim. The newcomer is hopelessly
lost."5

Secondly, the entrepreneur needs assistance in coordinating
state and federal permit applications and approval procedures.
Regulations of one agency may conflict with those of another; one
agency may wait for another to make the first or final move; one
agency may be sitting on an application, creating an approval
bottleneck. These situations occur all too often, to the detri-
ment of both the public and the private entrepreneur's interest. 58

The State of Hawaii has again moved towards remedying this
problem. Hawaii has established an Aquaculture Development Pro-
gram housed presently within the State Department of Planning and
Economic Development. Hawaii has also adopted joint hearing and
approval process for the CDUP and State Department of Transporta-
tion's "Permit for Work within Shore and Shorewaters." 59The
broader possibilities for commercial developments on or in state
marine waters suggest the need to create and staff a parallel liai-
son officer who would seek to make the regulatory framework which
exists function effectively, to educate public servants concerning
new ocean uses, and to advise entrepreneurs of defects or problem
areas in their plans and to direct them through the permit acqui-
sition process.

III-17

COMMERCIAL DEVELOPMENT 111(C)

If an applicant could obtain the assistance of an ocean re-
sources liaison officer in coordinating the regulatory requirements,
it would minimize delays as well as both agency and entrepreneural
time spent on paperwork. Each agency would retain its veto power
over any proposed activity, while the opportunity for informal
negotiation and activity modification to meet agency concerns would
be increased. Regulating agencies would not work in isolation and
an "acceptable-unacceptable" determination on each proposed activ-
ity could be reached based on a comprehensive perspective of the
project's potential costs and benefits. 60

The interface between state and county and state and federal
agencies also needs special attention. In particular, it is rec-
ommnended that the State review federal regulations governing the
importation of non-native species. Local entrepreneurs believe
the aquaculture and mariculture industries will be largely built
upon non-native species. 6

Federal regulations are here the primary inhibitors for cer-
tain species, though state procedures might also be streamlined,
and more consideration should be given, as recommended by DPED,
to "economic and social realities as well as environmental impli-
cations." 62 Thus, the present situation with regard to the impor-
tation of non-indigenous species needs to be reviewed to insure
that native species are adequately protected and to allow reason-
able and safe introductions of non-indigenous species for maricul-
ture purposes. Federal regulations which contain a blanket pro-
hibition of importation of non-native species may not recognize
the unique situation of Hawaii which is often different from the
mainland.

Federal restrictions in this area are directed to conditions
in the continental United States and ignore Hawaii's "mid-Pacific
insular nature, small size, and limited endemic fresh water and
brackish water biota . . . [federal regulations] place the State
in a clearly unfair position." ,63 it is recommended that Federal

I11-18

COMMERCIAL DEVELOPMENT 111(C)

regulations be reviewed to determine if an effective variance pro-
cedure could be adopted that would allow for importation of corn-
rmercially viable non-indigenous species absent a showing of a leg-
itimate risk to the local environment. Certain State procedures
may also cause problems for the entrepreneur. For instance the
burden of gathering biological data is on the applicant, which, in
some circumstances, can be overwhelming. 64It is recommended that
this requirement be reviewed and that the State continue its own
research in this area to develop impartial data. This is but one
example of a state-federal problem area which might be productively
approached by an ocean resources liaison officer.

it is recommended that the establishment of such an ocean
resources liaison officer be considered at the present time in
conjunction with the adoption of ocean leasing legislation. A
liaison officer might be located within the lead agency chosen for
development-regulatory purposes, or alternatively it might be
located within DPED, since it would have no regulatory functions.
The development of a master application procedure needs further
study.

One further aspect of government regulation which has great
practical consequences is the Environmental Assessment (EA)/Envi-
ronmental Impact Statement (EIS) requirement. The question here
is whether all costs of the necessary environmental investigation
should be borne by the permit applicant. 65

Here again a liaison officer could serve to expedite the flow
of information and services. There is also the concern to allow
the small-scale operator into the field, particularly in the area
of seaweed cultivation. Provision should be made in such cases to
allow agency discretion to conduct environmental surveys and to
determine what portion of the costs of such services should be
billed to the applicant.

Another way in which the State could encourage the under-
capitalized entrepreneur to engage in mariculture operations would

I11-19

COMMERCIAL DEVELOPMENT III (D)

be through mariculture parks. The Board of Land and Natural Re-
sources would be empowered to develop, on behalf of the State or
county, in partnership with others, state marine waters as a mani-
culture operation complex. Individual entrepreneurs could combine
and concentrate their resources and capital investment in one area
so as to achieve production and distribution economies. Presumably
maniculture parks would enable those who might not qualify for
traditional financing or who lack sufficient capital to get started
in mariculture operations. The State has begun to institute an
analogous management scheme in the form of agricultural parks. 66

D. FINANCING/INSURANCE

Commercial development of offshore resources is inhibited by
two further major problems: (1) access to capital and (2) high
insurance premiums. Again, these problems pertain primarily to
mariculture activities. Financing of OTEC is concentrated upon
one or a few ventures receiving direct government subsidies.

For the mariculturist, both the financing and the insurance
problems stem from the high risk, "pioneering" nature of all poten-
tial offshore ventures. Mariculture entrepreneurs find it diffi-
cult to borrow money, obtain insurance, or pay extremely high in-
surance premiums. The consensus among such entrepreneurs is that
without supportive government action in this area no industry can
develop. One mariculturist has stated: "The principal constraint
to the development of aquaculture in the United States is an array
of federal policy decisions that are preventing the formation of
risk-capital and blocking its flow into all forms of innovative
small bsnse.67The U.S. Congress has taken note of the prob-
lem: "Individuals or small companies wishing to enter the field
of aquaculture have generally been unable to obtain necessary fi-
nancing in the private sector." 68

While financing is not readily available to innovators, it is
these individuals and companies upon whom the future success of
mariculture depends. The trend currently apparent in the private

III-20

COMMERCIAL DEVELOPMENT III(D)

sector is for large companies "to apply their reduced research
efforts to the improvement of existing products in existing markets
where the risks are easily defined and where the pay-off of invest-
ment is a shorter distance into the future. This phenomena of
large corporation hesitancy to enter new fields clearly exists in
aquaculture where, with few exceptions, large companies are unwill-
ing to pioneer this new technology but are, instead, waiting for
individuals and their small businesses to pioneer their technolo-
gies and establish profitability before the large companies acquire
the small pioneers. ,69

There is clear justification for government encouragement of
innovative industries. Small innovative businesses play a key role
in stimulating economic growth. A recent M.I.T. study compared
employment growth rates of representative mature companies, inno-
vative companies and young high-technology companies between 1969
and 1974. The M.I.T. study found:

"During the five-year period the six mature com-
panies with combined sales of $36 billion in 1974
experienced a net gain of only 25,000 jobs,
whereas the five young, high-technology companies
with combined sales of only $857 million had a
net increase in employment of almost 35,000 jobs.
The five innovative companies with combined sales
of $21 billion during the same period created
106,000 net jobs."70

We are obviously not talking about "'Ma and Pa" operations.
While there is a potential particularly in seaweed cultivation for
very small-scale commercial enterprises, generally speaking, mani-
culture activities will be pioneered by entrepreneurs with minimum
investments in the neighborhood of $250,000. 71 Past encouragement
of small-scale operations by agencies or institutions to go into
mariculture with little or no capital reserve usually leads to
potential difficulties resulting in failure. It is recommended
that the present State Aquaculture Loan Program be amended so that
potential mariculturists can qualify for the program. 7

III-21

COMMERCIAL DEVELOPMENT III(D)

Government should concentrate its attention on the needs of
the viable yet innovative small to mid-sized company. Another com-
mentator warns:

"The prospective for the market structure of
coastal aquaculture in California today looks
very much like the market structure of agricul-
ture today. . . . The only way to ensure com-
petition is to support small business. Unfor-
tunately, unless proponents of aquaculture are
willing to commit themselves to . . . creating
ways to provide aquaculturists with capital to
begin, expand, and operate their ventures,
aquaculture will one day be known as 'aqua-
business.,,,73

The result will be delay in development, and "higher prices for
food of poorer quality."74

The passage of the National Aquaculture Act of 1980 demon-
strates some government recognition of this problem. However, the
actual response falls very short of remedying the problem with
direct federal action. Federal loan programs continue, but are
not enlarged or given new mandates. Neither the Farmers Home Ad-
ministration nor the Farm Credit System of the federal Department
of Agriculture has been or are likely to be of much assistance to
the first generation of mariculturists. Both programs limit their
financing to "established and proven aquatic ventures."75

At the state level, Hawaii has initiated its own aquaculture
loan program, whose funding is likely to be increased by the 1981
76
State Legislature. However, the statutory definition of "aqua-
culture" presently used for this program does not include maricul-
ture operations. "Aquaculture" is defined as "the production of
aquatic plant and animal life for food and fiber within the ponds
and other bodies of water that are within the real property for
which real property taxes are assessed and paid by the owner or
producer." (H.R.S. Section 219-2). It is recommended that this
definition be revised to qualify state-licensed offshore operations
conducted within leased ocean areas.

III-22

COMMERCIAL DEVELOPMENT III(D)

The Legislature should also consider a State-backed maricul-
ture insurance program to mitigate the casualty risks faced by
mariculturists. Such a program "would be of immeasurable help to
mariculture."77 The mariculturist is exposed to unpredictable
casualty risks to his equipment, his personnel and his stock. In-
surance is obtainable but the premiums are very high. Maricul-
turists suggest this is due to the present lack of actuarial data,
and that with experience, insurance rates will adjust to match
79
actual losses. An insurance underwriter states, however: "We
have behind us nearly seven years of practical experience in under-
writing the risks to stocks of all species of aquatic creatures.
� . . The risks in aquaculture demand fairly substantial insurance
premiums to cover them."80 This suggests that premiums may not
fall appreciably in the future, unless new technology and improved
techniques of disease control lessen risks of loss.

It is recommended that the State take a very large step toward
commercialization of ocean farming by establishing a program (1)
to subsidize mariculture insurance premiums or (2) to offer crop/
liability insurance of its own, either in place of or as a supple-
ment to privately available insurance. The insurance industry it-
self prefers the first approach. A spokesman for a major aquatic
insurance-provider argues that direct government coverage of mari-
culture insurance needs would "usurp the function of the private
insurance industry. . . . [Direct government insurance] is both
expensive and tends . . . to support the inefficient at the expense
of the efficient."81 Either program, if adopted, should be imple-
mented as a temporary measure only, to aid the first generation
of mariculturists.

III-23

COMMERCIAL DEVELOPMENT 111(E)

leasing of public lands is sound--annual rental fee supplemented
by royalties on gross income. The need of the mariculturist,
given the lengthy delay which must be expected between operational
inception and break-even point, is for the major emphasis to be
placed on royalties. It is recommended that base rents for ocean
leases initially be set at low or even nominal levels, with per-
centage fees to be paid upon gross receipts or gross productivity.
Percentage fees might increase if an enterprise matures economic-
ally. This approach places the State in partnership with the mani-
cuiturist and fairly distributes both the risks and the potential
gains. Such a policy is "the best way to maximize public benefit
while avoiding undue burden on the [ocean) farmer." 82

Another approach might be for the State to grant an initial,
start-up lease without charging fees or royalties. Instead the
State could require the mariculturist to allow the State unlimited
access to the operation and the technical information relied upon
in the operation for State research. This arrangement would fur-
nish the State with a research facility at no cost to the taxpayer
and at the same time assist the mariculturist in reducing his ini-
tial costs. The State presently has a similar arrangement to sup-
ply larvae to aquaculturists in exchange for State research oppor-
tunities. 83

E. CONCLUSION

The needs of the private ocean entrepreneur which can be ad-
dressed by State legislation are both fundamental and clearly appa-
rent. These needs are the concern primarily of the potential
mariculture entrepreneur, for whom competition, acceptance of risk,
regulatory rules, financing and individual persistence will all
play critical roles. No one takes lightly the monumental obsta-
cles which block the near-term commercialization of mariculture in
Hawaii. If the private sector is to be presented an opportunity
to apply its ingenuity and perseverance to the difficult task of
commercial development of offshore resources, the legal, regulatory
and financial framework in which this development is to occur must

III-24

COMMERCIAL DEVELOPMENT III CE)

be created. Experience will point out mistakes in detail. Balanced
against such risks of mistake is the prospect that ocean leasing
may bring far reaching benefits to the private sector, the public
and ultimately the protein-poor and energy-poor populations of the
world.

The State Legislature and the present State Administration
have already begun the work of shaping an appropriate institutional
and legal framework to support the development of mariculture in
Hawaii. In continuing this task, the words of one mainland observer
are worth noting:

"There is no question in my mind that Hawaii
must become intensively self-sufficient in the
next 20 years. This will take concerted ef-
forts in comprehensive planning and infusion
of private and public funds to develop new
food and energy resources in and for Hawaii.
Consequently, the planning that you do today
should be the best."84

III-25

COMMERCIAL DEVELOPMENT III

FOOTNOTES

1. Richard Kawakami, Chairman, House Committee on Water Land
Use Development and Hawaiian Homes," Developing Isle Aquacul-
ture," Honolulu Star-Bulletin, May 4, 1978.

2. Kawakami, supra, note 1, states: "It is our [the Legisla-
ture's] belief that government's present role should be to
promote research and development and provide support services
to private industry. . . Once research efforts have deter-
mined propagation potential of certain species in Hawaii's
environment, the actual commercial production and practical
application should be left to private industry." Hawaii
Governor George Ariyoshi has summarized the Administration
position by stating, "In Hawaii, aquaculture has clearly been
given the green light." "Red Tape Versus Green Light," in
William Brewer, Permits and Environmental Requirements for
Aquaculture in Hawaii, State Department of Planning and
Economic Development (Revised 1980), p. iii.

3. C. C. Hanson, et. al., "Legal and Political Perspectives on
Open Sea Mariculture," in Open Sea Mariculture: Perspectives,
Problems, and Prospects, Joe Hanson, ed. (Dowden, Hutchenson
& Ross: 1974), p. 39.

4. J. W. Salmond, Jurisprudence, 10th ed., G. L. Williams, ed.
(Sweet and Maxwell, Ltd., London: 1947), cited in Hanson,
supra, note 3, p. 40.

5. Paul Bente, Jr., "Keynote Address: Mariculture on the Move,"
Proceedings of the First Annual Meeting of the World Maricul-
ture Society (Louisiana State University, 1970), p. 24.

6. Gerald Bowden, "Marine Aquaculture in California: An Over-
view," unpublished paper (1977), p. 13.

7. Thomas Kane, Aquaculture and the Law, University of Miami
Sea Grant Program (1970), p. 65.

8. Graves v. Dunlop et. al., 87 Wash. 648, 152 Pac. Rptr. 532
(1915). [Emphasis added]

9. Kane, supra, note 7, p. 65.

10. See Hanson, supra, note 3, for full discussion of common law
ferae naturae and animus revertendi concepts, pp. 39-48.

11. Robert Hendry, "The Florida Mariculture Law," in Proceedings
of the First Annual Workshop, World Mariculture Society
(Louisiana State University, 1970), p. 48.

III-26

COMMERCIAL DEVELOPMENT III

12. 444 U.S. 164 (1979).

13. Id., at 179-180. The Kuapa Pond case involved a question of
federal law, the application of the federal navigational ser-
vitude based on the Commerce Clause of the United States Con-
stitution. The ruling restricted only the use of this federal
prerogative. A collateral attack by the State of Hawaii or
by a private party based on the public trust doctrine, as a
question of state law, is still possible.

14. Id., at 175.

15. John Glude, author of the NOAA Aquaculture Plan (1977), per-
sonal communication, July 30, 1980.

16. In Robinson v. Ariyoshi, 441 F. Supp. 559 (1977), the federal
District Court reversed on due process grounds the ruling of
the Hawaii State Supreme Court in McBryde Sugar Co. v.
Robinson, 54 Haw. 174, 504 P. 2d 1330 (1973) and 55 Haw. 260,
517 P. 2d 26 (1973), which had awarded surface water rights
to the State; however, the court acknowledged that it is
"axiomatic that the law of real property is left to the
states to develop and administer." Cited in Robert Kamins,
"Ownership of Geothermal Resources in Hawaii, 1 University
of Hawaii Law Review (1979), p. 82, n. 95, who argues that
this ruling recognizes one basis for the State of Hawaii to
claim ownership and control over another disputed natural
resource, geothermal energy.

17. See survey of state ocean leasing laws, Appendix A of this
report.

18. John R. Moring, Maine Cooperative Fishery Research Unit, Uni-
versity of Maine, personal communication, July 23, 1980.

19. H.R.S. Chapter 199, "Conservation and Resources Enforcement
Program."

20. Guy Rothwell, Oceanic Institute, Hawaii, personal communica-
tion, August 19, 1980.

21. Roger Mann, Woods Hole Oceanographic Institute, Maine, warns
that "OTEC's large enough to generate useful power may pre-
sent considerable mooring problems in that pumping so much
water they are liable to spin on their own axis (Coriolis
force)." Personal communication, August 4, 1980. Factors
such as this may make it necessary to restrict access because
of navigational hazards and also matters of liability which
arise therefrom.

22. George W. Phillips, Jr., Vice President Energy Systems, Glo-
bal Marine Development Inc., systems integration contractor
for OTEC-1 vessel, personal communication, July 22, 1980.

III-27

COMMERCIAL DEVELOPMENT III

23. id. Phillips continues, "some means will be necessary to keep
heat exchanger surfaces relatively clean. There are three
possible ways to do this: Periodic scrubbing with some abra-
sive material (brush, sponge rubber ball, or slurry); periodic
or continuous injection of a biocide (chlorine, bromine, hot
water); and coating surfaces with anti-foulants (copper,
organo-pin, arsenic, mercury). Some combinations of all three
methods, or two of the three may also be used. Clearly, the
effluent from such cleaning activities could affect the mani-
culture operation. Further, OTEC uses various metals in its
construction. Some may be dissolved in extremely small con-
centrations in the effluent. These metallic ions could also
affect the mariculture operation adversely.

"So instead of a nice synergistic activity, we may see a con-
flict between OTEC operations and mariculture activities.
Therefore, any leasing criteria should consider the possibil-
ity of interference between the different activities."

24. Charles Jagoe, et al., "Commercial Aquaculture of Fishes in
Maine," Migratory Fish Research Institute, University of Maine
(1980), unpublished, pp. 2-5, describes one such arrangement
in Maine.

25. California Marine Associates (CMA) and the Atlantic Richfield
Company (ARCO), for example, negotiated in 1976 the use of
ARCO's oil platform, "Holly" for research and development of
an offshore abalone grow-out operation. This program has
been funded by ARCO, with CMA carrying out the research.
Hugh Staton, General Partner, CMA, personal communication,
May 28, 1980. This provides an analogue to the OTEC situa-
tion in that the resource used by the mariculturist remains
under the control of the resource provider, ARCO. With re-
gard to potential OTEC developers, the General Electric Com-
pany, for one, feels "that the optimal approach to use of
the nutrient rich deep ocean water would be to combine the
ocean farming and OTEC technologies. The GE approach to OTEC
in the near term is to mount the power plant on a jacket
(Texas tower) to minimize the cable, cold water pipe and
floating plant interface concerns." M. G. Olmstead, Program
Manager, OTEC, Advanced Energy Systems, Projects Engineering
Operations, General Electric Company, personal communication,
May 21, 1980. A mariculturist may seek use of the OTEC
jacket as well as the OTEC-upwelled water. Matters are sim-
plified if the OTEC operator controls both resources.

26. Rothwell, supra, note 20, states: "Just as on land, there
are ocean areas adjacent to the Islands which will prove more
favorable to ocean farming than others. Certain compensations
of bottom depth and topography, current velocity maxima, in-
tensity of wind and ocean swell, and proximity to harbors will
make some areas easier to farm than others, just as some par-
cels of arable land are more arable than others."~

III-28

COMMERCIAL DEVELOPMENT III

27. Aquaculture Development for Hawaii, State of Hawaii Department
of Planning and Economic Development (1978), p. 14.

28. All property rights below high-water mark are held at the dis-
cretion of Congress. In United States v. Willow River, 324
U.S. 499 (1945), the U.S. Supreme Court stated that proprie-
tary and usufructary interests in navigable waters are mere
privileges, "permissible so long as compatible with navigation
interests." (Id. at 509) Such interests are not "protected
by law when . . . [they become] inconsistent with plans autho-
rized by Congress for improvement of navigation." (Id.)
Leighton Leighty, "The Source and Scope of Public and Private
Rights in Navigable Waters," V Land and Water Law Review (1970),
p. 431, states the meaning of this ruling: "Since there is
no 'property,' nothing is 'taken.' Hence no compensation is
required."

Public trust servitudes are discussed further in Section V(D)
of this report. See especially discussion of Boone v.
Kingsbury, on the right of the state to remove any structure
in navigable waters, and State of Hawaii v. Texaco, on State's
capacity to terminate leases for exclusive use of space or
facilities located within public trust resource areas. The
United States Supreme Court ruling in Kaiser Aetna discussed,
supra, notes 12-14 and accompanying text, apparently limits
the federal "no compensation" rule, but state controls over
activities within state waters are not affected.

29. Colin Nash, formerly of the Oceanic Institute, Hawaii, now
with Kramer, Chin & Mays, Inc., a State of Washington consult-
ing firm, observes: "I think Hawaii must lease its protected
offshore areas carefully for aquaculture and prevent the owner-
ship of a permit becoming a permanent asset of the develop-
ment company with the state having little or no recourse over
the company's liability for negligence. For example, I think
the permit processes for the ocean ranching of salmonids in
the Pacific Northwest and the territorial leases for the
practice of cage culture in the Pacific Northwest leave much
to be desired. This is a result of state agencies acting
too generously with entrepreneurs and companies that desired
quick and long-lasting agreements to their requests for state
support of their aquaculture ventures, otherwise feigning to
go elsewhere." Personal communication, July 1, 1980.

30. The validity of this "trade-off" has been recognized at law.
In Brusco Towboat Co. et al. v. State of Oregon, Or. App. 567
P. 2d 1037 (1977), Aff. as Mod., Or. 589 P. 2d 712 (1978), the
Oregon Court of Appeals stated, at 1045, "The payment of com-
pensation serves the public interest by increasing the common
wealth. Thus, through such compensation, the public derives
benefit from leased submerged and submersible lands although
it gives away their direct use."

III-29

COMMERCIAL DEVELOPMENT III

31. H.R.S. Section 171-33(7).

32. H.R.S. Section 171-32. See H.R.S. Chapter 171, Part III.
"Special Dispositions: Sales and Leases Permitted without
Public Auction."

33. Hideto Kono, Director, State of Hawaii Department of Planning
and Economic Development, "Foreword," Permits and Environ-
mental Requirements for Aquaculture in Hawaii, supra, note
2, p. ivo

34. Aquaculture in the United States: Constraints and Opportuni-
ties, National Academy of Sciences (1978), p. 1.

35. John Donaldson, "On Becoming a Mariculturist," in Northwest
Mariculture Laws, Oregon State University Sea Grant College
Program (1975), p. 8. Donaldson notes sardonically, p. 9:
"My last agency count was two city departments, four county
groups, eight state agencies and four federal entities, each
with the power to allow or disallow what you had in mind to
do. That is sixteen unanimous yes votes. It is very much
like being voted into a secret fraternity, one black ball
and you are out."

36. Lewis Feldman, Effects of the Costs Imposed by the Regulatory
Permit Process on California's Coastal Aquaculture Industry,
Center for Coastal Marine Studies, University of California -
Santa Cruz (1978), p. 26.

37. George Lockwood, "Some Causes and Consequences of Declining
Innovation," An Address to the Third Annual Colloqium on Re-
search and Development Policy, American Association for the
Advancement of Science (June 21, 1978), p. 2.

38. Glude, supra, note 15, states: "Many potential fish farmers
have given up rather than face the complication, challenges
and long delays in getting numerous permits and licenses."

39. George Lockwood, "The Outlook for Mariculture in the United
States," An Address to the World Mariculture Society, Honolulu,
Hawaii, January 23, 1979, p. 2. Dr. Edward Scura, President,
Aquatic Farms, Ltd., of Hawaii echoes this view. Personal
interview, May, 1980.

40. Lockwood, supra, note 37, p. 2.

41. Robert L. Cranmer, Manager, Morgan Oyster Company, San Mateo,
California, personal communication, May 30, 1980.

42. Feldman, supra, note 36, p. 80.

43. Id., pp. 78-79.

III-30

COMMERCIAL DEVELOPMENT III

44. Id., p. 80.

45. Permits and Environmental Requirements for Aquaculture in
Hawaii, supra, note 2, p. vi.

46. Id., p. iii.

47. Reporting George Lockwood's speech before the World Maricul-
ture Society, Honolulu Advertiser reporter Barbara Hastings
stated, "Hawaii's encouragement of aquaculture, on both the
state and county levels, may make it the only state to spawn
a diverse and viable fishfarming industry, according to a
Mainland aquaculturist." Honolulu Advertiser, "Isle Support
for Fishfarm Growth Cited," January 24, 1979.

48. Quoting the Honolulu Advertiser, Id.: "Richard Gibson, now
with Amfac, but who headed the state's efforts to develop an
aquaculture plan, explained why 'Hawaii is light years ahead
in terms of planning and streamlining' the permit require-
ments.

"Right now, according to Gibson, an applicant for an aquafarm
in Hawaii could need as few as a single permit, or as many as
15 'under the worst of circumstances.'

"In Alaska, on the other hand, it takes about 120 permits to
open a salmon farm, according to Curt Kerns of the University
of Alaska. 'Any one of the requirements are reasonable,' he
added, 'but put all together, they're prohibitive.'"

49. In contrast, Bowden, supra, note 6, p. 6 describes the present
regulatory system in California as "a mosaic laid down with-
out a pattern." Elsewhere Bowden states, "For this reason
many of these administrative programs (and all of them in
aggregate), have an unforeseen, unintended, and undesirable
effect on the development of an aquaculture industry."
Bowden, Aquaculture Law and Policy in California, in press,
p. 18.

50. See Section VI of this report.

51. The State Senate has twice passed legislation designating
the Department of Agriculture as lead agency. The Ariyoshi
Administration supports the Department of Land and Natural
Resources as lead agency. A compromise is in effect at
present, with no designated lead agency. Harry Whitten,
"Aquaculture to Rival Tourism, Yim Predicts," Honolulu Star-
Bulletin, March 13, 1980, p. E-4.

52. Honolulu Star Bulletin, "Land Panel Okays Seaweed Research"
February 9, 1980. Gail Ishiyama, "Formulating a Mariculture

III-31

COMMERCIAL DEVELOPMENT III

Policy for Hawaii: The Submerged Lands Leasing Issues," un-
published Master's Thesis, University of Washington (1980),
pp. 45-50, discusses the Board's treatment of all Conserva-
tion District Use Applications for mariculture activities.
The Brewer application has been the only application approved
by the Board to date.

53. Glude, supra, note 15.

54. Rothwell, supra, note 20, states: "By analogy to cattle f arm-
ing, sea farming will resemble a feed lot fattening operation
rather than, say, pasture grazing. . . . Annual introduction
of tens or hundreds of tons of feed per acre, coupled with
the shading and current-diverting effects of enclosures, will
significantly nutrify the seawater passing through the farm
and may drastically alter the benthic environment below and
down-current from the farming site. Benthic communities will
be strongly modified and whole new vertebrate and invertebrate
species will be recruited to the farm environs, resulting in
a much richer and much changed biota from what existed before."

55. Rothwell, Id., suggests that guidelines contain specific lan-
guage which accepts environmental change as an integral conse-
quence of ocean farming. "If this is not done, it would be
virtually impossible to induce any informed entrepreneur to
operate within current environmental ground rules."

56. Jeffrey Zinn, "Energy in the Coastal Zone: A Question of
Risk," Coastal Zone Management Journal (Vol. 7, No. 2-3-4,
1980), P. 129.

57. Donaldson, supra, note 35, p. 9.

58. Donaldson, Id., points out a classic example of conflicting
regulations: "Have you ever tried to pour a concrete floor
in a food processing building? FDA says make it smooth so
it can be cleaned. The safety people say-make it rough so
the workers won't fall down."

An important example of agency conflict creating a serious
bottleneck is cited by Bowden, "Marine Aquaculture in Cali-
fornia: An Overview," supra, note 6, p. 11. The California
State Department of Fish and Game is mandated to enhance and
replenish populations of aquatic animals. The Department
encourages aquaculture as an aid to achieve this goal. At
the same time, the State Health Department wants no one to
eat contaminated shellfish. Each goal is undebatably a pub-
lic good. However, in practice, things have gone awry. "In
order to advance this goal the Health Department requires
shellfish growing waters to be certified as safe by its staff.
Unfortunately the Health Department lacks the necessary staff

III-32

COMMERC IAL DEVELOPMENT III

to test all but a few potential growing sites. And since
this certification has not been delegated to another depart-
ment, such as Fish and Game which regulates the actual grow-
ing of shellfish, few new growing areas have been tested in
recent years. The result is that the policy of fostering
aquaculture is being frustrated by the Health Department's
water certification policy." Id.

59. The federal government has also begun the process of combined
or joint agency action. The Federal Deepwater Port Act of
1975 provides the basic model. "The Coast Guard is the lead
agency for granting a license to develop a deepwater port
beyond U.S. territorial waters; it is mandated to solicit and
receive the views of all other agencies with respect to appli-
cations for a deepwater port and to prepare the environmental
impact statement." Aquaculture in the United States, supra,
note 34, p. 92.

The 1978 Amendments to the Outer Continental Shelf Lands Act
and the presently enacted OTEC bill follow this model. "Under
the 1978 Amendments, primary responsibility for OCS supervi-
sion is given to the Secretary of the Interior, who is given
increased responsibility to assure coordinated federal action
at all stages in the OCS process . . . Permits, licenses,
and leasing requirements are to be coordinated to facilitate
"one-stop" shopping by those involved in OCS activities."
John Murphy, "OCS Development: A New Law and A New Begin-
ning," Coastal Zone Management Journal (Vol. 7, No. 2-3-4,
1980), p. 309.

60. Glude, supra, note,15, states "Decisions should be made in the
correct forum--one which considers all aspects of the proposal--
not environmental effect alone. . . . In my view the logical
forum is at the state level, by a panel or commission with
multi-interest representation." Dr. Marvin Miura, President,
Environmental Impact Study Corporation, Honolulu, suggests a
single application and EIS procedure in which all concerned
agencies review and "sign off" on the application in order to
indicate approval. Dr. Miura, believes this would eliminate
the problem of one agency waiting upon another to grant its
required permit. Personal interview (June, 1980).

61. This assertion is strongly made by both Taylor A. Pryor,
President, Systemculture, Inc., (Kahuku Seafood Plantation),
personal interview, (July, 1980), and by Richard Gibson, AMFAC
Aquatech (July, 1980).

62. Permits and Environmental Requirements for Aquaculture in
Hawaii, supra, note 2, p. 16. For example, Federal regula-
tions prohibit the importation of claridoti, an Asian catfish,
because of bad experience with their escape in Florida.
Accordingly the Federal Government confiscated and killed a

III-33

COMMERCIAL DEVELOPMENT III

shipment of Asian catfish worth approximately $4,000 in
Hawaii although Asian catfish have been an established popu-
lation in Hawaii for 100 years. Clearly a variance was
needed and procedures for obtaining variances should be
investigated.

63. Id., p. 15.

64. John Corbin, Aquaculture Development Program, personal inter-
view (October, 1980).

65. Arguably, for a small project or one involving cultivation of
indigenous species, less environmental data may be required.
James Maragos, U.S. Army Corps of Engineers, personal inter-
view (October, 1980).

66. H.R.S. Chapter 171, Part V, "Lands for Agricultural Purposes."

67. Lockwood, supra, note 37, p. 6.

68. U.S. Senate Report, 96th Congress 2d Session, No. 96-660 (to
accompany S. 1650, National Aquaculture Act of 1980), p. 6.

69. Lockwood, supra, note 37, p. 19.

70. John 0. Flender and Richard Morse, The Role of New Technical
Enterprises in the United States Economy (M.I.T. Development
Foundation, Inc., 1978), noted in Lockwood, supra, note 37,
p. 20.

71. Lockwood's Monterey Abalone Farms is a good example. Lockwood
Reports "Ten individuals jointly invested $250,000 of 'seed'
capital for this risky undertaking. . . . In 1974, we began
to scale-up our operations and increased our investment by an
additional $1,000,000. As before, this investment was sup-
plied by individuals willing to risk part of their personal
savings on this promising yet unproven venture. Although the
profit potential was attractive, professional sources of ven-
ture capital were not interested in such a long-term project.
Our company was entirely privately financed by a small group
of local people with confidence in me and in our product."
Lockwood, supra, note 37, p. 3.

72. H.R.S. Chapter 219, "Aquaculture Loan Program."

73. Feldman, supra, note 36, pp. 83-84.

74. Id., p. 83.

75. U.S. Senate Report No. 96-660, supra, note 67, p. 7.

III-34

COMMERCIAL DEVELOPMENT III

76. William Brewer, Aquaculture Development Program, personal
interview (August, 1980).

77. Staton, supra, note 25.

78. Staton, Id., states "Offshore operations both boat and diving
are regulated by either the Longshoremens and Harbor Workers
Act or the Jones Act. Bothof these required coverages de-
mand large premium deposits (ours is in excess of $7,000.00
per year) and excessively high premiums of near $60.00 per
each $100.00 of payroll."

79. Staton, Id., asserts that the high insurance premiums paid by
California Marine Associates is "Primarily . . . due to the
lack of rating experience by the insuring companies. They
are literally scared to death of the possible ramifications."

Rothwell, supra, note 20, states: "Our informal discussions
with an insurance underwriter suggests that an ocean farmer
would be able to obtain crop insurance similar to that avail-
able to farmers on land, but due to lack of actuarial data
the premiums would be very high. With experience, we are told,
insurance premium rates will adjust to match actual loss rates."

80. P.A.D. Secretan, Director, The Aquacultural Insurance Services,
Ltd. (London), personal communication (September 17, 1980).
Mr. Secretan continues: "We have some significant statistical
actuarial data, compiled over the years that, whilst by no
means perfect, is broadly based enough to give us a great
deal of guidance on where we are going. These statistics,
and the educating experience of having covered [aquatic] farms
and run into losses on them, mean that we are fairly well
versed in negotiating terms and conditions which fairly repre-
sent the interests of both insured and Underwriters at fair
premiums. . . . The aquacultural industry is not overcharged
for the insurance."

81. Secretan, Id.

82. Rothwell, supra, note 20.

83. Interview with William A. Brewer, Department of Planning and
Economic Development, regarding Anuenue contract arrangements,
October 31, 1980.

84. Anthony J. Novotny, Fishery Research Biologist, Northwest and
Alaska Fisheries Center, National Marine Fishery Service, NOAA,
personal communication (September 3, 1980). Mr. Novotny has
been involved in aquaculture projects or symposia in France,
Ireland, Scotland, England, Mexico, Canada, and the United
States. He concludes: "In all countries, in any environment

III-35

COMMERCIAL DEVELOPMENT III

aquaculture at its best is a very risky business. . . . What
then can we expect of any venture groups in marine aquaculture
who must face investment costs, pioneering technology, risks
of crop lost, sporadic markets and environmental and aesthe-
tic restraints that would bring an elephant to its knees?
Only the extreme optimists venture forth under these condi-
tions." Id.

III-36

SECTION
4

POLICY ISSUES IV(A)

IV. STATE MANAGEMENT OF OFFSHORE RESOURCES:
POLICY ISSUES

A. INTRODUCTION

It is likely that new policies concerning the development of
offshore waters will have to be adopted by the State if (1) legal
obstacles and uncertainties are to be overcome; and (2) appropriate
commercial use of the area is to occur. The State has already
issued a number of policy statements committing Hawaii to the gen-
eral goal of development of the offshore waters.I However, these
goals and objectives do not appear to have established a resource
allocation system that will insure that the overarching policy of
development will in fact occur, or that it will occur in an orderly,
rational manner which is in the best interests of the citizens of
Hawaii.

Since extensive commercial development of the offshore area
is still some years away, the State presently has an excellent op-
portunity to review existing policies and to evaluate the strengths
and weaknesses of new policy options. Until action is taken by
the State, research and development in Hawaiian waters may be slowed,
large and small investors will be reluctant to become involved,
and development will proceed on an erratic and uncertain path. In
addition, inaction by the Legislature and State agencies may inad-
vertently hand the policy-making function to the courts. Such
quiesence may eventually create problems later when the Legisla-
ture seeks to "modify property definitions developed by the courts,
which are institutionally limited in the alternatives that they
can consider and must decide cases within the confines of litigants
advancing their own interests."

Such an eventuality is hardly desirable from a policy or a
legal point of view. Th e formulation of an "Ocean Management Plan,"
a process now underway under the general direction of the Hawaii
Coastal Zone Management Program, should result in an integrated

IV-1

POLICY ISSUES IV(B)

management program for the State, greatly lessening the likelihood
or need for judicial pinch-hitting. In the context of that Plan,
the study herein only surveys broad questions of management approach
to commercial development of offshore resources.

The establishment of new policy essentially involves the fol-
lowing steps:

1. Stating the problem, or acknowledging that a problem is
likely to occur;

2. Developing policy goals and objectives that will provide
direction in helping solve the problem;

3. Researching and evaluating various management schemes for
their potential effectiveness in promoting policy goals;
and

4. Choosing, designing, and implementing a management system
that initiates and supports activities consistent with
the policy goals. 3

The remainder of this section will raise a number of important
issues which the policy maker should consider in moving through
these steps in order to have a more informed judgment about step
four, choosing, designing and implementing an effective management
system.

B. PROBLEM IDENTIFICATION

Development of fixed-location ocean activities is likely to
create a number of problems whose definition will vary according
to one's perspective. Acknowledging different perspectives is
important because defining the problem differently leads one to
different policy goals and consequently to the favoring of differ-
ent kinds of management systems.

Perspective depends largely on how the ocean user sees his
present or future interests in ocean space. One way to identify
the range of problems likely to emerge if ocean areas are reserved
for fixed-location ocean uses such as mariculture and OTEC is thus

IV-2

POLICY ISSUES IV(B)l

to identify the current user groups of offshore waters and each of
their particular interests in ocean space. The following list
identifies the major user groups:

1. Commercial fishermen
2. Recreational fishermen
3. Surfers
4. Beachgoers, sunbathers, swimmers
5. Commercial shippers
6. Recreational boaters
7. Divers (although the activities of commercial and
recreational divers may be different)
8. Marine researchers
9. Sightseers
10. Military4

In addition, special interest groups such as native Hawaiians, en-
vironmentalists, and the tourist industry may have concerns other
than those addressed by the groups listed above. Each of these
groups can be expected to strongly represent their positions in
any discussion over the deployment of fixed-location ocean activi-
ties.

While identifying the major user groups and interest groups is
a fairly easy task, several factors combine to make the response
of each group difficult to anticipate. These factors include:

1. Multiple impacts
2. Proximity to site
3. Multiple group loyalties
4. Unanticipated outcomes 5

1. Multiple Impacts

Each new fixed-location activity is likely to have a variety
of impacts on any user group. When trying to anticipate how a
group will respond to a new activity, both positive and negative
impacts of the activity will have to be weighed. For example, a
commercial fisherman may find an OTEC facility interfering with his

IV-3

POLICY ISSUES IV (B) 2

right-of-way on the open seas, forcing him to alter his course.
on the positive side, the OTEC site may serve to attract fish,
due to the concentrated upwellings of nutrients created by the
OTEC operation or to its fixed location. The fisherman's response
will depend upon whether he foresees a net positive or net nega-
tive impact, or put another way, upon how he weighs costs and bene-
fits to himself.

2. Proximity to Site

Present ocean user groups will react to fixed-location activ-
ities according to where such new activities are actually located.
The definition of the problem will be largely site-specific. As
long as an activity is located outside one's spatial sphere of
interest, no problem will be perceived to exist. If OTEC platforms
are placed outside prime fishing areas, commercial fishermen may
not see them as creating any kind of problem. However, another
concern may be that OTEC platforms will be hazardous to navigation,
especially at night, and may require special lighting.

Visual impacts of new offshore activities is also likely to
be a factor for property owners, beachgoers, and other shoreline
users. If the new activities are not highly visible, resistance
to them will be lessened.

3. Multiple Group Loyalties

The response of some persons to new offshore activities will
be largely determined by association and identification with one
major user-group. However, many others will have an interest in
more than one of several potentially conflicting activities, and
their responses will change or be modified as they consider their
multiple roles. For example, a local fisherman who enjoys the
ocean primarily as a recreational resource will see the develop-
ment of fixed-location activities far differently than a director
of a company involved in the research of OTEC. However, the com-
pany's director may also be a fisherman, while the fisherman may
also support the idea of clean, renewable energy that will lessen

IV-4

POLICY ISSUES IV(B)4

Hawaii's dependence on imported oil. Multiple group memberships
may produce more agreement on problem identification than is ini-
tially premised.

4. Unanticipated Outcomes

A final factor which makes user-group responses hard to pre-
dict is the inability of the groups themselves, scientists, devel-
opers, or policy analysts to anticipate all the important features
or outcomes of deploying the new fixed-location ocean activities.
Unanticipated outcomes could produce positive or negative impacts
that will alter initial perceptions. This is a particularly rele-
vant factor when considering newly developed, rapidly changing
fields such as OTEC, mariculture and other fixed-location activi-
ties.

Despite the inability to forecast precisely or to predict the
full range and source of problems relating to fixed-location activ-
ities, it is still possible to list a number of problems that have
already surfaced or are likely to be raised in the future. These
include:

1. The development of fixed-location ocean activities may
interfere with access to the beach and offshore areas. 6

2. Increased use of offshore waters may interfere with
recreational boating.7

3. Fixed-location ocean activities may be considered un-
sightly and thus interfere with aesthetic enjoyment of
the shore.8a

4. The development of fixed-location ocean activities may
cause significant environmental problems. 9

To a certain extent, these problems have already been anticipated
by existing state (and federal) policies. For example, an appli-
cant wanting to locate an activity in offshore waters would pres-
ently have to apply for a Conservation District Use Permit from

IV- 5

POLICY ISSUES IV(B)S

DLNR, and would have to satisfy environmental protection objectives.
The Hawaii Coastal Zone Management Program has established proce-
dures which encourage multiple use of the coastal area while mini-
mizing user conflicts. 10The Hawaii State Plan also mandates
protection of the environment, especially the coastal zone. 11
Behind all these policies is an underlying objective of orderly
development and use of coastal resources.

Thus, the State has already established a policy framework
which addresses the potential problems noted above. Any future
policies or laws enacted by the State regarding the use of offshore
waters will have to be compatible with these existing policies.

There are other problems surrounding the development of of f-
shore activities, however, which present laws and policies do not
adequately address. One problem, as perceived by potential commer-
cial operators, and discussed in more detail in Section III, is
the absence of any guarantee of property rights in ocean waters.
Fixed-location activities such as OTEC and mariculture enterprises
require some degree of exclusive use of an area. in addition,
these activities often require long-term use of an area. Thus, a
fifth problem may be stated:

5. Fixed-location ocean activities require the adoption of
a new offshore legal regime to protect private property
rights within a traditionally public domain resource
12
area.

However, even if rights were clearly established, the ocean
environment protected, and order prevailed, there would still re-
main the question: Who benef its? 13 If extensive private use of
offshore waters, which have historically been public areas, yields
benefits to only a small segment of the population, serious ques-
tions are raised. Broad community concern, likely to be spearheaded
by recreational and native Hawaiian groups, will be certain. This
concern leads to a sixth problem:

IV-6

POLICY ISSUES IV(B) 6

6. Development of offshore waters for private enterprise
may yield significant direct benefits to only a small
segment of the population.

C. GOALS AND OBJECTIVES

If a new resource management system for offshore waters is
adopted, the policy goals and objectives that guide it will have
.'address the problems noted above. In particular, the lack of
property rights and the question of distribution of benefits will
likely be key issues since the State has previously addressed, to
some extent, the problems of environmental quality and conflicting
uses.

in developing goals and objectives two other important policy
questions must also be weighed. These are:

1. Should the amount and types of activities in offshore
waters be limited and how?

2. Who should be encouraged to participate in the develop-
ment of fixed-location activities?

Given current policies and programs, development of one fixed-
location activity, OTEC, will definitely occur in State waters.
The projected benefits of such development are many. Development
of OTEC facilities is expected to help Hawaii become less depen-
dent on imported energy supplies, strengthen Hawaii's reputation
as a center for R & D work in alternative energy sources, provide
Hawaii with a relatively clean source of power, lessen the demands
for new fossil-fuel power plants, and serve as fish attraction de-
vices for the benefit of commercial fishermen. 14

Development of mariculture activities could bring additional
jobs to the State, eventually provide a major source of locally
grown, low-cost seafood, help diversify the economy, create addi-
tional revenue for the State, aid in preserving rural life-styles,
and attract business and population to neighbor island communities. 15

While such benefits of fixed-location activities may be stated,
it does not necessarily follow that the State should embark on a

IV-7

POLICY ISSUES MVC)

policy of maximum development. Goal options range from maximum
utilization to no utilization. The maximum development option
is limited by the natural carrying capacity of the resource (the
offshore area) and by existing state laws and policies.

Sufficient environmental impact data from mariculture and OTEC
operations has yet to be collected,1 and baseline studies of the
offshore environment have yet to be undertaken before the capacity
of the resource to support the new activities can be determined.
Whatever policy goals are chosen, they must take into account this
uncertainty, for it is likely to be several years before adequate
data is available.

Policy options are also limited by the Hawaii State Plan and
the Coastal Zone Management Program. Both acknowledge that there
are many valid claims to the use of offshore waters, and mandate
a multiple-use approach for the coastal zone and the marine envi-
ronment. Consequently, potential policy options regarding the
scope of devrelopment of fixed-location ocean activities are limited
to those options which reflect a multiple-use approach and which
would protect existing uses as well as encourage new development.

There remains the question of who is to participate in the
development of the new activities. Policy goals need to be estab-
lished concerning the appropriate combination of local and out-of-
state operators, and the optimum balance between small-scale and
large-scale operators. Goal options range from favoring large-
scale, out-of-state participants to focusing on local, small-scale
operators is possible. Existing state policies generally promote
economic activities that allow for a mixture of these various lev-
els of participants. For example, aquaculture activities, includ-
ing mariculture, are being promoted as a way of increasing and
diversifying employment opportunities for local residents, particu-
larly those on the neighbor islands, and at the same time, attract-
ing large-scale, out-of-state investors. 17 This policy has already
produced a wide diversity of participants for land-based aquacul-
ture operations throughout the state. 18 The involvement of large

IV-8

POLICY ISSUES IV(C)

corporations, such as Amfac and the Coca-Cola Co., in the local
aquaculture picture has been encouraged to,help guarantee that
19
aquaculture becomes an important segment of Hawaii's economy.
Corporations can help

"[t]o increase public awareness of the mari-
culture industry through publications and mar-
keting efforts, and 'big business' could create
a political constituency to protect and possi-
bly expand mariculturists' rights within the
framework of interest groups competing for gov-
ernment attention.1"20

While some may fear that the involvement of large corporations in
the aquaculture business could limit the opportunities available
to small-scale, local operators, this does not appear to have
happened. In fact, of the 20 aquaculture operations currently in
the State, 15 are under five acres, and most are run by small,
local firms.21

A similar mix can be encouraged by appropriate economic pro-
grams in mariculture development, although it appears unlikely
that large corporations will be taking the lead in such develop-
ment. Open sea mariculture will simply remain too risky for the
next decade or longer to interest very large-scale operators.
Innovative entrepreneurs will pioneer the industry, if it develops
at all.

OTEC development, in contrast, because of its requirements of
scale, advanced technology and high capitalization, will necessar-
ily be limited to a small range of participants, if not to a single
consortium. The major policy options are between local and out-
of-state participants. Currently, both kinds of investors are in-
22
volved in on-going R & D work. A policy which would attempt to
favor local participants may create more direct economic benefits
to the people of Hawaii, but outside operators can commit consid-
erably more resources to the effort, particularly in terms of tech-
nological know-how and capital. Thus the R & D work is likely to
proceed faster if a policy favoring out-of-state participants is

IV-9

POLICY ISSUES IV(D)

pursued. At the same time, a policy oriented only to out-of-state
companies would appear contrary to the goals of the State Plan and
would fail to take advantage of what expertise and resources local
firms could contribute. The State's leverage on this issue is not
great, since much of the R & D will be federally funded, and OTEC
development is likely to be handled through an international con-
sortium arrangement. The present policy of the State is to support
any consortium which proposes to locate a pilot plant in Hawaii.

To sumimarize, the range of goals and objectives available to
policy-makers concerning the development of new offshore activities
is fairly well-defined. Experience in aquaculture, on-going OTEC
activities, and previous policy statements, such as those found in
the State Plan and the Coastal Zone Management Program, suggest
that certain policy goals have already been established, and that
others will be favored because-of the State's experience with them.
Within the parameters thus already set, certain policy goals emerge
as priorities: establishing an orderly system to determine prop-
erty rights and to allocate resources, promoting multiple-use of
ocean areas, participation by a wide range of entrepreneurs, and
development of clean, relatively non-polluting activities.

D. ALTERNATIVE RESOURCE MANAGEMENT SYSTEMS

This section considers three general allocation models for
managing the use of ocean resources. Each is analyzed from the
perspective of satisfying the general policy goals summnarized
above. Generally, "two allocative mechanisms can be hypothesized
as the polar opposites of the spectrum of allocation--a system in-
volving grants of private property rights in the resource, and a
system of purely public resource management . . . 3A third
model incorporates a mixture of public and private policies in the
management of natural resources. Policy analysts have identified
specific benefits and problems, culminating in distinct patterns
of resource utilization, resulting from choices made by policy-
makers among these three resource management approaches. 24

IV-10

POLICY ISSUES IV(D)l1

One significant finding, explained more fully below, is that
neither extreme of public or private resource management is likely
to achieve the policy goals noted as relevant in Hawaii. Neither
extreme would be legally nor politically acceptable given current
Hawaii statutes and policy. Instead,."the creative use of an inter-
mediate approach--one which overlays private ownership with public
controls--will more adequately allow for efficient resource use,",25
and be more compatible with state policy and the concerns of the
general public.

1. Public Research, Development, and Production of Offshore
Resources

Under this resource management system, the State would retain
complete rights to offshore resources, including the water column
and surface waters, and own and operate all production facilities
such as OTEC, mariculture, fish aggregation buoys, and any other
fixed-location activities. All income derived from the exploita-
tion of the offshore area would accrue to the State. The rationale
for government development rests on the public trust status of the
ocean resources. In addition, public ownership and operation is
often advocated when preservation of the resource is the single
most important goal (as with the National Park lands) or when the
development of the resource is seen as too large and/or too risky
for private enterprise (as with the Tennessee Valley Authority
Project).

Such a system would permit the State, as the sole owner of
fixed-location ocean activities, to have complete control over the
development process. This would make siting problems less diffi-
cult since only one owner would be involved. Conflicts among com-
peting firms for the same space would be eliminated. In addition,
the costs ol monitoring and enforcing environmental standards would
be reduced since, "the locus of responsibility for an adverse effect
may be fixed more readily than where there are a number of opera-
tors." 26 Conservation goals and environmental protection may also
be enhanced under a public management system since decision-making

IV- 11

POLICY ISSUES TV (D) 2

is not tied to organizational wealth. A decision-maker may be more
willing "to take into account external costs involved in any given
option and thereby promote efficiency from the vantage point of
the community . . . " 7However, when adequate regulatory controls
are imposed at the start, these externalities may be of the same
magnitude regardless of government control. 28

Certain considerations, however, argue against a system of
public ownership and production. Unlike the goal of the National
Park System, the primary goal of the State is not the preservation
of offshore resources. As the preceding Goals and Objectives sec-
tion noted, the State is publicly committed to the development of
OTEC, has already placed fish aggregation buoys at sea, and is en-
couraging the study of mariculture operations. While a large por-
tion of offshore waters will undoubtedly be placed "off-limits" to
development, preservation is only one goal for this area.

In addition, private enterprise apparently does not view the
development of fixed-location activities as too large or too risky
an undertaking. Private firms are already involved in the R & D
work, and have expressed interest in investing in commercial oper-
ations. Thus, the two traditional arguments for public resource
management do not apply to the use of offshore waters of Hawaii.

Finally, under this system, the private sector would be un-
likely to commit many resources to the development and production
of fixed-location activities if there is no future of commercial
benef its. The State (with some assistance from the federal govern-
ment) would then have to carry a much larger share of the financial
burden, raising the possibility of significant cut-backs in other
programs.

2. Private Ownership and Production

A pure system of private ownership and production for activi-
ties in state- marine waters is neither practical nor legal. In
such a system, the State would (1) sell offshore ocean space'and
then, (2) provide no financial support toward the development of

TV-12

POLICY ISSUES IV(D) 3

fixed-location activities. Such alienation of public ocean re-
sources is not within the power of the Legislature or of State
agencies due to public trust doctrine legal restraints, and is
therefore not a meaningful option. Moreover, the State has already
committed itself to assistance in the R & D phase of OTEC and mani-
culture development.

A modified scenario which might pass baseline tests of legal-
ity and utility would be for the State to grant long-term leases,
hold back few offshore areas for preservation, relax environmental
quality controls now governing the use of marine waters, and re-
strict its own P & D commitments. Such a plan might generate con-
siderable development, but offshore enterprise would be dominated
by a few large corporations which had extensive financial and tech-
nological resources. The multiplier-effect might bring consider-
able economic benefit to the State.

Such benefit would be negated, however, by the fact that the
environmentaj costs from such a system would be unacceptably high,
user conflLC-ts would be endemic, and public opposition would be
certain. If anything, the clear trend in resource management in
the State of Hawaii during the past decade has been toward increas-
ing environmental protection and more comprehensive planning.
While the potential economic benefits of offshore development might
stimulate some redefinition of environmental regulation, it is dif-
ficult to see any real viability in even the "modified" private
ownership and production scenario. This model does not meet the
State's presenit policy goal, and it is politically untenable,
given its necessary conflicts with powerful interest groups, such
as the tourism industry, local commercial and sport fishermen, and
recreational ocean users.

3. Public/Piivate Ownership and Development

Along the spectrum of resource management models from purely
public to purely private is a vast middle ground where the public
and private dimensions overlap. This area is familiar because it

IV-13

POLICY ISSUES IV(D) 3

represents the policy framework used in making most land-use deci-
sions. The concept of public/private policy combinations may be
applied to (I) the ownership of offshore resources, and (2) the
research and development of the fixed-location activities.

The State, as owner and trustee of state marine waters and
the resources therein, has a number of options for allocating and
controlling the use of state marine waters. Conditions regarding
the use, fees, environmental safeguards, and license and/or lease
renewal and revocation procedures could be established to suit the
type of activity. Preferential treatment to encourage certain
classifications of operators could be exercised. In mariculture
operations, for example, one observer recommends that,

"[alt least one half of all leases granted for
mariculture purposes should be for small-scale
or eleemosynary operators. This is needed to
create a healthy balance of both large and
small-scale development in mariculture."29

California has attached eligibility requirements to its mariculture
operations, limiting applicants to citizens of the state and cor-
porations organized under California laws. 30

The State could also elect to broaden the number of potential
participants in mariculture operations by stipulating that exten-
sive environmental impact statements or ocean floor surveys are
not required where the lessee anticipates gross revenues less than
$150,000 and requires less than one acre of ocean space. These
could be handled by an administrative lease which would have a
shorter term. If small businesses are required to shoulder these
expenses, which could easily run into six figures or more, maricul-
ture could be limited to only the larger firms. Factors such as
proposed location, amount of state marine waters required, compet-
ing uses, native or non-indigenous species should also be consid-
ered by the State in determining how much environmental data is
necessary and how extensive surveys should be.

IV- 14

POLICY ISSUES IV(D) 3

Some type of zoning or overall management plan could also be
an ingredient in a public/private resource system. Presently all
offshore waters are in the State's Conservation District; however,
there is no subzoning and management plan which recognizes the di-
verse character of the resource and its multi-use potential. Such
a plan has been mandated by the State Legislature, 31and would
help maximize utilization, reduce user conflicts, and prevent de-
velopment of the area from occurring on a case-by-case basis with-
out any reference to the overall pattern of use. Such piecemeal
development on land was one factor contributing to the development
of comprehensive land-use plans such as the State Land Use Plan
and the Hawaii Coastal Zone Management Program.

Public/private policy combinations can be significant in the
technical development of fixed-location activities, as well as in
the determination of ownership and user-rights. When substantial
technological or market risks exist, government often enters the
R & D phase in order to reduce the uncertainties for any given
business. Government can take the lead initially, then give pri-
vate interests the right to commercialize the resource. This policy
would allow a greater number of firms to consider entering the
field. Where R & D work is entirely private,

"'[o]nly a few larger firms, or joint ventures
of smaller ones, with sufficient capital and
diverse activities over which to distribute
the risks of non-discovery would be able to
bid.-"32

in addition, when the R & D work is expedited by government
funding, smaller firms may be able to enter the field because they
will have greater access to necessary technical information, and
once uncertainty as to the value of the resource has been reduced,
greater access to capital. 3

The public/private model thus provides the greatest continuity
with present State policy goal among the three management systems
here discussed. Its flexibility and its retention of public con-
trol over development would make the resolution of user-conflict,

IV-15

POLICY ISSUES IV(D) 3

or the mitigation of such conflicts to an acceptable level, much
more feasible. Orderly development of state marine waters could
proceed with a likelihood of general public support.

IV-16

POLICY ISSUES IV

FOOTNOTES

1. For example, The Hawaii State Plan, State Department of Plan-
ning and Economic Development (Honolulu: 1978), signed into
law in 1978, requires the State to "accelerate research and
development of new energy related industries based on wind,
solar, ocean and underground resources and solid waste," and
to "encourage investment and employment economic activities
that have the potential for growth such as diversified agri-
culture, aquaculture, apparel and textile manufacturing, and
energy and marine-related industries," p. 29.

For OTEC specifically, Governor George R. Ariyoshi has stated,
"We in Hawaii are committed to the development of OTEC . . .
our State will counsel and cooperate with any consortium which
proposes Hawaii as a pilot-plant site." George R. Ariyoshi,
"The Future of OTEC in Hawaii and the Nation," An Address to
Ocean Energy 7, Washington, D.C., June 2, 1980, p. 3.

The State Department of Planning and Economic Development
has adopted the goal of reducing Hawaii's dependence on imported
oil by "establishing an OTEC industry which will be environ-
mentally sound, socially acceptable, and economically benefi-
cial to the people of Hawaii." State of Hawaii Ocean Thermal
Energy Conversion Program, 1980-1985, Department of Planning
and Economic Development (Honolulu: 1980), p. 2.

The development of mariculture activities is presently guided
by the policies and objectives of the Aquaculture Planning
Program, which include the identification of new economic
opportunities in aquaculture, and the goal of providing "funds
for testing the applicability of using aquaculture technolo-
gies as components in ocean thermal energy conversion (OTEC),"
Aquaculture Development for Hawaii: Assessments and Recom-
mendations, Aquaculture Planning Program, Center for Science
Policy and Technology Assessment, Honolulu: Department of
Planning and Economic Development (Honolulu: 1978), p. 148.
R & D work on mariculture operations unassociated with OTEC
facilities is also being pursued. See "Mariculture: An Issue
Paper (Draft Copy)," Aquaculture Development Program, Depart-
ment of Planning and Economic Development (Honolulu: 1980).

2. Sho Sato and Thomas D. Crocker, "Property Rights to Geothermal
Resources, Ecology Law Quarterly, Vol. 6:48 (1977), p. 495.

3. Edith Stokey and Richard Zeckhauser, A Primer for Policy Ana-
lysis (New York: W. W. Norton and Co., Inc., 1978).

4. George Kent, "Hawaii Coastal Zone Management Technical Supple-
ment No. 10," Department of Planning and Economic Development,

IV-17

POLICY ISSUES IV

(Honolulu: 1975), pp.2-3, which identifies those groups in
Nos. 1-10. A similar list may be found in "Mariculture: An
Issue Paper (Draft Copy)," supra, note 1, p. 3.

5. These four factors were culled from the extensive literature
relating to coastal zone development and land and water use
conflicts. Many of these studies have attempted to plot
matrices which show existing uses along one axis and existing
uses and/or potential uses along the other. Conflict and/or
compatibility is then noted by appropriate notations at each
of the intersecting points. However, the number of exceptions
and conditions to such matrices, created by the oversimplifi-
cation inherent in a two-dimensional representation, are so
significant and numerous that a more realistic appraisal is
organized around these four conditions of use which account
for most conflict situations.

6. "Marlculture: An Issue Paper (Draft Copy)," supra, note 1,
p. 5; Gail Ishimoto, "Formulating a Mariculture Policy for
Hawaii: The Submerged Lands Leasing Issues," unpublished
Master's Thesis, University of Washington, (1980), p. 61.

7. Gail Ishlmoto, "Formulating a Mariculture Policy for Hawaii:
The Submerged Lands Leasing Issues," unpublished Master's
Thesis, University of Washington (1980), p. 21.

8. Id.

9. Id.

10. Hawaii Coastal Zone Management Program and Final Environmental
Impact Statement, Office 7 Coastal Zone Management, Department
of Commerce (Washington, D.C.) and the Department of Planning
and Economic Development (Honolulu), n.d.

11. "The Hawaii State Plan," supra, note 1.

12. Ishimoto, supra, note 7, p. 61; "Mariculture: An Issue Paper
(Draft Copy)," supra, note 1; "OTEC for Oahu," Ad Hoc Commit-
tee on the Advancement of OTEC for Hawaii, Department of Plan-
ning and Economic Development (Honolulu: 1980), pp. 31-32.

13. George Kent, "Dominance in Fishing," Journal of Peace Research,
Vol. 13:1 (1976), p. 35.

14. "OTEC for Oahu," supra, note 12, pp. 4-5.

15. Ishlmoto, supra, note 7, p. 6.

16. "OTEC for Oahu," supra, note 12, pp. 27-9; "Mariculture: An
Issue Paper (Draft Copy)," supra, note 1, p. 4.

IV-18

POLICY ISSUES IV

17. Aquaculture Development for Hawaii: Assessments and Recommen-
dations; supra, note 1, p. 132.

18. "The Outlook for Aquaculture," Economic Indications, First
Hawaiian Bank (Honolulu: June, 1980), p. 1.

19. Id.

20. Ishimoto, supra, note 7, p. 56.

21. "The Outlook for Aquaculture," supra, note 18, p. 1.

22. "State of Hawaii Ocean Thermal Energy Conversion Program,
1980-1985," supra, note 1, (no page numbers) about page 4.

23. Bert Slonim, "Coastal Zone Resource Allocation: Some Legal
and Economic Considerations," Sea Grant Law Journal, Vol. 1,
No. 1, 1976, p. 369.

24. Slonim, supra, note 23, reviews the management of public lands
and the broadcast spectrum and draws conclusions about the pat-
tern of costs and benefits derived from the management of these
two resources. Zoning, leasing, licensing and easement proce-
dures are compared in Orlando E. Delogu, "Land Use Control
Principles Applied to Offshore Coastal Waters," Kentucky Law
Journal, Vol. 59, No. 3 (1971), p. 606. Sato and Crocker,
supra, note 2, analyze several allocation regimes ranging
from public to private.

25. Slonim, supra, note 23, p. 369.

26. Sato and Crocker, supra, note 2, p. 501.

27. Id.

28. Ishimoto, supra, note 7, p. 83.

29. Sato and Crocker, supra, note 2, p. 498.

30. Sally Owen, "The Response of the Legal System to Technological
Innovation in Aquaculture: A Comparative Study of Mariculture
Legislation in California, Florida and Maine," Coastal Zone
Management Journal, Vol. 4, No. 3 (1978), p. 274.

31. House Reso. 1737, State of Hawaii (1979).

32. Sato and Crocker, supra, note 2, p. 505.

33. Id.

IV-19

SECT ION9
5

THE HISTORICAL BACKGROUND V(A) (1)

V. STATE AUTHORITY OVER OFFSHORE RESOURCES:
THE LEGAL ISSUES

A. STATE OWNERSHIP OF OFFSHORE RESOURCES

1. The Historical Background

Q: Does the State have ownership rights in its offshore waters
within state boundaries?

A: Initially, the dispute between federal and state
claims of jurisdiction over the marginal sea was
resolved by the U.S. Supreme Court in favor of the
federal government. Subsequently, Congress passed
the Submerged lands Act (SLA) which restored to
the states the right to control their offshore
resources within state boundaries.

Coastal states have asserted proprietary interests in the
marginal sea since their first declarations of self-sovereignty in
1776.1 Grants of seabeds for oystering in fact antedate the War
of Independence. 2Until the third decade of the 20th Century,
State claims to title over offshore areas were not challenged, but
were in fact fully recognized by the federal government. Fourteen
times between 1847 and 1941 federal agencies sought and received
deeds from various states for portions of their submerged lands
"lying outside the inland waters and within the three-mile belt." 3

States historically exercised exclusive control over fishing
in navigable waters within state boundaries, based upon proprietary

rights affirmed by federal courts. 4Congressional policy clearly
was to accept state ownership and jurisdiction over offshore re-
sources. A United States House of Representative Report in 1953
reviewed various congressional recognitions of constitutional sea
boundaries accorded to states upon admission into statehood, and
concluded that: "At the time of these actions by the Congress it
was the universal belief that the States owned the beds of all nav-
igable waters within their tidal jurisdiction, whether inland or
not."

V-1

THE HISTORICAL BACKGROUND V(A) (1)

Soon after oil and mineral deposits were discovered in off-
shore locati,,ns, and means to extract these resources became prac-
tical, coastal states asserted rights to regulate and to profit
from offshore resource exploitation. Louisiana leased submerged

lands more thar. three leagues from its coastline as early as 1920.6
California initiated leasing of substantial portions of its mar-
,4Lnal sea for oil, gas, and mineral development in 1921. Texas
toLlowed in 1926. Other states, including Washington, Florida,
Mississippi, North Carolina, and Maryland made leases for like
7
purposes.

State authority to lease offshore oil and mineral rights was
relied upon by private industry and accepted by federal officials
throughout the 1920's. 8While there was no definitive judicial
statement upholding this authority, the presumption in favor of it
was strong enough that extensive offshore resource development pro-
grams became established in several states. Large public and pri-
vate capital outlays underwrote the construction of facilities and
improvements in the marginal sea to accommodate the new ocean uses.
Many state services were dependent upon public revenues generated
by these offshore activities. 9

These facts notwithstanding, controversy and litigation over
state claims to ownership of offshore submerged lands arose in the
1930's. As the extent and value of offshore resources became more
clear, the federal government moved to contest the states' claims.
In 1945, the U.S. Attorney General brought suit in the United
States Supreme Court, which had original jurisdiction in the mat-
ter, against the state of California. The federal government
sought a decree declaring the rights of the United States over sub-
merged lands from low water mark to three miles offshore as against
California, and "enjoining California and persons claiming under
it from continuing to trespass upon the area in violation of the
rights of the United States." 10

v-2

THE HISTORICAL BACKGROUND V(A) (1)

This action directly challenged the long-standing assumptions
which had governed federal-state relations in this area. 11 A train
of Supreme Court decisions beginning with Martin v. Waddell 12in
1842 had suggested strongly that state sovereignty included of f-
shore areas to the limits of state boundaries. In Martin the Court
had ruled that land under tide waters in Raritan Bay, New Jersey,
belonged to the State of New Jersey as an incident of state sover-
eignty. In Pollard's Lessee v. Hagan (1845) 13 the Court had de-
clared that the Constitution itself reserved ownership of inland
navigable waters, and submerged lands lying between the high and
low water marks, to the states. 14This ruling applied to all new
states as well, for each new state was admitted to the Union on an
"equal footing" with the original thirteen states. 15

The Pollard holding had been reaffirmed many times. 16Some
later rulings appeared to have extended "the Pollard rule," as it

came be to be known. In Shively v. Bowlby (1893), 17for example,
the Court had stated that upon admission to the Union, "title in
the lands below high water mark of navigable waters passed to the
state, and could not be granted away by the Congress of the United
States." I8 he Court in Port of Seattle v. 0 & W Railroad Co.
(1921) 19had stated emphatically,

"The right of the United States in the navi-
.jable waters within the several states is lim-
ited to the control thereof for purposes of
navigation. Subject to that right Washington
became, upon its organization as a state, the
owner of the navigable waters within its bound-
aries and of the land under the same ...
TFhe -character of the state's ownership in the
land and in the waters is the full proprietary
r ight.,"20

Now, in U.S. v. California (1947), 21the federal government
argued against these precedents declaring that the federal govern-
ment had retained all rights over the marginal sea as appurtenances
of national sovereignty, and that it had never bestowed these
rights upon the states. Further, the Government declared that the

V-3

THE HISTORICAL BACKGROUND V(A) (1)

rationale in Pollard was not applicable to the marginal sea, since
ownership of offshore water areas was not a necessary incident of
the state sovereignty contemplated by the "equal footing" clause,
any more than was ownership of uplands, which clearly did not come
under this clause. 22

The state of California in opposition asserted its right and
claim on the basis of its original 1849 Constitution, which set
the state's ocean boundary at three English miles from the shore,
and the Enabling Act admitting California to the Union, which rati-
fied the territorial boundary thus defined and which admitted
California on an equal footing with the original states. 23The
state argued that the Pollard rule did apply, and that California
should be recognized as the owner and trustee for its citizens of
the offshore submerged lands, just as it was the owner and trustee
of the submerged lands between high and low water marks. 24

The Supreme Court accepted the federal argument that the
Pollard ruling could not be extended to the marginal sea. The
Court found that only the federal government was competent to exer-
cise proper jurisdiction over the open sea, since a "state is not
equipped in our constitutional system with the powers or the facil-
ities for exercising the responsibilities which would be concomi-
tant with the dominion it seeks." 25

The Court judged matters of peace, national security, world
commerce and international relations to be necessarily exclusive
responsibilities of the federal government, stating: "Not only
has acquisition, as it were, of the three-mile belt been accom-
plished by the National Government, but protection and control of
it has been and is a function of national external sovereignty
. ..whatever any nation does in the open sea, which detracts from
its common usefulness to nations, or which another nation may
charge detracts from it, is a question for consideration among
nations as such, and not their separate government units." 26The
sovereignty rationale developed by the Court in Pollard was thus

v-4

THE HISTORICAL BACKGROUND V(A) (1)

turned against the state position. 27The Court held that since
national interests took precedence in the marginal sea, "the Fed-
eral Government rather than the state has paramount rights in and
power over that belt, an incident of which is full dominion over
the resources of the soil under that water area, including oil." ,28

The Court re-affirmed this ruling in U.S. v. Louisiana 29and
U.S. v. Texas, 30both decided in 1950. The Court in these related
cases rejected the argument that "the interests in the marginal
sea may be chopped up, the states being granted the economic ones
and the Federal Government keeping the political ones." 31 Rather,
the Court held,

"1once low-water mark is passed the interna-
tional domain is reached. Property rights
must then be so subordinated to political
rights as in substance to coalesce and unite
in the national sovereign.",32

The California, Louisiana and Texas rulings have given rise
to litigation which continues to the present. 33The rulings also
raised a hailstorm of protest in Congress. In 1946 Congress had
passed a bill to quitclaim all federal marginal sea rights to the
states;A this bill was vetoed by President Truman. Congress passed
a second quitclaim measure in 1952 which was again vetoed by Presi-
dent Truman. 34Congress passed new legislation in 1953 which Pres-
ident Eisenhower, a supporter of state control of the marginal

sea, 35signed into law as the Submerged Lands Act (SLA). 36

This legislation is now the basis for state authority over
offshore resources. The Submerged Lands Act restored to the states
the right to control economic development of submerged lands within
state ocean boundaries. 37Congress declared this to be a matter of
equity, for "it would be unconscionable to take the oil away from
the States after they had been solely responsible for bringing it
into the public use." 38

Justice aside, Congress was highly concerned about the orderly
development and utilization of offshore resources. A principal

V-5

THE HISTORICAL BACKGROUND V(A) (1)

purpose of the SLA was to resolve the "vexatious and interminable
litigation" attendant upon the Supreme Court decisions. 40The SLA
was intended not only to stabilize the legal basis for further de-
velopment, 41but also to place the government unit Congress felt
most competent to expedite such further development, the states,
clearly in charge. 42In sum, Congress wished no further delay in
offshore oil leasing and production, and therefore relinquished
its interests in the submerged lands beneath the marginal seas to
the various states. 43These considerations become particularly
meaningful when interpreting how the SLA applies to economic devel-
opment of state marine waters, rather than specifically of offshore
submerged lands.

Congress also passed in 1953 the Outer Continental Shelf
Lands Act (OCSLA). 44Taken together, the SLA and the OCSLA appor-
tion control of all offshore submerged lands within the jurisdic-
tion of the United States. Within state boundaries, the states
exercise primary authority; beyond state boundaries, the federal
government exercises such authority.

The passage of these Acts, however, did not end debate on
offshore ownership and control. As one commentator has stated:
"This decision whereby the States 'own' the territorial sea and the
federal government 'owns' the area to seaward is no more tidy than
the boundary is visible. Each sovereign has acknowledged interests
in the zone of the other." 45 Coastal states themselves continued
to press their claims on two fronts: (1) the location of the outer
boundary of state jurisdiction under the SLA, and (2) the states'
right despite OCSLA to exercise authority seaward to the limits of
the jurisdiction of the United States.

The claims of several gulf states concerning the location of
state boundaries were settled in U.S. v. Louisiana (1960). 46The
Supreme Court confirmed the claims of Texas and Florida to title
and control over territorial seas extending out from shore three
marine leagues, but denied the extended sea claims of the other

v-6

THE HISTORICAL BACKGROUND V(A) (1)

gulf states, fixing the offshore boundaries of these states at
three geographical miles. The Supreme Court held similarly against
the claim of California in U.S. v. California (1966), 47 fixing
California's boundary at three geographical miles and denying the
use of offshore islands as baseline points for calculating this
boundary.

In U.S. v. Maine (1975) 48the Supreme Court ruled that the
Atlantic Coast states could not exercise leasing authority beyond
the three-mile state ocean boundaries. The Court re-affirmed its
earlier holdings declaring paramount federal authority over the
marginal sea, and ruled that Congress in passing both an SLA and
an OCSLA clearly intended to grant to the states proprietary rights
in submerged lands only to the extent of their state boundaries.
As a result of this decision, regardless of what territorial sea
boundary, exclusive economic zone boundaries, or other jurisdic-
tional boundaries the federal government might declare for purposes
of national policy, states may exercise authority beyond state
boundaries only within very circumscribed bounds set by court rul-

ings on the police powers of the State 49and by specific statutes
enacted by Congress to accommodate state interests. 50

One state-federal boundary dispute which remains unresolved
is the state ol Hawaii' s claim that channel waters between the
Hawaiian islands are inland waters and therefore fall within State
jurisdiction, regardless of distance from island shores. This
dispute is discussed more fully in subsection (B) (4), below.

v-7

THE HISTORICAL BACKGROUND V(A)(1)

FOOTNOTES

1. Many of the American colonies had enacted laws relating to
fish and/or shellfish activities prior to the American Revo-
lution. These laws became enforceable state statutes follow-
ing the Declaration of Independence. The original states
continued to exercise general control over navigable waters
after the adoption of the U.S. Constitution, as before. The
United States Supreme Court in Martin v. Waddell (1842), 41
U.S. (16 Pet.) 367, 410, recognized the legitimacy of this
state authority, at least as far as tidelands were concerned:
"When the revolution took place the people of each state be-
came themselves sovereign; and in that character hold the
absolute right to all their navigable waters and the soils
under them for their common use, subject only to the rights
since surrendered by the Constitution to the general govern-
ment."

2. Novotny, "Legal Aspects of Marine Farming Operations - A Game
of Tournament Chess," in Northern Mariculture Laws Oregon
State University Sea Grant College Program (1975), p. 26.

3. House Report No. 215 (To accompany H.R. 4198, 83d Congress,
1st Session), on the Submerged Lands Act (March 23, 1953),
p. 1426. The Report also cites 22 other instances between
1847 to 1943 where grants were made by states to the federal
government of offshore areas which "might be considered either
inland or marginal sea waters," and concludes: "These facts
established conclusively that the States, during more than a
century, have been exercising the highest rights of ownership
by conveying to the United States a part of the submerged
lands within their boundaries."

4. Smith v. Maryland (18 Haw. 74), McCready v. Virginia (94 U.S.
394), Manchester v. Massachusetts (139 U.S. 240, 11 S. Ct.
559).

5. House Report No. 215, supra, note 3, p. 1427. The Report
unequivocally concludes: "These affirmative acts of Congress,
and its failure to deny State ownership at any time in our
history, establish conclusively that the congressional policy,
at least since 1850, consistently has been to recognize State
ownership of the lands in question." Id.

6. Testimony at hearings before the Senate Interior and Insular
Affairs Committee on S.J. Res. 13, etc., 83d Cong. 1st Sess.
341, and Joint Hearings before House Committee on Judiciary,
Senate Special Judiciary Subcommittee on H.J. Res. 118, etc.,
79th Cong. 1st Sess. 82.

V-8

THE HISTORICAL BACKGROUND VA)(1)

7. S. Rep. No. 133, 83d Cong., 1st Sess. 64, from S. Rep. No.
1592, 80th Cong., 2nd Sess.

8. H.R. Rep. No. 695, 82d Cong., 1st Sess., accompany H.R. 4484,
at 5 (July 12, 1951); also U.S. v. California, 332 U.S. 19,
39 (1947). In U.S. v. Louisiana, 363 U.S. 1 (1960, at 94-95,
Justice Black, in dissenting, stated: "Not only have the
States' possession, dominion and sovereignty over these mar-
ginal belts been open and notorious, but that is coupled
with the fact that for much more than a century federal de-
partments and agencies not only acquiesced in but unequivo-
cally recognized the States' rightful claims to these belts."

9. S. Rep. No. 133, 83d Cong., 1st Sess. 64 (1953), from S. Rep.
No. 133, 2d Sess, also see 332 U.S. 19, at 40. Justice Black,
363 U.S. 1 (1960), dissenting, noted at 94: "Very large sums
of money have been spent by the States and their public agen-
cies and grantees in the development and improvement of the
marginal submerged lands adjacent to the States' borders."

10. U.S. v. California, 332 U.S. 19 (1947), at 23.

11. S. Rep. No. 1592, (To accompany S. 1988, 80th Cong., 2d Sess.)
at 17-18 (June 10, 1948), noted that the legal profession
had long assumed State ownership of all lands under navigable
waters, to the limits of state boundaries. The report stated:
"The evidence is conclusive that not only did our most emi-
nent jurists so believe the law to be, but such was the belief
of lower Federal court jurists and State supreme court jurists
as reflected by more than 200 opinions. The pronouncements
were accepted as the settled law by lawyers and authors of
leading legal treatises." Id.

12. 41 U.S. (16 Pet.) 376 (1842).

13. 41 U.S. 212 (1845).

14. Id., at 224. The Court stated that under Article I, Section
8, Clause 16 of the Constitution, the federal government owned
only those public lands specifically ceded by particular states
to the United States, or specifically purchased by the federal
government for federal uses. The U.S. government possessed
municipal sovereignty and the power of eminent domain over
public lands only until a territory became a state. Tide-
lands were public lands, had not been ceded by the individual
states, and were therefore owned by those states.

15. Id., at 223.

16. Smith v. Maryland, 18 How. 71, 74; Mumford v. Wardwell, 6
Wall. 423, 436; Weber v. Harbor Commissioners, 18 Wall. 57,

V-9

THE HISTORICAL BACKGROUND V(A) (1)

65-66; McCready v. Virginia, 94 U.S. 391, 394; Shively v.
Bowlby, 152 U.S. 1, 26-28; Manchester v. Massachusetts, 139
U.S. 240, 259-260: United States v. Mission Rock Co., 189
U.S. 391, 404; Louisiana v. Mississippi, 202 U.S. 1, 52;
The Abby Dodge, 223 U.S. 166, 174; Borax, Ltd., v. Los Angeles,
296 U.S. 10, 15-16.

17. Supra, note 16.

18. Id., at 341 [Emphasis added].

19. 255 U.S. 49, 65 L. Ed. 500.

20. Id., at 63 [Emphasis added]. The Supreme Court itself acknowl-
edged in U.S. v. California, supra, note 10, at 36, that the
language the Court had used in these cases appeared "strong
enough to indicate that the Court then believed that states
not only owned tidelands and soils under navigable inland
waters, but also owned soils under all navigable waters within
their territorial jurisdiction, whether inland or not."

21. 332 U.S. 19 (1947).

22. Id., at 30-31.

23. Id., at 29-30.

24. Id., at 30.

25. Id., at 35-36.

26. Id., at 34-35 [Citations omitted].

27. Id., at 36. The Court stated: "We are not persuaded to trans-
plant the Pollard rule of ownership as an incident of state
sovereignty in relation to inland waters out into the soil
beneath the ocean, so much more a matter of national concern.
If this rationale of the Pollard case is a valid basis for a
conclusion that paramount rights run to the state in inland
waters to the shoreward of the low water mark, the same
rationale leads to the conclusion that national interests,
responsibilities, and therefore national rights are paramount
in waters lying to the seaward in the three-mile belt."
[Citations omitted]

28. Id., at 38-39.

29. 329 U.S. 699 (1950).

30. 329 U.S. 707 (1950).

V-10

THE HISTORICAL BACKGROUND V(A) (1)

31. Alabama v. Texas (1954), 347 U.S. 272, 282, Justice Douglas
dissenting.

32. U.S. v. Texas, 329 U.S. 707, 719.

33. The latest case being U.S. v. California (1980). The U.S.
Department of Justice is also reported to be about to file
a suit against the State of Hawaii concerning the state's
exercise of jurisdiction in "archipelagic waters." John
Briscoe, Deputy Attorney General, State of California, per-
sonal communication (July, 1980).

34. U.S. v. Louisiana, 363 U.S. 1, 6-7, N. 4 (1960).

35. Armstrong & Ryner, Coastal Waters: A Management Analysis
(Ann Arbor Science Publishers, Ann Arbor; 1978), p. 22.

36. 67 Stat. 29, 43 USC Section 1301, et. eq. The SLA was found
constitutional in Alabama v. Texas (1954), 374 U.S. 272. The
Court ruled the SLA was a proper disposition of federal
territory.

37. Both House and Senate reports attached to the SLA indicate
that Congress basically sought to undo what the Supreme Court
had wrought in the California, Louisiana and Texas decisions.
Eg., S. Rep. No. 133, 83d Cong., 1st Sess., to accompany S.J.
Res. 13, at 7-8 (March 27, 1953): "The purpose of this legis-
lation is to write the law for the future as the Supreme Court
believed it to be in the past -- that the States shall own
and have proprietary use of all lands under navigable waters
within their territorial jurisdiction, whether inland or sea-
ward, subject only to the governmental powers delegated to
the United States by the Constitution." Justice Black, in
U.S. v. Louisiana, 363 U.S. 1, 90, notes "the congressional
expressions, stated time and time again that the Act's purpose
was to restore to the States what Congress deemed to have been
their (the States') historical rights and powers."

38. Black, J., dissenting in U.S. v. Louisiana, supra, note 37,
at 98-99. Justice Black stated this as the view of Congress,
not as his own view. S. Rep. No. 133, supra, note 35, at 67,
reprinting S. Rep. No. 1592, 80th Cong. 2d Sess., under the
heading "Equity best served by establishing State ownership,"
summarizes the equity argument: "The evidence shows that the
States have in good faith always treated these lands as their
property in their sovereign capacities; that the States and
their grantees have invested large sums of money in such lands;
that the States have received, and anticipate receiving large
income from the use thereof, and from taxes thereon; that the
bonded indebtedness, school funds, and tax structures of sev-
eral States are largely dependent upon State ownership of

V-11

THE HISTORICAL BACKGROUND V(A) (1)

these lands; and that the legislative, executive, and judi-
cial branches of the Federal Government have always consid-
ered and acted upon the belief that these lands were the
properties of the sovereign States.

"If these same facts were involved in a dispute between pri-
vate individuals, an equitable title to the lands would result
in favor of the person in possession . . *" The 1953 Report
itself concludes, at 24: "By this joint resolution the Fed-
eral Government is itself doing the equity it expects of its
citizens."

39. U.S. v. Maine (1975), 420 U.S. 515, at 527.

40. House Report No. 215, supra, note 5, states at 1396: "All
agree that only the Co ngress can resolve the long-standing
controversy between the States of the Union and the depart-
ments of the Federal Government over the ownership and con-
trol of submerged lands. . . The longer it continues, the
more vexatious and confused it becomes. Interminable liti-
gation has arisen between the States and the Federal Govern-
ment, between applicants for leases under the Federal Mineral
Leasing Act and the Departments of Justice and Interior, and
between the States and their lessees. Much-needed improve-
ments on these lands and the development of strategic natural
resources within them have been seriously retarded. The com-
mittee deems it imperative that Congress resolve this need-
less controversy at the earliest possible date and bring to
an end, once and for all, the confusion, chaos, inequities,
and injustices that have resulted from the inaction of Con-
gress."

41. S. Rep. No. 133, supra, note 37, at 61, from S. Rep. No. 1592,
states: "lWe are certain that until the Congress enacts a
law consonant with what the States and the Supreme Court be-
lieved for more than a century was the law, confusion and
uncertainty will continue to exist, titles- will remain clouded,
and years of vexations and complicated litigation will result."

42. Id., at 71, states: "Local controls and promptness action
are highly desirable. The fixed, inflexible rules and the
delays and remoteness which are inseparable from a central-
ized national control would, in the committee's judgment,
be improvident."

43. Id., at 70, states: "The committee believes the failure to
continue existing State control will result in delaying for
an indefinite time the intensive development now under way
on these lands and that any delay is, in the words of Secre-
tary Forrestal, 'contrary to the best interest of the United
States from the viewpoint of national security."'"

V-12

THE HISTORICAL BACKGROUND V(A)(1)

44. 67 Stat. 462, 43 USC Section 1331 et seq. The OCSLA declared
the policy of the United States to be that "the subsoil and
seabed of the Outer Continental Shelf appertained to the
United States and are subject to its jurisdiction, control,
and power of disposition as provided in this sub-chapter."
(43 USC Section 1332(a)).

45. Dean Rusk, "Sea Changes and The American Republic," 9 Georgia
Journal of International and Comparative Law 1 (1979), p. 4.
Rusk criticizes the lack of a national "ocean policy" despite
the passage of the SLA and the OCSLA.

46. 373 U.S. 1 (1960).

47. 382 U.S. 448 (1966).

48. 420 U.S. 515 (1975)

49. Eg., Skiriotes v. Florida 313 U.S. 69 (1941). These powers
are discussed more fully in subsection (B)(3) of this report.

50. Eg., Deepwater Port Act of 1974, Coastal Zone Management Act
Amendments of 1976, OCSLA Amendments of 1978, and the OTEC
Act of 1980.

V-13

PROPRIETARY RIGHTS V (A) (2)

A. STATE OWNERSHIP OF OFFSHORE RESOURCES

2. Proprietary Rights Granted to the States by the Submerged
Lands Act

Q: Does the State have ownership rights in its offshore waters
within state boundaries?

A: Under the SLA, the State owns the submerged lands
and natural resources in the marginal sea within
state boundaries, and has the right to manage,
administer, lease, develop, and use these lands
and natural resources. It appears that the State
also has proprietary rights to the water column
and water surface as well.

The Submercied Lands Act relinquished to the states the inter-
est of the federal government in all lands beneath navigable waters
within state boundaries. The states were given title to and owner-
ship of not only these submerged lands but also of the natural re-
sources within such lands and the superjacent waters. IThe SLA
explicitly recognized and granted to the respective states "the
right and power to manage, administer, lease, develop, and use the
said lands and natural resources all in accordance with applicable
State law."2 Such rights incident to ownership are considered by
law to be proprietary rights.

The SLA grants to the states the power to lease areas of the
ocean bottom. However, the SLA does not explicitly mention the
water column in its grant to the states. Since mariculture proj-
ects as well as ocean platform technologies require some degree
of exclusive use of ocean space because of the nature of these
operations, it must be determined whether the State has the right
and power to lease the vertical water column and the ocean surface
within the marginal sea.

As stated in the previous subsection, the SLA was enacted
primarily in response to the controversy concerning conflicting
state and federal assertions of jurisdiction over oil and other
minerals in the seabed. New ocean uses such as mariculture and

V-14

PROPRIETARY RIGHTS V(A) (2)

ocean platform technologies were not contemplated at the time of
the Act. One commentator has stated,

"[Tihe Submerged Lands Act only conveyed federal
right, title and interest in 'land, improvements
and natural resources.' Submerged Lands Act, 43
U.S.C. Section 1311 (b). The Act dealt only with
the then existing state claims. Future state
claims, whether for a superport or a mariculture
activity, are not expressly included within the
conveyance of right, title and interest. Because
mariculture does not involve exploitation of exist-
ing natural resources and requires use of the
water column, the potential for intergovernmental
conflict exists.`"3

No definitive statement can be made in answer to the question
of whether the SLA extends State proprietary authority to the ocean
water column itself. However, four arguments can be made which
strongly suggest that the State of Hawaii may lease ocean waters
in addition to offshore submerged lands:

(1) The SLA's definition of "natural resources" includes "oil,
gas, and all other minerals, and fish, shrimp, oysters, clams,
crabs, lobsters, sponges, kelp, and other marine animal and plant
life."'' This broad definition of natural resources "on its face,
would seem to include virtually all living and non-living resources
on or beneath the ocean floor or within the water column." 5Taken
in context with the equally broad language describing the rights
and powers which the states may exercise over the submerged lands
themselves, as well as these natural resources, the plain inference
is that Congress intended the states to exercise proprietary rights
for all purposes not specifically excluded by the SLA.6

The SLA does specify certain exceptions to its grant of author-
ity to the states (these are discussed in subsection (C) (1), below).
It therefore seems significant that while the SLA did not specifi-
cally include ownership of the water column in the grant of author-
ity to the states, such ownership was not specifically excluded
either. Congress reserved to the federal government no proprie-
tary rights in the marginal sea, either waters or submerged lands.

V-15

PROPRIETARY RIGHTS V(A) (2)

This reinforces the inference that Congress intended the states
now possess all proprietary rights which the Supreme Court had
declared the federal government to hold.

It is on this basis that one commentator concludes, "a state
may lease land and the adjacent water column for mariculture prac-
tices and may exclude all non-licensed persons from fishing within
areas leased for mariculture purposes."7

(2) The intent of Congress in the SLA was to "restore" state
proprietary rights which had been recognized prior to the 1947
Supreme Court decision in U.S. v. California. 8Before 1947, the
Supreme Court had recognized that the states had proprietary rights
to the waters above state-owned submerged lands. In McCready v.
Virginia (1877), 9the Supreme Court stated, "The principal has
long been settled in this Court that each State owns the beds of
all tide-waters within its jurisdiction . . . in like manner, the
States own the tide-waters themselves. . . 0In Port of Seattle
v. Oregon & Washington Railroad Co. (1921), 11the Court stated,

"The character of the State's ownership in the
land and in the waters is the full proprietary
right. The States, being the absolute owner
of the tideland and of the waters over them,
is free, in conveying tidelands, either to
grant with them rights in the adjoining water
area, or to completely withhold all such
rights."12 [Emphasis supplied]

It is clear that prior to 1947, the Court had recognized
state ownership rights to the water column overlying tidelands
within state boundaries. U.S. v. California did not change this
rule.

In U.S. v. California, the Court tied the national interest
in controlling activities occurring on the surface and in the
water column of the open sea to federal ownership of the submerged
lands, including "full dominion over the resources of the soil." 13
But the SLA specifically quitclaimed these federal proprietary

V-1 6

PROPRIETARY RIGHTS V(A) (2)

interests to the states. Congress authorized the states instead
to exercise all conceivable proprietary rights over submerged
lands and natural ocean resources. If federal control over the
ocean itself, out to the three-mile limit, justified federal own-
ership of the lands beneath the ocean, then conversely, the ceding
of these submerqed lands to the states ought to carry with it pro-
prietary control of the overlying waters, at least to the extent
that such control does not interfere with national interests that
the SLA explicitly recognizes. There is no reason to believe that
a State ocean leasing program which guarantees proper review of
all ocean lease applications by all concerned federal agencies
would present any conflict with the national interest, as defined
by either the SLA or the Supreme Court in U.S. v. California.
Therefore, since the Supreme Court has held that (a) state owner-
ship of submerged tidelands vests the states with ownership rights
to the overlying waters, (b) control of ocean waters is inseparable
from ownership of the offshore submerged lands, and (c) the SLA is
a constitutional disposition of federal territory to the states,
it may be deduced that state ownership of offshore submerged lands
ought to vest the State with ownership rights to overlying ocean
waters. 14

(3) The accepted legal definition of "land" also points to
the conclusior' that state ownership rights in the water column are
sufficient to support state-licensing of mariculture and other
fixed-location offshore activities. The legal definition of "land"
generally includes all interests connected with the land. Land
"includes not only, the soil or earth, but also things of a perma-
nent nature affixed thereto or found therein, whether by nature,
as water. . . .It embraces not only the surface of the earth,
but everythinci under or over it. . . .It has in its legal signif-
ication an indefinite extent upward and downward." 15

Although court rulings concerning "navigable airspace" have
limited this traditional definition with regard to ownership of

V- 17

PROPRIETARY RIGHTS V (A) (2)

air rights, the Supreme Court has held that "[tihe landowner owns
at least as much of the space above the ground as he can occupy or
use in connection with the land." 16 Landowners retain a right to
utilize the airspace above their lands insofar as this does not
present a safety hazard for aircraft. By the same token, the
State as submerged lands owner ought to obtain a right to utilize
the ocean space above submerged lands insofar as this does not
present a safety hazard for surface and subsurface water craft.

(4) Many states now exercise leasing powers within their adja-
cent ocean waters. Some of these states have enacted laws which
explicitly authorize state leasing of the vertical water column.
Other state leasing laws governing the exploitation of ocean re-
sources such as oil in practical effect grant exclusive use of the
vertical water column. Neither private citizens nor the federal
government have thus far successfully challenged any state's exer-
cise of water column leasing powers.

V-18

PROPRIETARY RIGHTS V(A)(2)

FOOTNOTES

1. 43 U.S.C. �1311.

2. 43 U.S.C. �1311(a).

3. Smith & Marshall, Mariculture: A New Ocean Use, 4 Ga.
J. Int'l Comp. L. 307, p. 316 n. 57 (1974).

4. 43 U.S.C. �1301(e).

5. J. Armstrong, P. Ryner, Coastal Waters, A Management Analysis
(1978) at 24.

Smith & Marshall, supra, note 4, p. 321, suggests that the
definition seems broad enough to cover any conceivable mari-
culture operation.

6. Smith & Marshall, p. 317.

7. Id. at 321-22.

8. 332 U.S. 19 (1947).

9. 94 U.S. 391 (1877).

10. Id. at 395 [Emphasis supplied].

11. 255 U.S. 58 (1921).

12. Id. at 63.

13. 332 U.S. 19 (1947), at 39.

14. In the recent case of Brusco Towboat Co. v. Oregon, Or. App.,
567 P. 2d 1037 (1977), plaintiffs argued that the public, not
the state in its proprietary capacity, owned the waters of
the state. The Oregon Court of Appeals rejected this argu-
ment, stating that it was "based upon the erroneous assump-
tion that ownership of the land does not confer title to the
overlying waters. The state is the owner of both the navi-
gable waters and the underlying land. Port of Seattle v.
Oregon and W.R.R., 255 U.S. 56, 63, 41 S. Ct. 237, 65 L. Ed.
500 (1921)." Id. at 1042, n. 7.

The Oregon Supreme Court in Brusco Towboat Co. v. Oregon, Or.
589 P. 2d 712 (1978), stated that the Oregon Court of Appeals'
ruling on this issue was not necessary. The court instead

V-19

PROPRIETARY RIGHTS V(A) (2)

asserted that "[t]he state's ownership of the submerged and
submersible land alone is sufficient to justify the rental
which the Board proposes to charge for occupation of the sur-
face of the water." Id., at 718. The Brusco cases are dis-
cussed in greater detail in later sections of this report.

15. Black's Law Dictionary (Revised 4th ed. 1968).

16. United States v. Causby, 328 U.S. 256 (1946), at 264.

V-20

POLICE POWERS V(B) (1)

B. STATE REGULATION OF OFFSHORE RESOURCES

1. Police Powers of the States

Q: What is the extent of the State's powers over its offshore
waters?

A: In addition to proprietary rights, the State has
police powers which can be used to conserve, develop,
manage, and control its offshore resources in the
interest of public health, safety and welfare.

In addition to proprietary rights established by the passage
of the Submerged Lands Act, each state has broad policing powers
to regulate or prohibit activities within its boundaries in the
interest of public health, safety and welfare. 1These police
powers are inherent government powers reserved to the states,
unless specifically granted to the Federal Government by the U.S.
Constitution. 2

State police powers extend to all state marine waters. The
U.S. Supreme Court has held that a state "has the power to regulate
and control activity within her territorial waters, at least in

absence of conflicting federal legislation." 3The Hawaii State
Constitution specifically grants to the State of Hawaii "the power
to manage and control the marine, seabed and other resources lo-
cated within the boundaries of the State.4

Thus Hawaii, as a coastal state, may restrict or regulate of f-
shore ocean activities within its boundaries. Absent federal re-
striction, Hawaii may regulate navigation within its waters. A
state may act to improve its waterways or remove obstructions

therein for the general purpose of aiding navigation. 5A state
may also authorize activities which impede or obstruct navigation
such as the erection of structures in the waters, if such activi-
ties serve the public good. 6

Police powers may be validly exercised to protect and conserve
a state's natural resources. 7A state may act to protect the na-
tural environment or the ecology of an area. 8Thus any activity

V-21

POLICE POWERS V(B) (1)

taking place within a state's marine waters which may have an ad-
verse impact on the natural environment may be regulated under the
police powers of the state. Federal courts have recognized a
state's right to take positive action with regard to natural re-
sources as well: "[N]othing is more universally recognized than
the right which inheres in the state to conserve, protect and de-
velop its resources for the people's general welfare and prosper-
ity.11 Recent decisions have also recognized "ecological values"
as a basis for the exercise of the State's police powers. 10The
Hawaii State Constitution relating to "Conservation and Develop-
ment of Resources" directs the State to exercise its police powers
to conserve, protect and develop its resources. However, this
provision qualifies the type of "development and utilization of
these resources" (which include water and energy sources):

"For the benefit of present and future genera-
tions, the State and its political subdivisions
shall conserve and protect Hawaii's natural
beauty and all natural resources, including
land, water, air, minerals and energy sources,
and shall promote the development and utiliza-
tion of these resources in a manner consistent
with their conservation and in furtherance of
the self-sufficiency of the State."11

The police powers of a state may be exercised to provide for
economic needs, and to protect against economic harm.1 A state
may take police action to increase the industries of the state and
to develop its resources for the general prosperity of the state.1

As part of its power to control and regulate the exploitation
of natural resources, a state may regulate the taking of fish and
game. 14A state may take such action as is reasonably necessary
to preserve the fish and game within its jurisdiction from exterm-
ination. 15In the absence of limiting federal legislation, the
regulation of coastal fisheries falls within the scope of a state's
police power. 16The Hawaii State Constitution specifically reserves

V-22

POLICE POWERS V(B) (1)

to the State of Hawaii the power to manage and control "state-
licensed mariculture operations." 17

Aesthetics may be a valid object of state police measures.
Whether a state may regulate private activities solely or predomi-
nantly upon aesthetic considerations is not presently a settled
point of law. Some courts have ruled that police power regulations
based solely upon aesthetic considerations are invalid. Several
recent decisions, however, have allowed such regulation with re-
gard to land use. In any event, it is well recognized that aesthe-
tic considerations may at least be taken into account in state
legislation directed to the public welfare. 18In Hawaii, aesthetic
considerations may be especially important. Ocean recreation is
an important aspect of the Hawaiian environment. Hawaii is also
a major tourist destination. The preservation of natural scenic
beauty therefore promotes economic well-being as well as aesthetic
and environmental values. Likewise, the preservation of historic
sites serves important economic, cultural and aesthetic ends. A
state may validly act to protect historic sites within its lands
and waters. 19

Although a state's police powers are very broad, these powers
have limitations. The Fifth Amendment to the U.S. Constitution
proclaims. "No person shall . . . be deprived of life, liberty,
or property without due process of law; nor shall private property
be taken for public use without just compensation." Any state
regulation must be a reasonable means for effecting a legitimate
public purpose in order to satisfy the due process requirement.
if the exercise of the police power is overly restrictive and re-
sults in the deprivation of private property rights, just compen-
sation must be paid to the holder of these private property rights.
The private property rights that may be affected by state regula-
tion and control of offshore resources in Hawaii include konohiki
and native Hawaiian fishing rights and common law riparian rights.
These rights are discussed in detail in subsection D below.

V-23

POLICE POWERS V (B) (1)

The State of Hawaii is presently exercising many of its police
powers, and to some extent its proprietary rights in submerged
lands, to restrict, regulate and promote activities within its
marine waters. The present state and county regulatory framework
is outlined in Section VI below.

V-24

POLICE POWERS V(B)(1)

FOOTNOTES

1. Nebbia v. New York, 291 U.S. 502 (1934); W. H. Greenwell, Ltd.
v. Dep't. of Land and Natural Resources, 50 Hawaii 207, 436
P. 2d 527 (1968).

2. Berman v. Parker, 348 U.S. 26 (1954).

3. Alaska v. Arctic Maid, 366 U.S. 199, 203 (1961).

4. Article XI, Section 6.

5. Sands v. Manistee River Improvement Co., 123 U.S. 288 (1887).

6. Manigault v. Springs, 199 U.S. 473 (1905).

7. See 16A Am. Jur. 2d Constitutional Law �422 (1979).

8. Huron Portland Cement Co. v. Detroit, 362 U.S. 440 (1960).
However, the Port and Waterways Safety Act of 1972, 33 U.S.C.
1221 (1976) authorizes the Federal Government to "establish
vessel size and speed limitations." 33 U.S.C. 1331(33)(iii)
(1976). The U.S. Supreme Court has held that this Act "in-
tended uniform national standards for design and construction
of tankers that would foreclose the imposition of different
or more stringent state requirements." Ray v. Atlantic Rich-
field Co. and Seatrain Lines, Inc., 435 U.S. 151, 174 (1978).
The U.S. Supreme Court invalidated a Washington State law ex-
cluding tankers in excess of 125,000 deadweight tons from
entering Puget Sound even though the State aimed at insuring
vessel safety and thereby protecting the marine environment.

9. Phillips Petroleum Company v. Jones, 147 F. Supp. 122 (DC
Okla., 1955).

10. Brecciaroli v. Connecticut Commissioner of Environmental Pro-
tection Agency, 36 Conn. L. J. 5 (1974). See also Zabel v.
Tabb, 430 F. 2d 199 (5th Cir. 1970) cert. denied, 401 U.S.
910 (1971) which stands for the proposition that the Corps
of Engineers is entitled, if not required, to consider ecolo-
gical factors prior to granting dredge and fill permits.

11. Article XI, Section 1 [Emphasis added].

12. Veix v. Sixth Ward Bldg. & Loan Assoc., 310 U.S. 32 (1939).

13. Bayside Fish Flour Co. v. Gentry, 297 U.S. 422 (1935).

V-25

POLICE POWERS V(B) (1)

14. Lawton v. Steele, 152 U.S. 133 (1894).

15. Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1 (1928);
Lacoste v. Dept. of Conservation, 263 U.S. 545 (1924).

16. Manchester v. Massachusetts, 139 U.S. 240 (1891).

17. Article XI, Section 6.

18. In Berman v. Parker, 348 U.S. 26, 33 (1954), the U.S. Supreme
Court stated, [T]he concept of the public welfare is broad
and inclusive. The values it represents are spiritual as well
as physical, aesthetic as well as monetary. It is within the
power of the legislature to determine that the community
should be beautiful as well as healthy, spacious as well as
clean, well-balanced as well as carefully patrolled. [Cita-
tions omitted]

19. See Maher v. City of New Orleans, 516 F. 2d 1051 (5th Cir.,
1975); Penn Central Transportation Co. v. City of New York,
42 N.Y. 2d 324, 397 N.Y.S. 2d 914, 366 N.E. 2d 1271 (1977).

V-26

REGULATORY POWERS V(B) (2)

B. STATE REGULATION OF OFFSHORE RESOURCES

2. Regulatory Powers Granted by Federal Legislation

Q: What is the extent of the state's powers over its offshore
waters?

A: Under several federal statutes, state authority to
regulate offshore activities is maintained or in-
creased in scope.

In our federal system of government, both the states and the
federal government may regulate offshore activities. Federal law,
however, is preeminent in any conflict between state and federal
regulations. Federal limitations upon State authority over of f-
shore waters are discussed in subsections V(C). This section re-
views the federal statutes which increase the scope of state autho-
rity to regulate offshore activities.

The Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, 1recognizes the basic responsibility of
the states to control water quality within their boundaries. 2The
states are authorized by this Act to regulate waste treatment and
management, 3and to implement and administer permit programs to
enforce effluent limitations and water quality standards. 4States
may also regulate the discharge of dredged or fill material into
state waters. The Act specifically recognizes, and the U.S.
Supreme Court has confirmed that states may enact water quality
standards and enforcement regulations which are more stringent
than parallel federal regulations. 6

The Fishery Conservation and Management Act of 1976 (FCMA) 7
establishes an exclusive 200-mile fishery conservation zone con-
tiguous to the three-mile marginal sea. The FCMA fixes federal
control of the 197-mile zone beyond state waters, while specific-
ally reserving to the states continued authority and jurisdiction
within state boundaries. 8The FCMA also extends to the states a
limited role in the management of the 197-mile fishery conservation
zone beyond state waters. The Act provides for state representa-

tion on regiona.l fishery management councils. 9These councils are

V-27

REGULATORY POWERS V(B) (2)

responsible for preparing and implementing fishery management plans
for all fisheries within their regional jurisdiction. It must be
noted, however, that the FCMA also provides that under certain
special circumstances, the Secretary of Commerce may regulate fish-
ing within the boundaries of a state. 10State regulation may there-
fore be subject to possible federal override.

The Coastal Zone Management Act of 1972 (CZMA) 11recognizes
basic state responsibility for management and planning within state
coastal zones. Congress found that:

"The key to more effective protection and use
of the land and water resources of the coastal
zone is to encourage the states to exercise their
full authority over the lands and waters in the
coastal zone by assisting the states, in cooper-
ation with Federal and local governments and
other vitally affected interests, in developing
land and water use programs for the coastal
zone. . . "12

Under the CZMvA, states may receive federal grants for the
development of coastal management programs. 13Once a program is
approved, federal money is available to support its implementa-
tion. 1

The CZMvA is more than a grant program, however. once a
state management plan is approved, federal actions affecting the
state's coastal zone must be "consistent" with the state's pro-
gram. There are four categories of activities which are subject
to the federal consistency requirements: (1) Activities supported
or conducted by a federal agency which directly affect the coastal
zone; (2) Development projects conducted by federal agencies which
are actually within a state's coastal zone; (3) Activities affect-
ing land or water uses in the coastal zone that require a federal
license or permit; (4) State or local government activities re-
ceiving federal assistance under other federal programs and which
affect the coastal zone. 1

V-28

REGULATORY POWERS V(B) (2)

In situations (1) and (2) above, the federally supported or
conducted activities must be consistent with the state's plan
only "to the maximum extent practicable." For such activities,
the responsible federal agency itself reaches the consistency de-
termination. If the state disagrees with the federal agency's
determination, it can respond by notifying the agency of the basis
of its disagreement and describing alternative measures which would
ensure consistency. 16If a serious disagreement arises between
the federal agency and the coastal state, the CZMA provides for
mediation by the Secretary of Commerce. 17

For activities requiring a federal permit or license, or for
state or local government activities receiving federal assistance,
situations (3) and (4) above, the consistency requirements are
much stronger. The states have'an effective veto power over the
issuance of federal permits, licenses or federal assistance grants.
In order to obtain a federal license or permit for a project which
affects a state's coastal zone, an applicant must certify to the
federal licensing or permit-granting agency that the proposed proj-
ect is consistent with the state CZM program. If the state program
opposes such a certification, the federal permit or license must
be denied. 18Similarly, if a state CZM program opposes a federal
assistance activity, the federal grant to the applicant agency of
the state or local government may not be released. 19However, this
veto power of the states is not absolute. The Secretary of Com-
merce may override a state's objection to a proposed activity if
he finds that the activity is consistent with the objectives of
the CZMA or "is otherwise necessary in the interest of national
security." .20

The consistency provisions of the CZMA provide each coastal
state with substantial control and influence over activities
located within or directly affecting the state' s coastal zone.
One obvious effect of the consistency provisions is that any per-
mit issued by the U.S. Army Corps of Engineers pursuant to its

V-29

REGULATORY POWERS V(B) (2)

broad jurisdiction of navigation, dredging and filling must be con-
sistent with a state's CZM program.

Federal legislation has also extended to the states consider-
able influence over activities occurring beyond state boundaries
on the outer continental shelf. The CZMA was amended in 1976 to
include a consistency provision which requires that any plan for
the exploration, development of, or production from any area
leased under the outer Continental Shelf Lands Act (OCSLA), 21
which affects a state's coastal zone, must be consistent with the
state's CZM program. 22The OCSLA itself was amended in 1978 to
provide for review by, and consultation with the states concern-
ing the leasing and development of outer continental shelf lands. 23
This has little relevance to Hawaii, however, where no continen-
tal shelf exists.

Other federal statutes extend state influence over specific
activities occurring beyond state boundaries. The Deepwater Ports
Act of 1974, 24which provides a framework for the licensing of
deepwater ports beyond the three-mile zone, allows an adjacent
coastal state to veto the issuance of a license. An "adjacent
coastal state"' is one that is directly connected by pipeline to
a proposed deepwater port or is within 15 miles of such a port.

The Deepwater Ports Act also makes the civil and criminal
laws of the nearest adjacent state applicable to deepwater ports. 25
The Outer Continental Shelf Lands Act contains a similar provi-
sion which makes the civil and criminal laws of the adjacent state
applicable to the subsoil and seabed of the outer continental
shelf, and to artificial islands and fixed structures thereon. 26

Congress has recently enacted the Ocean Thermal Energy Con-
version Act of 1980 (P.L. 96-320) (August 3, 1980) which provides
a framework for the licensing, siting, and financing of OTEC facil-
ities and plantships. The Act provides a one-stop federal licens-
ing scheme, but allows an adjacent coastal state to veto the issu-
ance of a federal license. The governor of an adjacent coastal

V-30

REGULATORY POWERS V(B) (2)

state with a federally approved State CZM plan must approve the
OTEC project before a federal license will be issued. 27An "adja-
cent coastal state" is defined in the Act as a state which is di-
rectly connected by pipeline or electric transmission cable to an
OTEC facility, or in whose waters an OTEC facility or plantship
would be operated. 28A state may also be designated an "adjacent
coastal state" if the risk of damage to its coastal environment is
greater than, or equal to, the risk posed to a state directly con-
nected to the proposed OTEC facility, or if the thermal plume of
a proposed OTEC facility will impinge on possible locations for
other OTEC facilities which can be directly connected to such
state. 29

Coastal states may also influence the conduct of federal
activities through the National Environmental Policy Act (NEPA). 30
NEPA requires the filing of environmental impact statements for
major federal actions, and the adoption by federal agencies of
procedures for considering environmental concerns. Although NEPA
does not substantively extend state power, a state as well as pri-
vate individuals or organizations can challenge federal decisions
affecting the coastal zone on procedural grounds. Until compli-
ance with NEPA is judicially confirmed, an ocean activity may be
halted entirely. A state can therefore significantly delay an
ocean project which it opposes by judicially challenging the proj-
ect's compliance with NEPA. The threat of such a delay can pro-
vide political leverage to the state. 3

V-31

REGULATORY POWERS V(B)(2)

FOOTNOTES

1. 33 U.S.C. �1251-1376 (Supp. II, 1978).

2. Id. �1251(b).

3. Id. ��1281, 1288.

4. States have the authority to administer the permit program
for the National Pollutant Discharge Elimination System, if
the state program meets federal standards and is approved.
In Hawaii, the Department of Health administers the program.

5. The State of Hawaii has not set up a program to implement
this permit process. The U.S. Army Corps of Engineers is
presently administering it.

6. See Askew v. American Waterways Operators, Inc., 411 U.S.
325 (1973).

7. 16 U.S.C. ��1801-1882 (1976).

8. Id. �1856(a) (Supp. II 1978) provides: "In general.--Except
as provided in subsection (b) of this section, nothing in this
chapter shall be construed as extending or diminishing the
jurisdiction or authority of any State within its boundaries.
No State may directly or indirectly regulate any fishing which
is engaged in by any fishing vessel outside its boundaries,
unless such vessel is registered under the laws of such State."

9. Id. �1852.

10. Id.. �1856(b) provides: "Exception.--If the Secretary finds
after notice and an opportunity for a hearing in accordance
with section 554 of Title 5, that--

(A) the fishing in a fishery, which is covered by a
fishery management plan implemented under this chapter
is engaged in predominately within the fishery conser-
vation zone and beyond such zone; and

(b) any State has taken any action, or omitted to take
any action, the results of which will substantially and
adversely affect the carrying out of such fishery manage-
ment plan;

the Secretary shall promptly notify such State and the appro-
priate Council of such finding and of his intention to regu-
late the applicable fishery within the boundaries of such

V-32

REGULATORY POWERS V(B) (2)

State (other than its internal waters), pursuant to such
fishery management plan and the regulations promulgated to
implement such plan. . . .

11. Id. �1451-64 (1976).

12. Id. �1451(h). [Emphasis supplied]

13. Id. �1454.

14. Id. �1455.

15. Id. �1456(c) (1)-(3), (d).

16. 15 C.F.R. ��930.30-.44 (1980).

17. 16 U.S.C. �1456(h) (Supp. II 1978); 15 C.F.R. ��930.110-.116
(1980).

18. 15 C.F.R. ��930.50-.66.

19. Id. ��930.90-.100.

20. Id. ��930.120-.134.

21. 43 U.S.C. ��1331-1343 (1976).

22. Id. �1456(c) (3)(B); 15 C.F.R. S�930.70-.86 (1980).

23. 43 U.S.C. �1345 (Supp. II 1978).

24. 33 U.S.C. ~�1501-1524 (1976).

25. Id. �1518(b).

26. 43 U.S.C. �1333(a)(2) (1976).

27. P.L. 96-320, �105.

28. Id.

29. Id.

30. 42 U.S.C. 3�4321-47 (1976).

31. See Breeden, Federalism and the Development of Outer Conti-
nental Shelf Mineral Resources, 28 Stan. L. Rev. 1107, 1130
(1976).

V-33

EXERCISE OF STATE JURISDICTION V(B) (3)

B. STATE REGULATION OF OFFSHORE RESOURCES

3. The Exercise of State Jurisdiction Beyond State Boundaries

Q: What is the extent of the state's powers over its offshore
waters?

A: In some circumstances, the state can regulate activ-
ities beyond state boundaries in order to effectively
manage its coastal resources.

Those federal statutes were earlier described which grant
states limited, or powerful but indirect control over offshore
activities beyond state boundaries. Two types of state laws also
provide authority for coastal states to regulate activities beyond
the three-mile zone. The first type of special "long-arm" stat-
utes are "landing laws." "ILanding laws" may prohibit the posses-
sion, sale or transportation of protected fish or game within a
state. Under such laws, a state may control fish or game that are
brought into the state from beyond state boundaries. 2The regula-
tions apply to all fish or game because it is impossible to dis-
tinguish between fish or game caught within or without state bound-
aries, and therefore any territorial distinctions would render
enforcement ineffective. The U.S. Supreme Court has upheld such
"extraterritorial control" as a valid exercise of state police
powers.3

State courts have also affirmed that states may prohibit pos-
session of fish taken outside the state's territorial waters in

order to conserve fish located within state waters. 4States may
even require a permit for any fishing boat traveling within state
waters although the boat catches all its fish beyond state waters.5

The second type of "long-arm" regulation is control of activi-
ties taking place beyond state boundaries but which have an effect
on natural resources located within state boundaries. In Skiriotes
v. Florida, 6the U.S. Supreme Court affirmed the conviction of a
Florida resident who used diving gear prohibited by Florida law to
harvest sponges outside the state boundaries. The Court held that

V-34

EXERCISE OF STATE JURISDICTION V(B) (3)

a state can validly exercise its police powers to control the activ-
ities of its citizens beyond the territorial limits of the state:

"If the United States may control the conduct
of its citizens upon the high seas, we see no
reason why the State of Florida may not likewise
govern the conduct of its citizens upon the high
seas with respect to matters which the State has
a legitimate' interest and where there is no con-
flict with acts of Congress.",7

The Alaska Supreme Court has recently extended the extrater-
ritorial concepts supporting the "landing laws" and the Skiriote's

type situation. In State v. Bundrant, 8the Alaska court upheld
certain state conservation measures restricting the taking of King
crab in the Bering Sea, beyond the three-mile marginal sea. The
court cited cases upholding "landing laws" to support its decision.
In those cases, however, the landing laws did not directly control
activities beyond state boundaries, but only regulated resources
brought into the state from outside. One of the justifications
for the extraterritorial aspect of the landing laws was the prob-
lem of enforcement. Nevertheless, the Alaska Supreme Court con-
cluded that "landing laws" were justified primarily on resource
conservation grounds, and that such laws did not require that an
enforcement problem be present. The court noted that the proper
inquiry into such matters is "whether the regulations bear a rea-
sonable relationship to the purpose sought to be achieved. "9 The
court concluded that since crabs are migratory creatures, the
state's regulation of activity outside the state was necessary to
conserve the crabs existing within state waters. Therefore, the
court held that a state could validly exercise its police powers
to control activities beyond its boundaries in order to conserve
a fishery resource that existed partially within state boundaries. 10

The court in Bundrant also refused to limit the Skiriotes
concept of extraterritorial control only to residents of the state.
The court cited precedents from domestic and international law and
held that Alaska could control the activities of even non-citizens

V-35

EXERCISE OF STATE JURISDICTION V(B) (3)

outside its formal territorial jurisdiction when those activities
cause detrimental effects within state boundaries. The court did
intimate, however, that the regulations can be applied only against
persons having a sufficient "inexus"i (i.e. contacts or ties) with
the State. 11

In sum, there appears to be two well-established types of
state extraterritorial control, and the Alaska court has recently
extended the possibilities of extraterritorial control in both.
This may be important in Hawaii's effort to manage its coastal re-
sources. For example, the Fish and Game Division of the Depart-
ment of Land and Natural Resources presently regulates the taking
of spiny lobsters within state waters. However the taking of
spiny lobsters beyond the three-mile limit may adversely impact
this important state reore 2Under the "landing law" concept,
the state may prohibit the possession, transportation or sale of
spiny lobsters within the state, even though the lobsters are
caught beyond state boundaries. Under the Skiriotes rule, the
state may regulate the taking of spiny lobsters beyond state bound-
aries by its own citizens. Under Alaska's extension of this rule,
the state might not only directly regulate the taking of spiny
lobsters by its own citizens beyond the three-mile limit, but if
non-resident lobster fishermen can be shown to have sufficient ties
with the state, it might also regulate their activities as well.

All the bases for state extraterritorial control may no longer
apply, however, as a result of the Congressional passage in 1976
of the Fishery Conservation and Management Act (FCMA). 13While
the FCMA reserves to the states continued jurisdiction and autho-
rity within their own boundaries, it prohibits direct or indirect
regulation of fishing outside these state boundaries, except with
respect to state-registered vesl.4 Whether or not the FCMA
has preempted all extraterritorial state power over fisheries can-
not be known until the statute is construed by the courts. The
outlook for extraterritoriality is not sanguine, however.

V-36

EXERCISE OF STATE JURISDICTION V(B) (3)

FOOTNOTES

1. See generally, Schoenbaum and McDonald, State Management of
Marine Fisheries After the Fishery Conservation and Manage-
ment Act of 1976 and Douglas v. Seacoast Products, Inc., 19
Wm. & Mary L. Rev. 17, 20-26 (1977).

2. In Silz v. Hesterberg, 211 U.S. 31 (1908) the U.S. Supreme
Court upheld a New York law prohibiting the possession of
certain game in New York during a closed season. The prohi-
bition applied to all such game, including game brought in
from outside the state. Since the purpose of the law was to
protect game located within the state, the law was upheld as
a valid police power measure.

3. In Bayside Fish Co. v. Gentry, 297 U.S. 422 (1936) the U.S.
Supreme Court upheld a California landing law which regulated
the processing of sardines regardless of where they were
caught. The purpose of the regulation was to conserve fish
used for human consumption which are found within state waters.
The Court stated: "Sardines taken from waters within the
jurisdiction of the state and those taken from without are,
of course, indistinguishable; and to the extent that the Act
deals with the use or treatment of fish brought into the state
from the outside, its legal justification rests upon the
ground that it operates as a shield against the covert deple-
tion of the local supply, and thus tends to effectuate the
policy of the law by rendering evasion of it less easy." Id.
at 426.

4. State v. Richardson, 285 A. 2d 842 (Me. 1972) (court upheld
statute prohibiting the possession of lobster, regardless of
where obtained, on a boat rigged for other or beam trawling).

5. Frach v. Schoettler, 46 Wash. 281, 280 P. 2d 1038 (1955) (court
upheld statute requiring permits for operating commercial fish-
ing boats used to catch salmon and transporting them in and
through state waters for delivery); Santa Cruz Oil Corp. v.
Milnor, 55 Cal. App. 2d 56, 130 P. 2d 256 (1942) (court upheld
statute requiring a permit for fishing vessels operating within
state waters, even though fish were caught and would be deliv-
ered outside the state).

6. 313 U.S. b9 (1941).

7. Id. at 77.

8. 546 P. 2d 530 (Alaska), appeal dismissed mem. sub nom. Uri v.
Alaska, 429 U.S. 806 (1976).

V-37

EXERCISE OF STATE JURISDICTION V(B)(3)

9. Id. at 553.

10. This rationale was followed in the subsequent case of State v.
Sieminski, 556 P. 2d 929 (Alaska 1976) which upheld Alaska's
extraterritorial regulation of the scallop fishery.

11. The "nexus" requirement was made clear in the subsequent
Sieminski case, note 11, supra, at 933.

12. The problem of extraterritorial control of spiny lobsters
was identified in personal communications with the personnel
of the Division of Fish and Game. (June 5, 1980).

13. 16 U.S.C. ��1801-1882 (Supp. II, 1978).

14. Id. �1856(a).

V-38

HAWAIIVS ARCHIPELAGIC CLAIM V(B) (4)

B. STATE REGULATION OF OFFSHORE RESOURCES

4. Hawaii's Archipelagic Claim

Q: What is the extent of the State's powers over its offshore
waters?

A. The State of Hawaii is asserting a claim of juris-
diction over the archipelagic or channel waters
between the islands.

The extent of Hawaii's territorial jurisdiction over offshore
activities is dependent upon the resolution of Hawaii's archipe-
lagic claim. Generally speaking, "archipelago" means a group of
islands. Hawaii's archipelagic claim is based on the principle
that all the Hawaiian Islands should be considered legally a sin-
gle entity, and therefore the channel waters between the islands
should fall within Hawaii's territorial jurisdiction. "Archipela-
gic theories generally recognize waters between islands as internal
waters, with baselines usually being drawn around the headlands of
all the islands in the chain, and territorial seas extending out-
ward from there. Theories vary, however, and each archipelagic
State has made its own unique claims."

For several years, the Governor and Marine Affairs Coordina-
tor of Hawaii have asserted archipelagic claims. 2In 1977, Hawaii
Governor Ariyoshi notified the U.S. Department of Interior that
the State had exclusive jurisdiction over coral bed operations

which were taking place six miles east of Makapuu, Oahu. 3The
Federal Government has not yet taken any action to resolve this
cl aim.

In 1978, the Hawaii State Constitution was amended to include
references to Hawaii's archipelagic waters. Article XI, Section 6,
states,

"The State shall have the power to manage and
control the marine, seabed and other resources
located within the boundaries of the State,
including the archipelagic waters of the State,
and reserves to itself all such rights outside

V-39

HAWAII'S ARCHIPELAGIC CLAIM V(B) (4)

state boundaries not specifically limited by
federal or international law."

in regard to Hawaii's state boundaries, Article XV, Section I of
the Hawaii Constitution now reads,

"The State of Hawaii shall consist of all the
islands, together with their appurtenant reefs
and territorial and archipelagic waters, in-
cluded in the Territory of Hawaii on the date
of enactment of the Admission Act."

Article XV's claim to archipelagic waters is far from conclusive.
The State Constitution only recognizes archipelagic waters which
were included in the Territory of Hawaii when it was admitted as
a State. Therefore, if the State's archipelagic waters claim can-
not be proven as of 1959, the Constitution makes no claim to archi-
pelagic waters at all. 4

Hawaii's archipelagic claim is not recognized in present in-
ternational law. However, the current Informal Composite Negoti-
ating Text (ICNT) of the Third United Nations Conference on the
Law of the Sea 5contains the following definitions:

a. "Archipelagic State" means a State constituted
wholly by one or more archipelagos and may in-
clude other islands;
b. "Archipelago" means a group of islands, includ-
ing parts of islands, interconnecting waters
and other natural features which are so closely
interrelated that such islands, waters and
other natural features, form an intrinsic geo-
graphical, economic and political entity, or6
which historically have been regarded as such.6

Although Hawaii appears to fall within the definition of "archi-
pelago," the ICNT only recognizes the mid-ocean archipelagic claims
of nations consisting wholly of islands. Hawaii does not qualify
as a mid-ocean archipelago because it is not a separate political
entity.7

The ICNT also provides that an archipelagic nation may draw
straight baselines Joining the outermost points of the outermost

V-40

HAWAII'S ARCHIPELAGIC CLAIM V(B) (4)

islands. However, within such baselines, the ratio of the area of
water to the area of land must be between one-to-one and nine-to-
one.8 The length of such baselines also must be less than 100
nautical miles.9 Therefore, under these provisions, Hawaii clearly
cannot assert any archipelagic claim to all waters between the
major islands and the leeward islands.

Nor is Hawaii's archipelagic claim recognized by the U.S.
federal government. In C.A.B. v. Island Airlines, Inc. (1964) 10
a Federal District Court rejected Hawaii's historic claims to
archipelagic channel waters between the Hawaiian Islands, conclud-
ing that the channel waters between the islands were international
waters. The Ninth Circuit Court of Appeals upheld this lower
court decision. 11

The District Court specified three criteria which must be
taken into consideration in determining whether a state has acquired
historic or prescriptive title to a maritime area: 1) There must
be a historic exercise of authority over the area. Such dominion
must have been formally invoked through local legislation, procla-
mation or the like; 2) The exercise of dominion by the State must
have been active and continuous; 3) The exercise of dominion must
have been accepted or acceded to by foreign states.1 The court
concluded that the evidence presented by the plaintiffs did not
adequately satisfy these criteria, and therefore no historic or
prescriptive right had been established.

It has been argued, however, that Island Airlines is not bind-
ing on the State of Hawaii.1 The bases of this assertion are:
(1) The island Airlines cases should not have reached the question
of the State's boundaries. "The Federal Courts had information
sufficient to decide the case, without reaching the merits of a
boundary question. "14 The boundary discussion was therefore dicta;
(2) The State of Hawaii was not a party to the action and is not
restricted by the judicial doctrines of res judicata or collateral

estoppel;1 (3) The court's review of the boundary claims was

V-41

HAWAIIVS ARCHIPELAGIC CLAIM V(B) (4)

inaccurate and incomplete.16 If these arguments are legitimate,
the island Airlines case does not preclude Hawaii's claim to
archipelagic waters.

The Submerged Lands Act (SLA)1 does not preclude Hawaii's
archipelagic waters claim. Although the SLA fixed state boundaries
at three miles from the coast line, the definition of "coast line"
included "the line marking the seaward limit of inland waters."18
"Inland waters" is not defined in the SLA. But the drawing of
baselines from which the three-mile territorial sea extends is
dependent upon the definition given to "inland waters." One com-
mentator states,

"If the archipelagic theory is adopted, the
three-mile zone will extend from baselines
drawn around the entire Hawaiian Island chain.
If the archipelago theory is not adopted, the
three-mile zone will extend from baselines
drawn around each individual island. The
Supreme Court has repeatedly made it clear
that States are to exercise control over no
more than three miles. But the Supreme Court
has not put to rest the question: Three miles
from what?"19

In United States v. California (1965),2 the U.S. Supreme
Court defined "inland waters" in accordance with international law.
The Court adopted the definition of the Convention of the Territo-
rial Sea and the Contiguous Zone which came into force in 1964.
The Convention set out various formulas for determining the bound-
aries of inland waters.

The Court asserted that its adopted definition of inland
waters would not be subject to change in the future, even though

international law might change. 21The Court therefore "froze" the
definition of "inland waters" in terms of the existing interna-
tional Convention definition. However, one commentator has out-
lined an argument for possible judicial recognition of Hawaii' s
archipelagic waters as "inland waters":

V-42

HAWAII'S ARCHIPELAGIC CLAIM V(B) (4)

"Perhaps 'freezing' of the definition [of 'inland
wa~ters'] should apply to the parties to the dis-
pute before the Court without prejudicing the de-
termination of baselines and inland waters for
the State of Hawaii, which has not litigated the
issue.

Language in the California case indicates that
the Supreme Court may defer to international law
in preference to the U.S. State Department in
defining terms. . . . In future litigation, the
court could turn once again to international law,
and, if new definitions of an archipelago have
become established under international law, it
is possible that the courts could adopt archi-
pelagic baselines for Hawaii.",22

The State of Hawaii continues to argue that the decision in
Island Airlines v. C.A.B. does not bar the State's claim to inland

waters in the channels between i lns23The Ninth Circuit Court
of Appeals defined "inland waters" according to international law
as did the Supreme Court in the California case. Therefore,
"should international law of the sea change so as to recognize the
archipelago theory, it is possible that the Supreme Court might
find that the inland waters are part of the internal archipelagic
waters of the State. 24

In sum, the status of Hawaii's archipelagic claims remains
unresolved. At present, neither federal law nor international law
recognizes Hawaii's claims. However, it does not appear that
Hawaii is absolutely precluded from asserting such claims.

V-43

HAWAII'S ARCHIPELAGIC CLAIM V(B) (4)

FOOTNOTES

1. K. Keith, State and Federal Regulation of OTEC Plants in
Hawaii, Vol. 2, No. 3 Solar Law Reporter, p. 490, 530 (1980).

2. Id.

3. Hawaii Business News, February 21, 1977; Honolulu Star Bulle-
tin, February 2, 1977, A-13; May 28, 1977, A-8. The State of
Hawaii defines coral beds as fisheries, H.R.S. Chapter 188,
and therefore open and free to the public, subject to a $10.00
fishery license.

4. Keith, supra, note 1, p. 536.

5. Informal Composite Negotiating Text, A/CONF. 62/WP. 10/Rev.
2, 11 April 1980.

6. ICNT, Id., Part IV, Archipelagic States, Article 46.

7. Groups of islands adjacent to a mainland, or coastal archi-
pelagos, have sometimes been recognized as extending the bound-
aries of coastal states. In the Anglo-Norwegian Fisheries
Case, I.C.J. Rep. 116 (1951), the International Court of Jus-
tice held that the islands lying off the coast of Norway en-
abled a baseline to be drawn on the seaward side of the is-
lands, thereby extending the width of Norway's territorial
sea. The court reasoned that the economic links between the
islands and the mainland justified such an extension. Argu-
ably, these considerations are also applicable to mid-ocean
archipelagos. R. Schmitt et al., The Hawaiian Archipelago:
Defining the Boundaries of the State, Working Paper No. 16,
Sea Grant College Program, University of Hawaii, 1975.

8. ICNT, supra, note 5, Part IV, Article 47(1) provides:
"Paragraph 1. An Archipelagic State may draw straight archi-
pelagic baselines joining the outermost points of the outer-
most islands and drying reefs of the archipelago provided
that within such baselines are included the main islands and
an area in which the ratio of the area of the water to the
area of the land, including atolls, is between one-to-one and
nine-to-one."

9. Id., Article 47(2) provides: "Paragraph 2. The length of
such baselines shall not exceed 100 nautical miles, except
that up to 3 percent of the total number of baselines enclos-
ing any archipelago may exceed that length up to a maximum
length of 125 nautical miles."

V-44

HAWAII'S ARCHIPELAGIC CLAIM V(B)(4)

10. 235 F. Supp. 990 (1964).

11. 352 F. 2d 735 (9th Circuit 1965).

12. Island Airlines, 235 F. Supp. at 1004.

13. Rhyne & Rhyne, "Hawaiian State Boundaries," paper submitted
to the Governor of the State of Hawaii, 87-101 (October 11,
1973).

14. Id. at 87, 91-92.

15. Id. at 93.

16. Id. at 94-101.

17. 43 U.S.C. ��1301-1315 (1976).

18. Id. �1301(c).

19. Keith, supra, note 1, at 532.

20. 381 U.S. 139 (1965).

21. Id. at 166-67.

22. Keith, supra, note 1, at 533-535.

23. Id., at 535-536.

24. Id., at 535.

V-45

CONSTITUTIONAL POWERS V(C) (1)

C. CONSTITUTIONAL AND FEDERAL LIMITATIONS UPON STATE AUTHORITY

1. Constitutional Powers of the Federal Government

Q: What are the federal constitutional and statutory limitations
upon the exercise of state authority over its offshore waters?

A: The federal government has broad powers under the
U.S. Constitution to control ocean activities which
affect federal interests. Such powers include con-
trol over national defense, international affairs,
navigation, the production of water power, conser-
vation, and environmental quality. Several federal
statutes have been enacted pursuant to these powers.

By virtue of the Submerged Lands Act, states have proprietary
rights in the marginal sea. They can also exercise their police
powers to control activities therein. However, certain rights and
controls are reserved to the federal government which can exercise
any powers specifically granted to it by the U.S. Constitution.

The SLA specifically reserved to the federal government con-
tinued authority and control over state territorial waters "for
the purposes of navigation or flood control or the production of
power. . . . "I The United States expressly retained "all its navi-
gational servitude and rights in and powers of regulation and con-
trol of said lands and navigable waters for the constitutional
purposes of commerce, navigation, national defense, and interna-
tionl afais. .. .112 These federal rights and controls do not

include, but are paramount to any of the states-' proprietary

rights.3 The myriad ways in which these paramount rights limit
state authority or have been exercised by the federal government
are outlined herein.

All matters dealing with national defense are under the exclu-
sive control of the federal government. 4The SLA provides that
in time of war or when necessary for national defense, the United
States has the right of first refusal to purchase the natural re-
sources in the marginal sea and can acquire or use the submerged
lands by paying just compensation. 5

V-46

CONSTITUTIONAL POWERS V(C) (1)

The President of the United States has the exclusive power
to make treaties with foreign nations with the advice and consent
of the U.S. Senate. 6The States are forbidden to enter into any

treaty, alliance, or confederation with a foreign power. 7No
state can therefore enter into any independent treaty with a
foreign nation in regard to such matters as regulation of fish-
eries or pollution control. 8

The federal government also has broad powers to regulate all
aspects of international affairs. 9The U.S. Supreme Court has
stated that "although there is in the Constitution no specific
grant to Congress of power to enact legislation for the effective
regulation of foreign affairs, there can be no doubt of the exis-
tence of this power in the law-making organ of the Nation." 1
The President also has broad powers in foreign affairs as the
exclusive representative of the nation 11and as Commander in Chief
of the Armed Forces. State laws must not intrude into the field
of foreign affairs which the Constitution entrusts to the Presi-
dent and Congress. 12As the U.S. Supreme Court has stated, the
"1power over external affairs is not shared by the States; it is
vested in the national government exclusively." 13

The Commerce Clause of the U.S. Constitution provides the
major source of federal authority over the marginal sea. Congress
has the power to "regulate commerce with foreign nations, and
among the several states. . . . "1 In Gibbons v. Ogden (1824), 1
the U.S. Supreme Court held that as a part of the power to regu-
late interstate commerce, the federal government has the right to
regulate navigation. The Court stated,

[A111 America understands, and has uniformly
understood, the word "commerce," to comprehend
navigation. It was so understood, and must
have been so understood, when the Constitution
was explained. The power over commerce, in-
cluding navigation, was one of the primary ob-
jects for which the people of America adopted
their government,, and must have been contem-
plated in forming it.16

V-47

CONSTITUTIONAL POWERS V(C) (1)

The federal government's powers under the Commerce Clause go
far beyond the control of navigation, however. One extension of
the federal government's commerce powers is dominion over the use
of water as a power resource. The definition of "natural resources"
in the SLA specifically excludes "water power, or the use of water
for the production of power." 17 The U.S. Supreme Court originally
recognized the federal claim of jurisdiction over the use of water
for the production of power in United States v. Appalachian Elec-
tric Power Company (1940). 18 The Court there stated,

[I]t cannot properly be said that the consti-
tutional power of the United States over its
waters is limited to navigation . . . In
truth the authority of United States is the
regulation of commerce on its waters. Navi-
gability, in the sense just stated, is but a
part of this whole. Flood protection, water-
shed development, recovery of the cost of
improvement through utilization of power are
likewise parts of commerce control . . . That
authority is as broad as the needs of commerce.
Water power development from dams in navigable
streams is from the public standpoint a by-
product of the general use of the rivers for
commerce. . . The point is that navigable
waters is subject to national planning and
control in the broad regulation of commerce
granted federal government.19

When the SLA was enacted, federal jurisdiction over the use
of water for the production of power referred to hydroelectric
power, or power produced by the use of dams to harness the force
of flowing waters. 20OTEC was simply not contemplated in the 1953
legislation. However, a strict reading of the letter of the law,
as well as a recognition of the extensive federal power over com-
merce on navigable waters, lead to the conclusion that the federal
government can regulate OTEC operations in state waters. 21

The Commerce Clause has in truth been found to enable the fed-
eral government to regulate any activity in navigable waters.
Courts have held that pollution of the nation's waterways is a
threat to interstate commerce and also can be a direct threat to

V-48

CONSTITUTIONAL POWERS V(C) (1)

navigation. 22 Therefore, the federal government can regulate or
prohibit any activity in navigable waters which has a possible ad-
verse ecological impact or is potentially harmful to wildlife or
other resources. 23Any activity which results in a discharge of
material into the waters can be regulated by the federal govern-
ment. 24

Congress has exercised its paramount federal constitutional
authority through several laws which regulate activities occurring
in the marginal sea. The U.S. Army Corps of Engineers administers
a permit system under the authority of three of these laws. The
Rivers and Harbors Act of 1899 25prohibits the unauthorized ob-
struction or alteration of any navigable water of the United
States. Thus, a permit from the Corps of Engineers is required
for any type of construction within navigable waters. 26The Fed-
eral Water Pollution Control Act Amendments of 1972, as amended
by the Clean Water Act of 1977, 27authorizes the Corps to issue
permits for the discharge of dredged or fill material into waters
of the United States at specified disposal sites. 28The marine

Protection, Research and Sanctuaries Act of 1972, 29as amended,
authorizes the Corps to issue permits for the transportation of
dredged material for the purpose of dumping it in any ocean
waters. If an activity invokes more than one of these Acts, the
Corps consolidates its authorizations through a single permit
30
process.

The original purpose of a Corps permit was to insure free
navigability on the waters. 31However, in reviewing any permit
application, the Corps is not limited to an evaluation of a proj-
ect's impact on navigation. The Corps may consider a broad range
of factors in making its decision upon whether or not to authorize
a proposal:

[Tihat decision should reflect the national
concern for both protection and utilization
of important resources. All factors which
may be relevant to the proposal must be con-
sidered; among those are preservation, eco-
nomics, aesthetics, general environmental

V-49

CONSTITUTIONAL POWERS V(c) (1)

concerns, historic values, fish and wildlife
values, flood damage prevention, land use,
navigation, recreation, water supply, water
quality, energy needs, safety, food produc-
tion, and, in general, the needs and welfare
of the people032

The Corps of Engineers' permit is a last-stop approval for
activities occurring within navigable waters of the state. The
Corps will only issue a permit when all applicable state and local
permit and review requirements have been satisfied. All federally
licensed activities must also comply with an approved state coastal
zone management program. Therefore, a Corps permit will not be
issued until a state certification of "consistency" with a state's
CZM program has been obtained. 3

The National Environmental Policy Act of 1969 34declares the
national policy to "encourage productive and enjoyable harmony
between man and his environment." 35The Act essentially states
that every federal agency shall consider ecological factors when
dealing with activities which may have an impact on the environ-
ment. 36The Act requires environmental impact statements to be
filed by all federal agencies for "major federal actions signifi-
cantly affecting the quality of the human environment." 37 The
granting of a Corps permit is considered a "major federal action." 38
A federal EIS is therefore required for any activity in the margi-
nal sea which requires a Corps of Engineers permit and which sig-
nificantly affects the environment.

The Fish and Wildlife Coordination Act of 1934, 39as
amended, and Reorganization Plan No. 4 of 1970, 40impose further
requirements an activities which propose to control or modify a
body of water. Before licensing such an activity, a federal agency
must consult with the U.S. Fish and Wildlife Service (Department
of the Interior), the National Marine Fisheries Service (Depart-
ment of Commerce), as appropriate, and the applicable State con-
servation agencies (in Hawaii, the Fish and Game Division of DLNR).

V-50

CONSTITUTIONAL POWERS V(C) (1)

The purpose of such review and consultation by these agencies is
to assure input as to the conservation of wildlife resources. 4

The Federal Water Pollution Control Act Amendments of 1972,
as amended by the Clean Water Act of 1977, 42requires that a
National Pollutant Discharge Elimination System (NPDES) permit
be obtained for any activity which may result in a discharge of
a pollutant into the nation's waters. The Act permits the states
to administer the permit system if their standards meet federal
standards, or the states can leave the administration to the
federal Environmental Protection Agency (EPA). In Hawaii, the
NPDES is administered by the State Department of Health.

other federal laws may influence the decision to permit a pro-
posed activity within the marginal sea. The Marine Protection,
Research and Sanctuaries Act of 1972, 43as amended, prohibits the
transportation of any material from the United States for the
purpose of dumping it in ocean waters, except under a permit issued
by the Administrator of the Environmental Protection Agency. This
Act also authorizes the Secretary of Commerce to designate areas
of ocean waters as marine sanctuaries for the purpose of preserv-
ing or restoring such areas for their conservation, recreational,
ecological, or aesthetic values. 44

The Endangered Species Act of 1973 45requires federal agencies
to protect threatened or endangered species. The Marine Mammal
Protection Act of 1 746protects and encourages the development
of marine mammals. The National Historic Preservation Act of
1966 47created the Advisory Council on Historic Preservation which
is authorized to review and comment upon activities licensed by
the federal government which will have an effect upon properties
listed in the National Register of Historic Places, or eligible
for listing.

V-51

CONSTITUTIONAL POWERS V(C)(1)

FOOTNOTES

1. 43 U.S.C. �1311(d) (1976).

2. Id. �1314(a).

3. Id.

4. The U.S. Constitution grants to Congress the power to provide
for the common defense, to declare war, to raise and support
armies, to provide and maintain a navy, to make rules for the
government of the land and naval forces, to provide for call-
ing forth the militia, to suppress insurrections and repel
invasions. U.S. Const., Arti. I, �8. The President of the
United States also has broad powers as Commander in Chief of
the Armed Forces. Id. Art II, �2, cl. 2.

5. 43 U.S.C. �1314(b) (1976).

6. U.S. Const., Art. II, �2.

7. Id. Art. I, �10.

8. J. Armstrong & P. Ryner, Coastal Waters, A Management Analy-
sis (1978), p. 28.

9. United States v. Curtiss-Wright Export Corp., 299 U.S. 304
(1936).

10. Perez v. Brownell, 356 U.S. 44, 57 (1958).

11. U.S. v. Curtis-Wright, supra, note 9, at 319.

12. Zschernig v. Miller, 389 U.S. 429 (1968).

13. United States v. Pink, 315 U.S. 203, 233 (1942).

14. U.S. Const. Art. I, �8, cl. 3.

15. 22 U.S. 1 (9 Wheat.) (1824).

16. Id. at 190.

17. 43 USC �1301(e) (1976).

18. 311 U.S. 377 (1940).

19. Id. at 426. [Emphasis added]

V-52

CONSTITUTIONAL POWERS V(C)(1)

20. The water power exclusion originally contained the qualifying
phrase, "at any site where the United States now owns the
water power." No method besides hydroelectric power produc-
tion existed at the time of the SLA; therefore, other means
of power production from the use of water were not contemplated.

The rationale for striking the qualifying phrase is helpful
to an understanding of the source and extent of federal autho-
rity over the use of water for the production of power:

"The words 'at any site where the United States now owns
the waterpower' have been stricken . . . It is the
Committee's view that the provision is (1) surplusage;
the right of the United States to generate and dispose
of electrical energy as an incident to regulation of
commerce is amply protected in preceding language; and
(2) use of the word "owns" in connection with water
power may be construed to impart some right other than
and in addition to the rights of the United States
under its constitutional power to regulate commerce."

S. Rep. No. 133, 83d Cong., 1st Sess., reprinted in (1953)
U.S. Code Cong. & Ad. News 1474, 1494 [emphasis added].
Federal authority over water power is simply part of the
powers under the Commerce Clause. Also, no ownership rights
are implied by retained federal jurisdiction.

Another committee report explicitly referred to "hydroelec-
tric power," thereby reinforcing the view that other forms
of water power were not contemplated. S. Rep. No. 1592,
80th Cong., 2d Sess., reprinted in (1953) U.S. Code Cong. &
Ad. News 1501, 1527.

21. See OTEC Act of 1980, Pub. Law 96-320, August 3, 1980. K.
Keith, "State and Federal Regulation of OTEC Plants in Hawaii."
Solar Law Reporter, Vol. 2, No. 3, p. 490,. 515. Keith states
that the definition of natural resources appears to omit an
OTEC operation from coverage under the Submerged Lands Act,
since OTEC involves use of water for power production." Id.

22. U.S. v. Ashland Oil and Transportation Co., 504 F. 2d 1317,
1325 (1974).

23. See Annot., 25 ALR Fed. 706 (197_).

24. Zabel v. Tabb, 430 F. 2d 199 (5th Cir., 1970).

25. 33 U.S.C. �401, 403-4, 407-8 (1976).

26. Section 9 of the Rivers and Harbors Act, 33 U.S.C. 401,
prohibits the construction of any dam or dike across any

V-53

CONSTITUTIONAL POWERS V(C)(1)

navigable water of the United States in the absence of Con-
gressional consent and approval of the plans by the Chief of
Engineers and the Secretary of the Army.

Under Section 10 of the Act, 33 U.S.C. 403, the construction
of any structure in or over any navigable water of the United
States, the excavation from or depositing of material in such
waters, or the accomplishment of any other work affecting the
course, location, condition or capacity of such waters, is
unlawful unless the work has been recommended by the Chief
of Engineers and authorized by the Secretary of the Army.
The instrument of authorization is designated a permit, gen-
eral permit, or letter of permission.

Section 11 of the Act, 33 U.S.C. 404, authorizes the Secre-
tary of the Army to establish harbor lines channelward of
which no piers, wharves, bulkheads or other works may be
extended or deposits made without approval of the Secretary
of the Army.

Section 14 of the Act, 33 U.S.C. 408, provides that the Secre-
tary of the Army on the recommendation of the Chief of Engi-
neers may grant permission for the temporary occupation or
use of any seawall, bulkhead, jetty, dike, levy, wharf, pier,
or other work built by the United States.

See, Corps of Engineers regulations, 33 C.F.R. �320.2 (1979).

27. 33 U.S.C. �1344 (1976).

28. The Clean Water Act (Section 404, 33 U.S.C. �1344) provides
that a state can administer the permit system if the standards
of the proposed state permit system meet federal standards.
State administration of the permit system must be approved
by the Administrator of the Environmental Protection Agency.
In Hawaii, however, the Army Corps of Engineers still admin-
isters the Section 404 permit system.

29. 33 U.S.C. �1413 (1976).

30. Discussion with Mr. Stanley T. Arakaki, P.E., Chief of the
Operations Branch, U.S. Army Corps of Engineers, Pacific
Ocean Division.

31. Cummings v. Chicago, 188 U.S. 410 (1903).

32. 33 C.F.R. �320.4 (1979).

33. Arakaki, supra, note 30.

34. 42 U.S.C. �4321-47 (1976).

V-54

CONSTITUTIONAL POWERS V(C) (1)

35. Id. �4321.

36. Zabel v. Tabb, supra, note 24.

37. 42 U.S.C. �4332(2) (c) (1976).

38. See 33 C.F.R. �325.4 (1979).

39. 16 U.S.C. �661-66(c) (1976).

40. Reorg. Plan No. 4 of 1970, 35 Fed. Reg. 15627, 84 Stat. 2090,
(set out in the Appendix to Title 5, U.S.C. Government Organ-
ization and Employees (1976)).

41. 16 U.S.C. �662(a) (1976).

42. 33 U.S.C �1344 (1976).

43. 33 U.S.C. ��1401, 1402, 1411-1421 (1976). A permit for the
dumping of fish wastes is not required, except when deposited
in harbors or enclosed coastal waters, or if the Administrator
of the EPA finds it dangerous to health, the environment or
ecology. Id. �1412(d).

44. 16 U.S.C. �1432 (1976).

45. 16 U.S.C. �1531 et. seq. (1976).

46. 16 U.S.C. �1361 et. seq. (1976).

47. 16 U.S.C. �470 (1976).

V-55

FEDERAL PREEMPTION V(C) (2)

C. CONSTITUTIONAL AND FEDERAL LIMITATIONS UPON STATE AUTHORITY

2. Federal Preemption

Q: What are the federal constitutional and statutory limitations
upon the exercise of state authority over its offshore waters?

A: States cannot enact legislation which is incompati-
ble with or which bypasses federal statutory require-
ments.

Where federal and state legislation are incompatible, federal
law prevails. This doctrine of federal preemption is predicated
upon the "Supremacy Clause" of the U.S. Constitution. IThe doc-
trine was first enunciated by U.S. Supreme Court in Gibbons v.
Ogden (1824),2 which established that federal licensing of a ves-
sel conferred the right to perform the licensed activity notwith-
standing conflicting state legislation. 3Since Gibbons, the doc-
trine of preemption has guided judicial resolution of federal-state
jurisdictional conflicts.4

The preemption doctrine may invalidate state law in several
circumstances. If a state law stands as "[aln obstacle to the
accomplishment and execution of the full purposes and objectives
of Congress,"5 if compliance with both federal and state law is a
"physical impossibility," or if state law "frustrates the full
effectiveness of federal law," 7 federal law must prevail over
state law. These are examples of irreconcilable conflict between
federal and state law or interference with federal law by state
law.

A second circumstance in which state law may be preempted is
where federal legislation in a particular field is intended to
be exclusive. When federal legislation thus "occupies the field,"
any state legislation in the area is invalid regardless of whether
or not it interferes with federal laws. However, when a state's
exercise of its police power is challenged on this basis, the
Supreme Court has held it will "start with the assumption that
the historic police power of the States were not to be superseded

V-56

FEDERAL PREEMPTION V(C) (2)

by the Federal Act unless that was the clear and manifest purpose
of Congress." 8This Congressional purpose must be express or nec-
essarily implied. As one commentator has stated, "There are three
basic tests applied to determine whether a field has been occupied:
The express bar, the bar implied by the regulatory scheme involved,
and the bar implied by the subject being regulated." 9in the ab-
sence of an express bar of state regulation, "the scheme of fed-
eral regulation may be so pervasive as to make reasonable the infer-
ence that Congress left no room for the states to supplement it." 10
In other cases, the federal interest in regulating a subject mat-
ter may be "so dominant that the federal system will be assumed to
preclude enforcement of state laws on the same subject." 11

The Gibbons case is an example of litigation involving a
state law which conflicted or interfered with a federal licensing
law. However, a federal license does not preclude all state regu-
lation of the licensee. The States may impose upon federal li-
censees reasonable, nondiscriminatory conservation and environ-
mental protection measures pursuant to their police powers. 2In
Smith v. Maryland (1855), 13the federal enrollment and licensing
of vessels was not found to invalidate a state conservation law
which limited the fishing implements that could be used by a fed-
erally licensed vessel to take oysters from state waters. In
Manchester v. Massachusetts (1891), 14the U.S. Supreme Court upheld
a state law which prohibited the use of certain types of fishing
tackle in specified areas despite the existence of federal fish-
eries licenses. In Huron Portland Cement Co. v. Detroit (1960), 1
the Court held that a city ordinance regulating smoke emissions
was properly applicable to federally licensed vessels. 16These
cases reflect the general rule that "the mere possession of a fed-
eral license . . . does not immunize a ship from the operation of
the normal incidents of local police power." 17

Recent cases involving the application of the principles of
preemption to coastal resources law "indicate that the Supreme

V-57

FEDERAL PREEMPTION V (C) (2)

Court recognizes the interest of the states in regulating and pro-
tecting such resources and will invalidate state law only when
teeis a clear frustration of a federal ojcie"1 h ed

ing case, Askew v. American Waterways Operators, Inc. (1973), 19in-
volved a challenge to the Florida oil Spill Prevention and Pollu-
tion Control Act of 1970, 20which imposes strict liability for
damages caused by oil spills and allows the state to recover clean-
up costs. Two questions were presented in this case. First, was
the Florida legislation preempted by the Federal Water Quality Im-
provement Act of 1970? 21Second, can a state exercise its police
powers in the area of federal admiralty and maritime jurisdiction?
The lower court had held that the Florida legislation was an uncon-
stitutional intrusion into the federal maritime domain. The Supreme
Court reversed, stating,

"We find no constitutional or statuory impedi-
ment to permitting Florida, in the present set-
ting of this case, to establish any 'require-
ment or liability' concerning the impact of oil
spillages on Florida's interests or concerns.
To rule as the District Court has done is to
allow federal admiralty jurisdiction to swal-
low most of the police power of the States
over oil spillage--an insidious form of pol-
lution of vast concern to every coastal city
or port and to all the estuaries on which the
life of the ocean and the lives of the coastal
people are greatly dependent."22

The Court held that the Federal Act did not preclude, but in
fact specifically allowed state regulation. 23The federal statute
expressly contemplated federal-state cooperation in administering
the water quality program. Therefore, Congress clearly did not
intend to occupy the field, but instead intended to preserve the
rights of the States to exercise their historic police powers to
protect their coastal resources and populations.

The Court also reviewed the federal and the state law and
could find no discernable conflict between the two. The federal
and state schemes were aimed at different goals.

V-58

FEDERAL PREEMPTION V(C) (2)

Finding that the federal government had not occupied the
field, and that no fatal conflict existed between the state and
federal statutory schemes, the Court addressed the issue of "whe-
ther a State constitutionally may exercise its police powers re-
specting maritime activities concurrently with the Federal Govern-
ment." 24 The Court concluded that

Via State, in the exercise of its police power,
may establish rules applicable on land and water
within its limits, even though these rules inci-
dentally affect maritime affairs, provided that
the state action does not contravene any acts
of Congress, nor work any prejudice to the cha-
racteristic features of the maritime law, nor
interfere with its proper harmony and uniform-
ity in its international and interstate rela-
tions.,"25

Askew, therefore, holds that state coastal regulation, unless
plainly contradictory to federal regulation, is allowed to coexist
with even far-reaching federal regulation of the field. 26

State regulation of coastal resources must be carefully drafted,
however, so as not to directly conflict with federal legislation.
A Virginia statute which prohibited non-residents from catching
menhaden in the Virginia portion of Chesapeake Bay was recently
invalidated in Douglas v. Seacoast Products (1977). 27 As in
Gibbons, the Supreme Court held that the state statute was pre-
empted by the Federal Enrollment and Licensing Act. The federal
license was interpreted to confer the right to perform the licensed
activity, in this case the right to engage in the "mackerel fish-
ery. ,,28 The state statute invalidly discriminated against non-
resident owners of federally enrolled vessels. While the Court
struck down this particular state statute, it again explicitly rec-
ognized the rights of the States to impose upon federal licensees
reasonable and evenhanded conservation and environmental protection
29
measures.

In Ray v. Atlantic Richfield Co. (1978), 30the Supreme Court
invalidated on preemption grounds certain provisions of the State

V-59

FEDERAL PREEMPTION V(C) (2)

of Washington's Tanker Law. 31The Washington law regulated the
design, size, and movement of oil tankers in Puget Sound. The
state law (1) required that oil tankers of a minimum size must
carry a state-licensed pilot while navigating the Sound, (2) ex-
cluded all tankers exceeding a certain weight, and (3) required
that tankers of specified weights must either satisfy safety design
standards prescribed by the statute or use tug escorts.

The pilotage requirement was declared to be in direct con-
flict with specific federal laws which provided that an "enrolled"
vessel (that is, one engaged in domestic trade) must be under the
control of a pilot licensed by the Coast Guard. Additional licens-
ing requirements could not be imposed by state or municipal govern-

ments. 32However, the pilotage requirement was valid as applied
to "registered" vessels (ones engaged in foreign trade), since fed-
eral laws here left the state free to impose such requirements.

The weight limitation provision of the state law was also
invalidated. The Secretary of Transportation was authorized by

the Federal Ports and Waterways Safety Act of 1972 (FPWSA) 33to
establish vessel size limitations, and the Court ruled Congress
did not intend higher standards to be imposed by the states. Reg-
ulations under the FPWSA had been already established for the Puget
Sound area.

Similarly, the Washington Tanker Law's safety requirements
were struck down because the FPWSA comprehensively regulated design
and construction standards, and also contemplated uniform national
and international standards. Thus, states could not impose dif-
ferent or stricter design requirements.

The state statutory provision imposing tug escort require-
ments for vessels which failed to satisfy the state's design stan-
dards was upheld. The Court ruled that this provision was a per-
missible local safety measure because no inconsistent federal reg-
ulations had actually been established.

V-60

FEDERAL PREEMPTION V (C) (2)

The Ray case did not entail a total diminution of state pre-
rogatives. Ray establishes that even where preemption has been
found, state regulation will only be invalidated to the extent
that there is actual conflict with federal regulations. As the
Supreme Court has elsewhere stated, "the proper approach is to
reconcile the operation of both statutory schemes with one another
rather than holding one completely ousted." 34

The Court in the Ray case again recognized the validity of
state conservation and environmental laws. 35The Court pointed
out, however, that "in none of the relevant cases sustaining the
application of state laws to federally licensed or inspected ves-
sels did the federal licensing or inspection procedure implement
a substantive rule of federal law addressed to the object also
souhtto be achieved by the challenged state r euato."36

Therefore a state may not enact legislation for precisely the same
purpose that is encompassed in a federal law. A state may, however,
exercise its police powers to protect its own interests in the
coastal zone, to the extent that there is no actual conflict with
federal law. 37Coastal resource development planning and regula-
tion are especially important state prerogatives because of the
need to protect the sensitive ecological balance, as well as the
various interests of the public, found within coastal waters. 38

In sum, state police measures enacted to protect or regulate
activities occurring within coastal waters will not be preempted
by existing federal law if no direct conflict exists with any fed-
eral law, if there is no specific Congressional intent to exclude
state regulation in the matter, and if there is no compelling need
to establish national uniformity in a jurisdictional area.

V-61

FEDERAL PREEMPTION V(C)(2)

FOOTNOTES

1. Article VI, C1. 2 of the U.S. Constitution.

2. 22 U.S. 1 (9 Wheat.) (1824).

3. In the Gibbons case, the New York Legislature had granted to
Robert Fulton and Robert Livingston the exclusive right to
operate steam-powered vessels within state waters. The ex-
clusive right to navigate steamboats between New Jersey and
New York City was subsequently assigned to Aaron Ogden.
Gibbons began operating steamboats in violation of Ogden's
sub-monopoly. Gibbons' steamboats had been federally enrolled
and licensed to carry on the coasting trade. Nevertheless,
Ogden obtained an injunction from the New York courts re-
straining Gibbons from operating his boats in New York waters.
The U.S. Supreme Court reversed the decision of the New York
courts and held that Gibbons had federal authority to operate
his boats, and the conflicting New York law must yield to the
federal law.

4. See, Wrede, Preemption and the Role of State Legislation in
the Coastal Zone, 10 Natural Resources Lawyer 237 (1977);
Schoenbaum & Parker, Federalism in the Coastal Zone: Three
Models of State Jurisdiction and Control, 57 N. Car. L. Rev.
231 (1979); Breeden, Federalism and the Development of Outer
Continental Shelf Mineral Resources, 28 Stanford L. Rev. 1107
(1976). All articles describing the application of the doc-
trine of preemption in the governance of ocean resources.

5. Hines v. Davidowitz, 312 U.S. 52, 67 (1941).

6. See, e.g., Florida Lime & Avocado Growers, Inc. v. Paul, 373
U.S. 132, 142-43 (1963).

7. Perez v. Campbell, 402 U.S. 637, 651-52 (1971).

8. Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947);
Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977). [Empha-
sis added].

9. Wrede, supra, note 4, at 241.

10. Rice v. Santa Fe Elevator Corp., 331 U.S. at 230.

11. Id.

12. Douglas v. Seacoast Products, Inc., 431 U.S. 265, 277 (1977).

V-62

FEDERAL PREEMPTION V(C)(2)

13. 18 How. 71, 15 L. Ed. 269 (1855).

14. 139 U.S. 240 (1891).

15. 362 U.S. 440 (1960).

16. The Court stated, "Legislation designed to free from pollu-
tion the very air that people breathe clearly falls within
the exercise of even the most traditional concept of what is
compendiously known as the police power. 'In the exercise of
that power, the states and their instrumentalities may act,
in many areas of inter-state commerce and maritime activities,
concurrently with the federal government. Id. at 442.

17. Id. at 447.

18. Schoenbaum & Parker, supra, note 2, at 256.

19. 411 U.S. 325 (1973).

20. Fla. Stat. Ann. �376.

21. 33 U.S.C. �1161 (1970), amended by the Federal Water Pollu-
tion Control Act of 1972, 33 U.S.C. 1251-1376 (1976).

22. 411 U.S. at 328.

23. Id. at 329; 33 �1161(o) (1970).

24. 411 U.S. at 337.

25. Id. at 339.

26. See Note, "State Regulation of Liquefied Natural Gas Facili-
ties Siting: A Case for Federal Preemption?" 7 Review of
Law and Social Change 7, 15-18 (1978).

27. 431 U.S. 265 (1977).

28. Id. at 280-81.

29. Id. at 277.

30. 435 U.S. 151 (1978).

31. Wash. Rev. Code �88.16.170 (Supp. 1975).

32. 46 U.S.C. ��215, 364 (1976).

33. 33 U.S.C. ��1221-1227 (1976).

V-63

FEDERAL PREEMPTION V(C) (2)

34. Silver v. New York Stock Exch., 373 U.S. 341, 357 (1963).

35. 435 U.S. at 164.

36. Id.

37. One commentator has stated, "The courts will engage in stat-
utory analysis to reconcile apparent conflicts, invalidating
state law only when federal law compels a directly contrary
result or when Congress has unmistakably called for national
uniformity in the matter." Schoenbaum & Parker, supra, note
2, at 259.

38. See, Delogu, Land Use Control Principles Applied to Offshore
Coastal Waters, 59 Ky. L. Rev. 606 (1971); the Hawaii Coastal
Zone Management Program has initiated an Ocean Area Resource
Management Plan so that ocean activities can be reviewed to
determine if they are consistent with Hawaii's coastal zone
management policies and objectives.

V-64

THE COMMERCE CLAUSE V(C) (3)

C. CONSTITUTIONAL AND FEDERAL LIMITATIONS UPON STATE AUTHORITY

3. The Commerce Clause

Q: What are the federal constitutional and statutory limitations
upon the exercise of state authority over its offshore waters?

A: The Commerce Clause acts as a bar to any state regu-
lation which excessively impedes the flow of goods
in interstate commerce.

As noted in subsection (C) (1), interstate commerce is regu-
lated exclusively by Congress. The framers of the U.S. Constitu-
tion recognized "that in order to succeed, the new Union would
have to avoid the tendencies toward economic Balkanization that
had plagued relations among the Colonies and later among the States
under the Articles of Confederation," Iand therefore specifically
vested such regulatory authority in the new federal government

through the "Commerce Clause." As a result, this Nation is "a com-
mon market in which state lines cannot be made barriers to the
free flow of both raw materials and finished goods in response to
the economic laws of supply and demand." 2

Courts construing the Commerce Clause have shown a concern
for balancing state and federal powers. The federal responsibil-
ity is to insure the free flow of commerce within the nation.
This may at times conflict with a state's responsibility to pro-
tect the health, safety and welfare of its citizens. In this clash,
a state regulation which affects interstate commerce will be up-
held, however, if "the means of regulation chosen are reasonably
adapted to the end sought" 3 and the benefit sought by the regula-

tion outweighs the burden placed upon interstate commerce.4
Any state statute which discriminates against interstate com-
merce, either on its face or in practical effect, at a minimum
"~invokes the strictest scrutiny of any purported legitimate local

purpose and the absence of nondiscriminatory alternatives." 5 How-
ever, where discrimination against interstate commerce is only in-
cidental to legitimate state legislative objects, the permissible

V-65

THE COMMERCE CLAUSE V(C) (3)

authority which the state may exercise in this field is set forth
by the United States Supreme Court in Pike v. Bruce Church, Inc.
(1970)6 :

"Where the statute regulates evenhandedly to
effectuate a legitimate local public interest,
and its effects on interstate commerce are only
incidental, it will be upheld unless the burden
imposed on such commerce is clearly excessive
in relation to the putative local benefits ...
If a legitimate local purpose is found, then
the question becomes one of degree. And the ex-
tent of the burden that will be tolerated will
of course depend on the nature of the local in-
terest involved, and on whether it could be pro-
moted as well with a lesser impact on interstate
activities.,"7

The Commerce Clause may be said to embody a concept of "uni-
formity." Where national uniformity is deemed necessary for the
free flow of commerce, state legislation must give way. The Su-
preme Court has invalidated state regulations, for example, which
imposed restrictions on vehicles used in interstate transportation. 8
The Court has stated:

"There has . . . been left to the States wide
scope for the regulation of matters of local
state concern, even though it in some measure
affects the commerce, provided it does not
materially restrict the free flow of commerce
across state lines, or interfere with it in
matters with respect to which uniformity of
regulation is of predominant national con-
cern.`"9

The need for national uniformity, if determined, will invalidate
a state statute, even in the absence of federal legislation in
the field.

State legislation drafted to regulate activities occurring
within coastal waters must recognize the Commerce Clause require-
ments of uniformity and non-interference with interstate commerce.
While development of the coastal zone may promote the economic

V-66

THE COMMERCE CLAUSE V(C) (3)

welfare of a state, such development cannot be encouraged by legis-
lation which discriminates against out-of-state businesses, or by
legislation which shields local businesses from out-of-state com-
petition. State legislation cannot favor local businesses by re-
stricting the importation of out-of-state products. This is one
form of economic protectionism which has been struck down as being
unduly burdensome to interstate commerce. 10Nor can a state re-
strict consumption or use of commercial products generated by
coastal zone development to within the state in order to satisfy
state needs. 11

State burdens upon interstate commerce are equally prohibited
in Hawaii, despite the fact that Hawaii is separated from the rest
of the states by the Pacific Ocean. Hawaii may not impose undue
restrictions on ships and aircraft which come into the state. By
extension, state regulations which would prohibit certain resources
from entering Hawaiian waters, or which would restrict the con-
struction of pipelines or energy powerlines and associated onshore
receiving facilities, could be subject to a Commerce Clause chal-
lenge.

It is clear, however, that water use planning and controls,
as well as environmental regulations, promote permissible state
objectives. Thus legislation enacted pursuant to such objectives
will be upheld unless the burden imposed on interstate commerce
"i clearly excessive in relation to the putative local benefits."

V-67

THE COMMERCE CLAUSE V(C) (3)

FOOTNOTES

1. Hughes v. Oklahoma, 441 U.S. 322, 325 (1979).

2. Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 803 (1976).

3. South Carolina State Highway Dept. v. Barnwell Bros., 303 U.S.
177, 190 (1938).

4. Southern Pacific Co. v. Arizona, 325 U.S. 761 (1945).

5. Hughes v. Oklahoma, 441 U.S. at 337.

6. 397 U.S. 137 (1970).

7. 397 U.S. at 142.

8. In Bibb v. Navajo Freight Lines, 259 U.S. 520 (1959), the Court
struck down an Illinois statute which required a particular
type of mudguard on trucks operating on its highways. The spe-
cified type of mudguard was illegal in Arkansas and different
from those permitted in at least 45 other states. The Court
stated, at 529: "This is one of those cases--few in number--
where local safety measures that are nondiscriminatory place
an unconstitutional burden on interstate commerce. This con-
clusion is especially underlined by the deleterious effect
which the Illinois law will have on the 'interline' operation
of interstate motor carriers."

In Southern Pacific Co. v. Arizona, 325 U.S. 761 (1945), the
Court invalidated an Arizona statute which limited the length
of trains passing through the state.

9. 325 U.S. at 770.

10. See Dean Milk Co. v. City of Madison, 340 U.S. 349 (1951); Hunt
v. Washington Apple Advertising Comm'n., 432 U.S. 333 (1977).

11. See West v. Kansas Nautural Gas Co., 221 U.S. 229 (1911) (The
Court struck down a state statute that prohibited exportation
of the state's natural gas); Pennsylvania v. West Virginia, 262
U.S. 553 (1923) (The Court invalidated a state statute which
required natural gas companies within the State to satisfy all
fuel needs of state residents before transporting any natural
gas out of the State); Foster-Fountain Packing Co. v. Haydel,
278 U.S. 1 (1928) (The Court stated that "[a] State is with-
out power to prevent privately owned articles of trade from
being shipped and sold in interstate commerce on the ground
that they are required to satisfy local demands or because
they are needed by the people of the State." 278 U.S. at 10).

V-68

PRIVILEGES AND IMMUNITIES V(C) (4)

C. CONSTITUTIONAL AND FEDERAL LIMITATIONS UPON STATE AUTHORITY

4. Privileges and Immunities

Q: What are the federal constitutional and statutory limitations
upon the exercise of State authority over its offshore waters?

A: Any state statute which discriminates against non-
residents and which affects a fundamental right,
violates the Privileges and Immunities Clause un-
less there is a substantial reason for the discrim-
ination.

Any state regulation that discriminates in some manner
against non-residents of the state is subject to challenge under
the Privileges and Immunities Clause of the U.S. Constitution.
(Article IV, Section 2), which declares: "The Citizens of each
State shall be entitled to all Privileges and Immunities of Citi-
zens in the several States." The Privileges and Immunities Clause
and the Commerce Clause have a shared vision of federalism, which
stems from their common origin in the Fourth Article of the Arti-
cles of Confederation.I

in Corfield v. Coryell (1823), 2 an early case defining the
scope of the Privileges and Immunities Clause, a federal circuit
court viewed the Clause as protecting only "those privileges and
immunities which are, in their nature, fundamental; which belong,
of right, to the citizens of all free governments." 3

In Toomer v. Witsell (1948), 4the Supreme Court adopted a new
standard. The Court disregarded the "fundamental rights" analysis
and broadly interpreted the Clause as prohibiting any State dis-
crimination against non-residents "where there is no substantial
reason for the discrimination beyond the mere fact that they are
citizens of other States." " Under this "substantial reason" test,
a state statutory classification based on the fact of non-citizen-
ship is unconstitutional "unless there is something to indicate
that non-citizens constitute a peculiar source of evil at which
the statute is aimed." 6Moreover, even where the presence or activ-
ity of non-residents causes or adds to the problem the State seeks

V-69

PRIVILEGES AND IMMUNITIES V(C) (4)

to remedy, there must be a "reasonable relationship between the
danger represented by non-citizens, as a class, and the . . . dis-
crimination practiced upon them." 7

Cases subsequent to Toomer no longer inquired into whether a
given right was "fundamental" or not. Rather, the Court focused
on whether a statute discriminated against non-residents and ana-
lyzed the State's justification for the discrimination." 8

The "fundamental rights" aspect of the Privileges and Immuni-
ties Clause, however, was given new life in Baldwin v. Montana Fish

and Game Cornm'n. (1978). 9The Supreme Court recognized that in
previous cases the Clause "has been interpreted to prevent a State
from imposing unreasonable burdens on citizens of other States in
their pursuit of common callings within the State, . . . in the
ownership and disposition of privately held property within the
State, . . . and in access to the courts of the State." 10 How-
ever, the Court also recognized that state citizenship may some-
times validly be used to distinguish among persons. For example,
citizenship can be a prerequisite for the privilege of voting,
qualifying for elective office, and sometimes for the benefit of
particular state laws and services. 11Some distinctions between
residents and non-residents were viewed by the Court as merely
reflecting individual differences between States. The Court de-
clared, "Only with respect to those 'privileges' and 'immunities'
bearing upon the vitality of the Nation as a single entity must
the State treat all citizens, resident and non-resident, equally." 12
The Court therefore upheld a Montana licensing scheme for elk hunt-
ing which discriminated against non-residents. The Court empha-
sized that recreational hunting was not a means of livelihood.
Access to Montana elk was not basic to the maintenance and well-
being of the Nation. And the licensing scheme did not restrict
the right to travel. Therefore, the Court held that equality of
access to a state's limited wild game resource did not fall within
the purview of the Privileges and Immunities Clause.

V-70

PRIVILEGES AND IMMUNITIES V(C) (4)

One month after the decision in Baldwin, however, the Supreme
court in Hicklin v. Orbeck (1978),,1 struck down an Alaska statute
which required that residents be hired in preference to non-resi-
dents for jobs related to Alaska's oil and gas resources. The
Court based its decision on the "substantial reason" test of
Toomer. The Court made no attempt to distinguish Baldwin.

The apparent distinction between Hicklin and Baldwin is that
the latter dealt with access to a recreational activity and the
former dealt with the right to pursue a commercial livelihood.
The Court in Hicklin recognized that the Privileges and Immunities
Clause bars state discrimination against non-residents "seeking to
ply their trade, practice their occupation, or pursue a common
calling within the S tt. 4The Court cited Ward v. Maryland
(1871), 15where the Court had previously stated that "the clause
plainly and unmistakably secures and protects the right of a citi-
zen of one State to pass into any other State of the Union for the
purpose of engaging in lawful commerce, trade, or business with-
out molestation."1 Therefore it appears that commercial pursuits
are generally protected by the Privileges and Immunities Clause,
while recreational pursuits are not.

Such a distinction between commercial and recreational activ-
ity can have an impact on a state's efforts to plan and regulate
the development of limited coastal resources. Where there is a
limited resource, a state may want to preserve that resource by
limiting access to it by non-residents. Such discrimination against
non-residents will not pass muster under the Privileges and Immuni-
ties Clause unless the "substantial reason" test is satisfied, and
if the activity affected is not "fundamental." It appears that a
state can reasonably restrict non-resident access to its purely
recreational resources through regulation or through higher licens-
ing fees. However, in any commercial leasing or licensing scheme
for state marine waters, a burden imposed on non-residents as a
class would be difficult to justify under the "substantial reason/

V-71

PRIVILEGES AND IMMUNITIES V(C) (4)

fundamental rights" tests. Any absolute prohibition against non-
resident participation in commercial coastal development would cer-
tainly be struck down upon challenge.

V-72

PRIVILEGES AND IMMUNITIES V(C)(4)

FOOTNOTES

1. Hicklin v. Orbeck, 437 U.S. 518, 531-32 (1978); Baldwin v.
Montana Fish and Game Comm'n, 436 U.S. 371, 379-80 (1978).

2. 6 F. Cas. 546 (No. 3,230) (C.C.E.D. Pa. 1823).

3. Id. at 551. The opinion mentioned several "fundamental" rights
which fall under the Privileges and Immunities Clause:

"Protection by the Government; . . . [t]he right of a
citizen of one state to pass through, or to reside
in any other state, for purposes of trade, agricul-
ture, professional pursuits, or otherwise; to claim
the benefit of the writ of habeas corpus; to insti-
tute and maintain actions of any kind in the courts
of the state; to take, hold and dispose of property,
either real or personal; and an exemption from higher
taxes or impositions than are paid by the other citi-
zens of the state." Id.

4. 334 U.S. 385 (1948).

5. 334 U.S. at 396.

6. 334 U.S. at 398.

7. 334 U.S. at 399.

8. See Mullaney v. Anderson, 342 U.S. 415 (1952); Doe v. Bolton,
410 U.S. 179 (1973); Austin v. New Hampshire, 420 U.S. 656
(1975).

9. 436 U.S. 371 (1978).

10. 436 U.S. at 383.

11. Id.

12. Id.

13. 437 U.S. 518 (1978). c.f. Nehring v. Ariyoshi, 443 F. Supp.
228 (D. Haw. 1977) (durational residency requirement for
State employment ruled unconstitutional).

14. 437 U.S. at 524.

15. 12 Wall 418, 20 L. Ed. 449 (1871).

16. 12 Wall at 418, 20 L. Ed. at 449.

V-73

EQUAL PROTECTION V(C) (5)

C. CONSTITUTIONAL AND FEDERAL LIMITATIONS UPON STATE AUTHORITY

5. Equal Protection

Q: What are the federal constitutional and statutory limitations
upon the exercise of state authority over its offshore waters?

A: Under the Equal Protection Clause of the U.S. Con-
stitution, legislative classifications and other
State regulations relating to conservation, allo-
cation of a limited resource, ease of enforcement
and assessment of costs incurred by the State in
regulating and preserving a resource have been up-
held as legitimate State interests.

Under traditional equal protection analysis, a legislative
classification of persons is subject to judicial scrutiny under a
"rational basis" test. Under this test, a legislative classifica-
tion must bear some rational relationship to a conceivable legitim-
ate state interest or purpose. However if the classifying legis-
lation involves a "suspect classification" or affects a "fundamen-
tal right," such legislation is subject to strict judicial scru-
tiny. Under this "strict scrutiny" standard, a legislative clas-
sification will be upheld only if it is necessary to promote a
"compelling" state interest, and is the least drastic alternative
available. "Suspect" classifications include those based on race,
alienage, national origin, and religion. "Fundamental interests"
which must be protected under the "strict scrutiny" standard in-
clude the right of procreation, the right to marry, the right to
exercise First Amendment freedoms, the right to interstate travel,
and the right to vote.1I

In Takahashi v. Fish and Game Comm'n (1948), 2the U.S. Supreme
Court struck down a California statute forbidding the issuance of
commercial fishing licenses to aliens ineligible for citizenship.
Such discrimination against a "suspect" class was violative of the
Equal Protection Clause and could not be upheld as a valid conser-
vation measure.

In Baldwin v. Montana Fish and Game Comrm'n (1978), 3a case
noted earlier in discussing discrimination against non-residents,

V-74

EQUAL PROTECTION V(C) (5)

the Supreme Court upheld a Montana statute which discriminated
against non-residents by exacting higher licensing fees. Classi-
fications based on residency are not considered "suspect." Under
the "rational basis" test, the Court held that the Montana statute
was rationally related to the state interests in conservation, the
cost of preserving the resource, and enforcement of the regulations.

In a recent Hawaii case, Maeda v. Amemiya (1979), 4the Hawaii
Supreme Court upheld a statute which created two classes of persons
permitted to catch nehu (a bait fish): (1) properly licensed com-
mercial tuna fishermen, who may use a net of unlimited size, and
(2) all other fishermen, who may catch nehu for home consumption
or for bait purposes with a net no longer than 50 feet. The court
held that the right to work, even though constitutionally protected,
is not a fundamental right and does not invoke the application of
the "strict scrutiny" standard. The court applied the less rigor-

ous "rational basis" test. The court found that the statute was
rationally related to the legitimate state interests in conserva-
tion and allocation of a limited resource, and that enforcement of
the law pursuant to these legitimate regulatory objectives was
permissible.

in any coastal resource development or preservation scheme,
a state regulation which involves a "suspect classification" or
which derogates a "fundamental right," will be subject to the
"istrict scrutiny" standard and will very likely be struck down by
the courts. If no "suspect classification" or "fundamental right"
is involved, a statutory classification of persons must be ration-
ally related to a legitimate state interest. Conservation, alloca-
tion of a limited resource, ease of enforcement, and assessment of
costs incurred by the state in regulating and preserving a resource
have been recognized as legitimate state interests.

V-75

EQUAL PROTECTION V(C)(5)

FOOTNOTES

1. See generally, 16A Am. Jur. Constitutional Law, �750 (1979).

The imposition of durational residency requirements to qualify
for significant state benefits have been struck down under the
Equal Protection Clause because such requirements "penalized"
the fundamental right to interstate travel. See Memorial Hos-
pital v. Maricopa County, 415 U.S. 250 (1974); Dunn v. Blumstein,
405 U.S. 330 (1972); Shapiro v. Thompson, 394 U.S. 618 (1969).
Any ocean leasing scheme should avoid imposing such require-
ments.

2. 334 U.S. 410 (1948).

3. 436 U.S. 371 (1978).

4. 60 Haw. 662, 594 P. 2d 136 (1979).

V-76

STATE OWNERSHIP OF NATURAL RESOURCES V(C) (6)

C. CONSTITUTIONAL AND FEDERAL LIMITATIONS UPON STATE AUTHORITY

6. State Ownership of Natural Resources

Q: What are the federal constitutional and statutory limitations
upon the exercise of State authority over its offshore waters?

A: The fact that a state "owns" its natural resources
does not entitle the State to control such resources
in a manner which conflicts with federal constitu-
tional and statutory law.

States have often asserted that they "own", in trust for
their citizens, the natural resources located within their bound-
aries. It is argued, therefore, that a state may exercise this
"ownership" to control and allocate its resources in any way it
pleases for the exclusive benefit of its own citizens. 1

In McCready v. Virginia (1877), 2the U.S. Supreme Court upheld
a Virginia law prohibiting use of the state's oyster beds by non-
residents. The Supreme Court declared that the law did not vio-
late the Privileges and Immunities Clause, 3and stated its rea-
soning as follows:

"The principle has long been settled in this
Court that each State owns the beds of all
tide-waters within its jurisdiction, unless
they have been granted away. . . In like
manner, the States own the tide-waters them-
selves, and the fish in them, so far as they
are capable of ownership while running. For
this purpose, the State represents its people,
and the ownership is that of the people in
their united sovereignty. . . (The fisheries
are) under the exclusive control of the State,
which has consequently the right, in its dis-
cretion, to appropriate its tide-waters and
their beds to be used by its people as a com-
mon for taking and cultivating fish...
Such an appropriation is in effect nothing
more than a regulation of the use by the
people of their common property. The right
which the people of the State thus acquired
comes not from their citizenship alone, but
from their citizenship and property combined.
It is, in fact, a proprietary right, and not
a mere privilege or immunity of citizenship."4

V-77

STATE OWNERSHIP OF NATURAL RESOURCES V(C) (6)

The ownership doctrine was advanced in the subsequent case
of Geer v. Connecticut (1896). 5In this case, the Supreme Court
upheld against a Commerce Clause challenge a statute forbidding
the transportation beyond the State of game birds that had been
killed within the State. The Court declared that the State, as
representative for its citizens who owned in common all wild ani-
mals within the State, had the power to control the taking as well
as the ownership of game once it was taken. The Court stated, "The
common ownership imports the right to keep the property, if the
sovereign so chooses, always within its jurisdiction for every
purpose."

Subsequent to McCready and Geer, the scope of the doctrine
of state ownership was severely limited by the Supreme Court in
cases involving wild animals and other natural resources. 7The
Supreme Court's shift away from the "ownership"' theory was made
explicit in Toomer v. Witsell (1948),8 which struck down as viola-
tions of the Commerce Clause and the Privileges and Immunities
Clause certain South Carolina statutes which discriminated against
out-of-state commercial shrimp fishermen. The Court held that be-
cause the State permitted its shrimp to be shipped to other states,
the State could not condition such shipments so as to burden inter-
state commerce. 9The Court also rejected the contention that state
ownership of the shrimp created an exception to the operation of
the Privileges and Immunities Clause. The Court stated, "The whole
ownership theory, in fact, is now generally regarded as but a fic-
tion expressive in legal shorthand of the importance to its people
that a State have the power to preserve and regulate the exploita-
tion of an important resource."1 The Court distinguished the
McCready case on the following grounds: First, McCready involved
fish (oysters) that would remain within the State until removed
by man, while Toomer dealt with "free-swimming fish which migrate
through the waters of several States." 11 Secondly, McCready in-
volved inland waters, whereas Toomer involved the marginal sea.

V-78

STATE OWNERSHIP OF NATURAL RESOURCES V(C) (6)

Toomer was decided one year subsequent to the decision in
United States v. California (1947), 12where the Court had held
that the federal government had dominion over the marginal sea
and that the States had no ownership rights therein. However, in
1953 tnrough the Submerged Lands Act Congress quitclaimed to the
States title to and ownership of the submerged lands and natural
resources in the marginal sea.

Although the SLA contains broad language establishing exclu-
sive state ownership of all wild animals and other natural resources
in the marginal sea, the Supreme Court has construed the rights
granted by the SLA quite narrowly. In Douglas v. Seacoast Products
(1977), 13the Court rejected the argument that Virginia's "owner-
ship" of fish swimming in its waters empowered the State to forbid
fishing by non-residents in federally licensed ships. The Court
stated,

"A State does not stand in the same position as
the owner of a private game preserve and it is
pure fantasy to talk of 'owning' wild fish, birds,
or animals, neither the State nor the Federal Gov-
ernment, any more than a hopeful fisherman or
hunter, has title to these creatures until they
are reduced to possession by skillful capture...
The 'ownership' language of cases such as those
cited by appellant must be understood as no more
than a 19th-century legal fiction expressing 'the
importance to its people that a state has the
power to preserve and regulate the exploitation
of an important resource.' (Citing Toomer) Under
modern analysis, the question is simply whether
the State has exercised its police power in con-
formity with the federal laws and Constitution. "14

The Court therefore characterized a state's interest in its natural
resources not as an "ownership" interest, but as a police power to
control and regulate its natural resources.

Subsequent to Douglas, however, the Supreme Court recognized
in Baldwin v. Montana Fish and Game Comm'n (1978) 15that the own-
ership doctrine of McCready and Geer, has some remaining validity.

V-79

STATE OWNERSHIP OF NATURAL RESOURCES V(C) (6)

The Court declared, "the fact that the States' control over wild-
life is not exclusive and absolute in the face of federal regula-
tion and certain federally protected interests does not compel the
conclusion that it is meaningless in their absence." 16

Whatever vitality the ownership doctrine might have is un-
clear, however. The ownership doctrine was most recently rejected
by the Supreme Court in Hughes v. Oklahoma (1979). 17There the
Court struck down, as violative of the Commerce Clause, an Oklahoma
statute which prohibited transportation out of the State of minnows
caught within the State. The Court expressly overruled the Geer
case, and held that state regulation of wild animals is subject to
the same general rules concerning interstate commerce which apply
to state regulation of any other resource.

To summarize, it appears that the doctrine of state ownership
has been suffering a lingering death. it is clear that a state's
"ownership" of its wildlife and other resources cannot justify any
undue burden to interstate commerce. 18A state's control over its
resources does not preclude a proper exercise of federal power. 1
State regulation of its natural resources cannot on the basis of
"ownership" interfere with a non-resident's "fundamental" rights
protected by the Privileges and Immunities Clause. 20Finally, a
state may not allocate its resources in a manner which offends the
Equal Protection Clause of the Fourteenth Amendment. 21

V-.80

STATE OWNERSHIP OF NATURAL RESOURCES V(C) (6)

FOOTNOTE S

1. See, Baldwin v. Montana Fish and Game Conmm'n, 436 U.S. 371,
405 (1978) (Brennan, J., dissenting).

2. 94 U.S. 391 (1877).

3. The previous case of Corfield v. Corgell, 6 F. Gas. 546 (no.
3,230) (CCED Pa 1825) had held that access to oyster beds
owned by New Jersey could be limited to New Jersey residents.

4. 94 U.S. at 395.

5. 161 U.S. 519 (1896).

6. 161 U.S. at 530.

7. In West v. Kansas Natural Gas Co., 221 U.S. 229 (1911), the
Court invalidated as violative of the Commerce Clause an
Oklahoma statute which was designed to prohibit the transpor-
tation beyond the State of natural gas produced by wells
within the State. The Court stated that the welfare of the
Nation transcends that of any State, and all the States bene-
fit by a sharing of each States' resources. West was held
to be controlling in Pennsylvania v. West Virginia, 262 U.S.
553 (1923), where a West Virginia statute that required
natural gas companies within the State to satisfy all fuel
needs of State residents before transporting any natural gas
out of the State was held to violate the Commerce Clause.
West and Pennsylvania thus established that a State's owner-
ship of a resource within its boundaries was an insufficient
basis for preserving the benefits of the resource for that
State' s residents.

The state ownership theory of McCready and -Geer was further
eroded in subsequent cases involving regulation of wild ani-
mials. In Missouri v. Holland, 252 U.S. 416 (1920), the State
of Missouri attacked the Migratory Bird Treaty between the
United States and Canada on the ground that it interfered
with the State's rights pursuant to its status as owner of
the wild animals within its boundaries. The Treaty was up-
held as a valid exercise of federal power. The Court de-
clared that "1[tlo put the claim of the State upon titel is
to lean upon a slender reed," and noted that "wild birds are
not in the possession of anyone; and possession is the begin-
ning of ownership." 252 U.S. at 454.

Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1 (1928),
further undermined the state ownership doctrine. The Supreme

V-81

STATE OWNERSHIP OF NATURAL RESOURCES V(C)(6)

Court struck down as violative of the Commerce Clause a
Louisiana statute which prohibited the transportation beyond
the State of shrimp taken in Louisiana waters until the heads
and shells had been removed. In distinguishing the Geer
case, the Court made the following comment:

"As representative of its people, the state
might have retained the shrimp for consump-
tion and use therein. . . But by permitting
its shrimp to be taken and all the products
thereof to be shipped and sold in interstate
commerce, the state necessarily releases its
hold, and, as to the shrimp so taken, defi-
,nitely terminates its control. 278 U.S. at
13.

Therefore, where the resources were bound for interstate com-
merce, the State's "ownership" of the resource could not
serve as a justification for the State's economic discrimina-
tion.

8. 334 U.S. 385 (1948).

9. The Court cited Foster-Fountain Packing Co. v. Haydel, note
7, supra.

10. 334 U.S. at 402.

11. 332 U.S. 19 (1947); See, Section II-B, supra.

12. See Section II-B, II-C, supra.

13. 431 U.S. 265 (1977).

14. Id. at 284.

15. 436 U.S. 371 (1978).

16. 436 U.S. at 386. In the subsequent case of Hicklin v. Orbeck,
437 U.S. 518 (1978), the Court struck down as violative of
the Privileges and Immunities Clause, an Alaska statute which
required that residents be preferred for jobs related to
Alaska's oil and gas resources. The Court concluded that the
connection between the statute's requirements and the State's
ownership of its oil and gas was too attenuated.

17. 441 U.S. 322 (1979).

18. Hughes v. Oklahoma, 441 U.S. 322 (1979); Foster-Fountain
Packing Co. v. Haydel, 278 U.S. 1 (1928); Pennsylvania v.

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STATE OWNERSHIP OF NATURAL RESOURCES V(C)(6)

West Virginia, 262 U.S. 553 (1923); West v. Kansas Natural
Gas, Co., 221 U.S. 229 (1911).

19. Douglas v. Seacoast Products, Inc., 431 U.S. 265 (1977);
Kleppe v. New Mexico, 426 U.S. 529 (1976); Missouri v. Holland,
252 U.S. 416 (1920).

20. Hicklin v. Orbeck, 437 U.S. 518 (1978); Toomer v. Witsell,
334 U.S. 385 (1948).

21. Takahashi v. Fish and Game Comm'n, 334 U.S. 410 (1948).

V-83

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

D. COMMON LAW AND STATE LAW RESTRICTIONS UPON STATE AUTHORITY

1. The Public Trust Doctrine/Hawaii State Constitution

Q: What are the common law and state law restrictions upon the
state's authority over its offshore waters?

A: The public trust doctrine requires that any alloca-
tion of public ocean resources to private interests
must provide a net public benefit and must not sig-
nificantly impair public ocean uses.

The public has an interest in navigable waters which is dif-
ferent and more extensive than its interest in dry lands. The
United States Supreme Court has stated,

"[Liands under tide water are incapable of culti-
vation or improvement in the manner of lands above
high water mark. They are of great value to the
public for the purposes of commerce, navigation
and fishery. Their improvement by individuals,
when permitted, is incidental or subordinate to
the public use and right. Therefore the title
and the control of them are vested in the sover-
eign for the benefit of the whole people."l

This sovereign title has been recognized at common law since Roman
times: "As long ago as the Institutes of Justinian, running waters,
like the sea, were res communes - things common to all and property
of none." ,2 Trade, fishing and travel depended upon free access
and communal use of waterways. Therefore, as one commentator has
succinctly stated, "where the water went, the public was free to

go. 13This public right has historically risen and fallen, 4but
today is strongly asserted by U.S. courts as the "Public Trust

Doctrine."
A legal scholar has remarked, "the common law develops out

of problems which have arisen." The public trust doctrine is
such a development. The doctrine has lately been recognized as
an important common law and sometimes statutory means of protect-
ing "public ownership and control of critical state resources," 6
at a time when many of these resources have become threatened or
more scarce. Private and public demand for coastal resource use

V-84

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

"$is burgeoning, supply is recognized as finite, and concepts of
public interest, multiple use of land and water, and governmental
intervention via the police power have come very much into vogue." 7

The public trust doctrine today is seen as conferring "upon
the courts a basis for intervention in the competition between
private industry and the public interest for a given resource."8
The doctrine "is essential to environmental law and provides a
cohesive overview to all kinds of environmental problems and poten-
tial solutions." 9 The doctrine has been called "a medium for demo-
cratization,"1,0 a "philosophical conception of natural law,"11 and
a "classic example of bad law creating hard cases." 12

The concern of this report is to determine whether the pub-
lic trust doctrine would prevent, nullify or restrict the imple-
mentation of an ocean leasing program in Hawaii. The public trust
doctrine has obvious application in a state where ocean and shore
are the locus of the state's most important commercial and recrea-
tional activities. Hawaii is, moreover, dependent upon ocean com-
merce for virtually all of its energy and material needs. Thus
any obstruction to navigation would be a serious matter.

To answer questions raised by the public trust doctrine, the
history and the functional use of the doctrine must be described.
Public trust concepts developed in English common law in associa-
tion with the growth of commerce. 13English courts transformed
the concept of communal property rights into a public servitude
over navigable waters which guaranteed free navigation, commerce
and fishing. The King owned the waters and submerged lands with-
in the kingdom, but "the public had certain important rights in
the foreshore, which rights superseded any conflicting private
rights, including those claimed by the King. The King was trustee
of these public rights, but he could not appropriate them to his
own use." 14

The public trust doctrine was directly assimilated into U.S.
law from English common law. Congress and State legislatures

V-85

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

succeeded to the role the English doctrine assigned to the King. 1
The doctrine has found expression in both federal and state courts,
but "the scope and the limits of the public trust doctrine remain
uncertain."1

This uncertainty is largely due to the way in which the pub-
lic trust doctrine has been used by U.S. courts. Theory and prac-
tice seem to part. One unifying view is that the doctrine has an
"underlying economic nature" which shows the courts implementing
"a rough cost-benefit analysis . . . to promote the public welfare
policy explicit in the trust doctrine. 17Public trust judgments
are here seen as resource allocation decisions, with the courts
playing "a significant role in reconciling the increasing and con-
flicting pressures now being placed an coastal zone resources." i
In this view, the public trust doctrine "will only be used to the
extent that it will operate to achieve the appropriate economic
result, and . . . in the case where it will not achieve such re-
sult it will not be applied." 19

The doctrine appears amorphous also because "it is not so
much a substantive set of standards for dealing with the public
domain as it is a technique by which courts may mend perceived
imperfections in the legislative and administrative process." 20
These imperfections center around "the tendency of the legisla-
ture and of administrative agencies to subordinate diffuse public
advantages to pressing private interest." 21However, even strong
advocates of public trust applications describe the doctrine as
only "a potentially broad tool" and state that "the cases, with
a few exceptions, have not yet defined the public trust concept
in the context of our modern concern for protection of the envi-
ronment." 22While it is easy to state the fundamental rule that
the public trust in navigable waters and other protected resources
"cannot be substantially impaired or surrendered by reallocation,''
it seems that "at present there is little judicial precedent to
provide guidelines for what constitutes a substantial impairment
of the public trust." 23

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

The cost-benefit and "the court of redress" analyses both
suggest a certain arbitrariness is inherent in the use of the
doctrine. As one commentator has noted, "The court often gives no
indication of the route it has taken to make its decision and, in
most cases, it is probably fair to say that the judge makes a guess
as to the projected costs and benefits of a particular program." 24
Another commentator, a public trust advocate, stresses that public
trust concepts "serve a purely negative function . . . these con-
cepts are at best a stop-gap, a brake on precipitous and ill-
conceived legislative action."2 It might be argued that only
gross abuse would trigger the public trust doctrine. A public
trust advocate has stated that judicial intervention in "resource
allocation fields occupied by legislative or administrative action
is likely to remain cautious . . . Courts lack technical exper-
tise, and a particular challenged legislative or administrative
scheme may not appear sufficiently unreasonable to justify inter-
vention by a court with a crowded docket". 26

Nonetheless, recent State court cases in Hawaii and elsewhere
have vigorously affirmed the public trust doctrine and broadened
its application. 27in Hawaii, courts have used the public trust
doctrine as a basis for developing "substantive protections for
coastal resources to prevent their misuse by private parties, to
exercise control over government activities, and to balance con-
flicting private, government, and public interests."2 One com-
mentator concludes that "in Hawaii it will be difficult, although
not impossible, to grant an exclusive fishing right to a private
entity in a traditionally public area." 29Analysis of the public
trust doctrine's full rationale and application indicates, however,
that an ocean leasing program is not only permissible within pub-
lic trust precepts, but that a well-planned leasing program may be
considered a positive means of furthering the basic objectives of
the trust.

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

The first United States case to raise the public trust issue,
Arnold v. Mundy (1821), 30established the parameters of the public
trust debate. The court distinguished the two aspects of state
sovereignty discussed earlier in this section, proprietary rights
and police powers, and clearly subordinated the former to the
latter. From the perspective of the public trust doctrine, these
two aspects of sovereignty are described as the jus privatuin (state
or private property right) and the jus publicum (state police power
or inherent public right). 31The Arnold court asserted that navi-
gable waters were inalienably subject to the jus publicum.32

The United States Supreme Court supported the view of Arnold
in Martin v. Waddell (1842) 33and in several later cases which
confirmed the title and the jurisdiction of the various states over
tidelands and inland waters. 34The public trust nature of these
resources became the justification for declaring ownership to be
an incident of state sovereignty. 35As a result, disposition of
tidelands, and preservation of the public trust impressed on this
coastal resource, became matters of state l w36Since the pas-
sage of the Submerged Lands Act by Congress in 1953, control and
proprietary rights over offshore submerged lands to the limit of
state ocean boundaries has also been clearly vested in the states.37

Although not directly so stated, the tidelands "title" cases
carry a strong suggestion that trust resources cannot be alienated.
A direct judicial expression of such a view is found in Aguino v.
H-egelman (1918). 38The court there stated,

"I deny that the legislature has the power, either
by direct action or otherwise, to give or grant to
any person rights which are the property of all
the citizens of this commonwealth, and which the
legislature holds in trust for the common use and
does not hold in its own right or as proprietor.",39

Some commentators have thus argued that the restriction placed
upon resources impressed with the public trust is absolute. In
this view trust resources cannot be conveyed to private interests

V-88

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

for any purpose, but must remain always equally available to all
citizens. 40

The case law overall, however, and long-established public
policies do not support such an absolutist view.41 It must be
noted that public trust case law widely diverges from one jurisdic-
tion to another. Precedents established in one state are not bind-
ing on others, and as noted previously, the United States Supreme
Court has stated that in matters concerning disposition of trust
resources, state law controls. 42A proper characterization of the
case law might be that "where public trust protections have been
applied, courts have acted . . . to enjoin activities that would
unreasonably curtail public benefits." 43

This intermediate position, lying between trust absolutism
and a view that the ocean is legally no different than any other
44
publicly owned resource, has received the most consistent judi-
cial recognition. It "takes into account both legislative falli-
bility and economic necessity, acknowledging that efficient utili-
zation of coastal resources often requires private development
and ownership . . . this view would require that any diversion of
a coastal resource from public to private control be demonstrably
in furtherance of the public's interest in the particular resource,
subject to reversion to the state whenever the disposition ceases
to be beneficial to the public." 45

A highly respected environmental law scholar has recently
stated,

"[I]t is inconceivable that the trust doctrine
should be viewed as a rigid prohibition preventing
all dispositions of trust property, or utterly
freezing as of a given moment of time the uses to
which those properties have traditionally been put.
For it can hardly be the basis of any sensible
legal doctrine that change itself is illegitimate.",46

The leading United States Supreme Court public trust case, Illinois
Central Railroad v. Illinois (1892), 47 demonstrates this tempered

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

view. Illinois Central established basic public resource manage-
ment propositions which are found restated in contemporary public
trust dcsos48The Supreme Court specifically ruled that the
Illinois Legislature, which in a previous session had passed vir-
tually the entire harbor of Chicago in fee simple to a private
corporation, could revoke this egregious grant of a trust resource.
The Court declared that the original grant was an unallowable abdi-
cation of sovereign power, and therefore "void on its face." 49
The Court enunciated the principle that,

"[TI~he State can no more abdicate its trust over
property in which the whole people are interested,
like navigable waters and soils under them ..
than it can abdicate its police powers in the
administration of government and the preservation
of peace. "50

Illinois Central did not bar trust resources from being
granted to private users, however. Rather, the Court affirmed
positively the rule that the state could in fact "alienate both
the jus privatum and the jus publicum in lands which are subject
to the public trust doctrine if the alienation serves a public
purpose." .51

The concern of the Court focused on (1) the purpose of the
grant and (2) the extent of the grant. Three substantive tests,
all of which must be met for a conveyance of trust resources to
be unchallengeable, can be adduced from the Court's opinion in this
case. These are:

(1) Is the use supported by the conveyance necessarily
water-related? (Correlatively, is there no alternative
site? Does the use further the purposes of the trust?)

(2) Does the public receive a net benefit as a result of
the conveyance?

(3) May the public continue to use and enjoy the whole of
the trust resource without significant loss? 52

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

With regard to the first test, courts in various jurisdic-
tions have ruled that a public easement impressed on specific coas-
tal resources may be abridged and even terminated to further water-
related uses of those resources. 53This first test also eliminates
certain kinds of uses. The California Supreme Court in recent rul-
ings has held that "under the trust tidelands may be filled and
used for commercial and recreational purposes but not residential
purposes." 54 That court indicated "that reclamation for general
purpose county and municipal buildings and governmental housing
projects does not further trust purposes." 55

Water-relatedness was significant in Boone v. Kingsbury
(1928), 56a particularly important case for judging what impact
the public trust doctrine might have on an ocean leasing program
established to support OTEC, mariculture and other fixed-location
marine operations in Hawaii. Boone declared oil drilling leases
on tide and submerged lands in California to be valid. The Court
specifically denied the contention that the ocean leasing program
established by act of the California Legislature in 1923 violated
statutory and common law assertions of the public trust doctrine
found in California state law and in federal law.,57

Boone shows clearly how courts may disregard public trust
theory, which "characterizes a given right as either being fully
protected or as not being protected at al,,8in favor of prag-
matic cost-benefit considerations. The activities and rights to
be protected under the trust doctrine inevitably conflict. They
cannot all be absolute. The Court in Boone, faced with the neces-
sity of ordering priorities, declared oil leases to be consistent
with the trust purpose of commerce, and therefore legitimate de-
spite any derogation of other trust purposes which might result.
No alternative existed "to reduce to useful purposes oil, gas and
mineral deposits reposing beneath the ocean's bed" but to accept
"the development of oil fields wheresoever found to exist."59
offshore oil leases thus met both aspects of the first substantive

V-91

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

test of Illinois Central. They were legitimately water-related,
and they furthered the trust.

oil leasing also met the second test, according to the court.
Boone has been characterized as "probably the most overt example
of cost-benefit balancing"6 to be found in public trust law. The
court described gasoline as "the power that largely moves the com-
merce of nations over lands and sea" 61 and concluded that "the
development of the mineral resources, of which oil and gas are
among thie most important, is the settled policy of state and nation,
* .the courts should not hamper this manifest policy except upon
the existence of most practical and substantial grounds." 62To
the Boone court, the net benefit to the public of offshore oil
leasing was obvious. 63

The third test presented the most serious questions to the
court in this particular case. However, the court dismissed objec-
tions that offshore oil production would unreasonably interfere
with navigation and fishing. The court stated,

"No harm can come to fisheries under the protective
provisions of the act, as it must be presumed that
the provisions of the act will be observed, and, if
not observed, the general laws enacted for the pro-
tection of fish and sea life against the pollution
of waters by penalizing persons or corporations,
who cause or are responsible for deleterious sub-
stances escaping into the public waters of the
state, are amply sufficient to protect sea life
against serious injury or destruction-.

"Nor is there any substantial cause of alarm lest
the 1,200 miles of our sea coast will be barricaded
by la forest of oil derricks,' which will interfere
with commerce or navigation. The state may at any
time remove structures from the ocean erected by
its citizens, even though they have been erected
with its license or consent, if it subsequently de-
termines them to be purprestures or finds that they
substantially interfere with navigation or commerce.".64

The court judged that the public would suffer no significant loss
of trust resources, and clearly distinguished this leasing program's

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

methods and results from the broad alienation of trust resources
censured by the United States Supreme Court in Illinois Central.
The court noted:

"The license or privilege authorizing the permit-
tee to prospect and mine tidelands is denominated
by the act a lease, but in practical effect it
strongly partakes of the character of a contract
to prospect or mine said tidelands on a share or
percentage basis. In no sense does the state part
with title to its tidelands. More than this, it
expressly 'reserves from sale except upon a rental
and royalty basis' all coal, oil, oil shale, phos-
phate, sodium and other mineral deposits in lands
belonging to the state, and persons authorized by
said act to prospect for, mine and remove such de-
posits are restricted to as small a portion of the
surface area as may be reasonably required for min-
ing and removing such deposits."6~5

The court thus upheld the statute, stating:

"With full knowledge of the subject, the Legisla-
ture found that there was nothing in the drilling
and operation of oil wells conducted in the manner
provided by the statute that would substantially
impair the paramount public interest in the lands
and water remaining, and upon a consideration of
the case we find nothing that would justify us in
holding that the finding of the Legislature, which
is conclusive in such matters is not fully sup-
ported by the facts.",66

The same reasoning on all points applies to ocean leases for
OTEC and mariculture activities, and has been so applied to mani-
culture activities in California. 67Oil leasing programs in
other states have also received court approval, 68and at least
one of these states, Florida, has subsequently provided specifi-
cally for the leasing of offshore areas for the conduct of mani-
culture activities. 69The Florida statute permits the granting
of exclusive use of the ocean bottom and the vertical water col-
umn to the extent required by such activities. 70

Some states have instituted general ocean leasing programs.
The State of Alaska has legislation (ALASKA STAT. Section 38.05)

V-93

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

which "contemplates a wide range of exclusive leasing arrangements
for the carrying out of what would otherwise be competing develop-
ment activities. The legislation covers land and coastal waters
and is clearly premised on the concept of allocating areas in order
to maximize both public and private advantage.",71 The State of
Oregon has a submerged and submersible lands leasing program which
has withstood specific legal challenge on public trust grounds. 72
This program will be discussed more fully below.

The landmark Boone decision has not been controverted in
recent public trust cases, despite the emphasis in these cases
upon (1) subjecting private uses of ocean resources to public
rights and (2) requiring equal and open allocation of resources.

Upon this first point, the California Supreme Court in Marks
v. Whitney (1971) 73declared a public servitude over all Califor-
nia tidelands. 74The court also formally recognized both recrea-
tional activities, and preservation of tidelands in their native
state, as uses additionally protected by the public trust doc-
trine. 75But the court also noted, "In administering the trust
the state is not burdened with an outmoded classification favoring
one mode of utilization over ante. 6Marks reiterated the con-
cllusion of Colberg, Inc. v. State of California ex rel. Dept. Pub.
Wks. 77that the selection of one trust use over another is a mat-
ter committed to the discretion of the Legislature, or of an agency
to which the Legislature has delegated its discretion. 78In Marks,
the court stated,

"The power of the state to control, regulate and
utilize its navigable waterways and the lands
lying beneath them, when acting within the terms
of the trust, is absolute . . . It is a political
question, within the wisdom and the power of the
Legislature, acting within the scope of its duties
as trustee, to determine whether public trust uses
should be modified or extinguished.",79

The California State Department of Justice views the Marks
decision as holding that "mariculture, as much as port and a

V-94

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

variety of other uses, is appropriate for lands held subject to
the public trust." 80The latest California public trust case,
City of Berkeley v. Superior Court of Alameda (1980), 81extends
the application of the public trust doctrine. Certain tidelands
had been granted by the State Legislature to private owners prior
to the prohibition against such practice incorporated into the
California State Constitution in 1879. In City of Berkeley, the
California Supreme Court ruled that even these resources were sub-
ject to the public servitude guaranteed by the public trust doc-
trine. 82Nonetheless, the court continued to recognize the autho-
rity of the Legislature to absolutely dispose of tidelands and to
judge for itself what uses of trust resources best served the pub-
lic interest. 83As in Illinois Central, the public trust doctrine
was held to restrain the Legislature only from substantially im-
pairing the ability of succeeding Legislatures to deal effectively
with trust resources. 8

Upon the second point, equal allocation of trust resources,
the Supreme Court of New Jersey, in Neptune City v. Avon-By-The-Sea
(1972), 85held that "the public trust doctrine prohibits the state
and its subdivisions from discriminating among New Jersey citizens
in foreshore access regulations." 86 The court specifically ruled
that a municipality could not charge non-residents higher fees for
use of an upland beach area than it charged its own residents.
The Neptune City judgment harks back to the original New Jersey
public trust case, Arnold v. Mundy, which treated the public trust

"as beyond evnsvrinifigmn. 7 A strong supporter of
the decision nonetheless states,

`[Although] any tidalwater resource allocation or
claim that impairs or does not supply the common
interest of the state's citizens would be a dis-
crimination violating the public trust and would
be actionable by any injured state citizen . ..
Arnold and Neptune City permit legislation licens-
ing, leasing or conditionally granting possession
of parcels of foreshore, ocean beach or tidalwater
bedlands, if consistent with the public interest.

V-95

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D)(1

Such an allocation would not favor the grantee over
other citizens, but choose him as the mechanism of
an enhancement of the common benefit."88 [Emphasis
supplied]

These recent court decisions all signify "an increasing judi-
cial concern that a government grant of authority to a private
interest to make land and resource use decisions may result in
the broad public resource uses being subordinated to that private
interest." ,89 This reflects a basic shift in the perception of the
cost-benefit ratio associated with the private use of public re-
sources. Early legislative decisions to raise revenues by alien-

ating public lands, 90and to "achieve desired social goals, in the
absence of an adequate tax structure, by utilizing private capi-

tal," 91have been re-evaluated by contemporary critics as "legis-
lative acquiescence to pressure groups or indifference [which] has
allowed enormous tracts of shore to pass into the hands of devel-
opers with little thought of ecological or social consequence." 92

It is clear that as a result courts today take a strict view
concerning what uses of trust resources will provide "an enhance-
ment of the common benefit." There appears "a strong presumption
that the cost to the public resulting from the termination of the
trust easements outweighs the benefits to be gained from the ter-

mination." 9 The cost-benefit ratio, however, changes as the loca-
tion of the "private" activity moves offshore and away from prime

public use areas. 94An ocean leasing program supporting OTEC and
mariculture operations in Hawaii which did not involve the use of
beaches, highly-prized recreational areas, reefs, or shorefront
lands (the resources primarily at issue in the public trust deci-
sions) still must be judged on net benefits to the public.

From the foregoing analysis, the validity of an ocean leasing
program in Hawaii under the terms of the public trust doctrine
would appear to depend upon two closely interrelated determinations.
The first is the prerogative of the Legislature to establish such
a program. The second is the judgment that such a program serves
the public interest.

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

The authority of the Legislature to act as trustee for the
public with regard to the use of trust resources has been shown
to be little bounded. Exercising its proprietary rights and its
police powers, the State may take virtually any action it deems
necessary to protect the trust. 95Grants of user privileges to
private entities may be made when in furtherance of the purposes
of the trust. Such grants have not been invalidated by the courts. 96

No state has claimed a right to dispose of or lease public
trust resources without any regard for navigation, or for no pub-

lic purpose. 97An ocean leasing program in Hawaii would have to
carefully recognize limits placed by the need and right of naviga-
tion. This right is not unlimited, but is subject to lawful state
regulation. 98One commentator thus states that the courts "would
have no difficulty restricting the public right of navigation,
under the public purpose doctrine, if a more desirous public right
were in conflict with it." 99 Again, the judgment of legislatures
and of government agencies on conflicts with navigation has been
taken by courts as conclusive. 0

Some states have constitutional or statutory provisions which
appear to restrict any ocean leasing program which would authorize
exclusive use of ocean areas. Oregon, for example, has incorpo-
rated the concept of the jus publicum into its statutes, 1 and
an early court case held that a grant of an exclusive right to
fish in a particular area would violate the state Constitution
"privileges and immunities" clause. 12In most states, however,
the legislature is not so restricted:

"The lawmaking bodies of the several states, in
the absence of constitutional provisions affect-
ing the question, have generally been held to
have the power of granting exclusive rights of
fisheries in the public waters within the juris-
diction of the state."1103

Even in Oregon, the State Supreme Court recently upheld, in
Brusco Towboat Co. v. State of Oregon (1978), 14a statute estab-
lishing a leasing program for industrial and commercial water uses

V-97

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

including log booms, marinas, houseboat moorages, private docks
and aquatic cultivation facilities.10 The court found "no provi-
sion in the State Constitution which denies to the Legislature (or
to the Board) the power to require occupiers of state-owned sub-
merged and submersible lands to enter into leases and compensate
the State for their use." 10O6 Since this leasing program is closely
analogous to ocean leasing for OTEC and mariculture operations, it
is important to note that the court stated,

"[I]t is clear from the rules themselves that the
lease program does not purport to divest the legis-
lature or the Board of the state's power to protect
the rights of the public in the state's navigable
waters or to pursue other government objectives.",107

Finally, the court ruled the leasing program did not violate the
provision of the Oregon Admission Act which states that "navigable
waters of said State shall be common highways and forever free."
The Court stated that the intent of this provision is protect the
flow of commerce and vessels. Therefore,

"The leasing program does not violate the clause
as thus construed. It does not impose a charge
for the use of the navigable waters as a highway,
or tend to limit the privilege of navigation to
any particular class of persons or vessels. It
merely imposes a charge upon those who wish to
occupy, to the exclusion of others, portions of
the state's lands in pursuit of their own busi-
ness activities."108

The State Legislature in Hawaii would appear to have full
authority to implement an ocean leasing program, if it so chose.
There is no constitutional impediment to an ocean leasing program.
Article XI, Section 6 of the Hawaii State Constitution, as amended
in 1978, specifically excepts fish ponds, artificial enclosures,
and state-licensed mariculture operations from fisheries in sea-
waters which shall be free to the public. OTEC facilities do not
receive any formal constitutional recognition, but given the ration-
ales of Boone in California, Brusco Towboat Co. in Oregon, and the

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

other leading public trust cases, there appears to be sufficient
precedent to assert that ocean leasing legislation which included
other fixed-location ocean uses, such as OTEC, would not be pre-
cluded. Such legislation would of course have to meet the substan-
tive tests imposed on legislative grants by Illinois Central.

Article XI, Section 6, mandates that the Legislature set
guidelines for the licensing of mariculture activities in state
waters. The State Legislature is specifically required by Article
XI to "protect the public's use and enjoyment of the reefs," but
appears otherwise to not be constitutionally restricted in its
judgment on the issue of mariculture or general ocean leasing.

Article XI, Section 6 states that "All fisheries . . . shall
be free to the public." However, this cannot represent an absolute
injunction against the use of ocean waters for activities other
than fishing. Such an interpretation would obviously lead to un-
wanted results. The State could not approve any alteration in har-
bor lines, any landfill plans or any mooring easements, because
each would interfere with "fisheries." As is argued throughout
this subsection, the protections (both at law and in statutes)
afforded any one ocean activity need to be interpreted in context.
There are numerous other activities also afforded varying degrees
of protection, and in a clash, all cannot be absolutely protected.
The decision as to which activities are to take precedence in which
locations rightfully belongs to the Legislature.

The framers of the present Article XI appear to have been
concerned, as was the United States Congress in passing the Sub-
merged Lands Act, with optimal resource utilization. 19This is
the very core of the public trust doctrine, according to a leading
public trust advocate, who urges that "We . . . integrate legal
doctrine with the fundamental principles of intelligent resource
management." 10The Committee on Environmental, Agriculture, Con-
servation and Land at the 1978 Constitutional Convention recognized
the need to preserve Hawaii's natural resources, yet saw ocean

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

leasing for mariculture as desirable. The Committee defined "1con-
servation" as "the protection, improvement, and use of natural re-
sources according to principles that will assure their highest eco-
nomic or social benefits." II[Emphasis supplied]

The Committee determined that the "growing concern and aware-
ness of Hawaii as being overly dependent on outside sources for
among other resources, food and energy" 12should be constitution-
ally recognized. It therefore recommended amending Article XI,
Section I of the Hawaii State Constitution to read:

"[Flor the benefit of present and future genera-
tions, the State and its political subdivisions
shall conserve and protect Hawaii's natural beauty
and all natural resources, including land, water,
air, minerals and energy sources, and shall pro-
mote the development and utilization of these
resources in a manner consistent with their con-
servation and in furtherance of the self-suffici-
ency of the State." [Emphasis added]

The Committee also stated that "testimony indicated that the
state's future in the area of commercial fisheries would be in
the direction of sea farming rather than traditional fishing oper-
ations." 113 The Committee therefore recommended "in order to
enable the development of sea farms," that "fisheries developed
as a result of a 'state-licensed marine operation'" be excluded
from public fisheries, 14which must be free to the public. The
Committee concluded:

"[Tihe possibility that the public may be adversely
affected by the development of sea farms was raised.
However, after careful consideration, your Commit-
tee felt that the provision for state licensing
should serve to prevent indiscriminate prolifera-
tion of sea farms that would significantly reduce
the fisheries open to the public."11-5

In consideration of these policy findings by the Committee,
the approval of Article XI, as amended, by the people of Hawaii in
the 1978 General Election, and the corpus of U.S. case law on the
public trust doctrine generally, it appears unlikely that any

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

Hawaii state court would invalidate a legislatively enacted ocean
leasing program containing explicit public interest protections.
The courts have for the most part deferred to legislative judgment
as to whether a specific grant of public trust resources was or was
not in the public interest. 16Courts have looked rather to the
issues of explicit authorization and sufficient public policy de-
bate prior to such grants. The Massachusetts Supreme Court, for
example,

I' .has not attempted to police decisions con-
cerning the proper use of public trust lands, but
has instead developed means for insuring that
those who do make the decisions do so in a pub-
licly visible manner. The Court has served notice
to all concerned that it will view with skepticism
any disposition of trust lands and will not allow
them unless it is perfectly clear that the dispo-
sition has been fully considered by the Legisla-
ture.,"117

The leasing of ocean waters, as authorized by the State Legis-
lature and carried out pursuant to guidelines established by the
Legislature, does not violate the public trust doctrine. This con-
clusion is reached upon an examination of the relevant case law,
and is supported by the vast majority of legal scholars. One such
scholar, answering directly the question of whether ocean leasing
in Hawaiian waters would violate the public trust doctrine, stated:

"[W]hen you are talking of some [water-related
private ocean] use which has a value, I'm per-
fectly willing to accept the legislative judgment.
This is a use you can't have without intruding on
other uses. The question is, how do you balance
out those competing uses, and that is what legis-
lators are for. I don't see any reason why the
courts should have the final word on that kind
of conflict."118

Similarly, the Hawaii Supreme Court, in Bishop v. Mahiko (1940), 1
described in very strong language the breadth of legislative pre-
rogative:

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

"The burden of showing that an Act of the legis-
lature is unconstitutional is on the party assert-
ing it. Every enactment of the legislature carries
carries a presumption of constitutional validity
and should be upheld by the courts unless it has
been shown to be, beyond all reasonable doubt, in
violation of the Constitution. Moreover, the facts
adduced to show unconstitutionality must be clear
and convincing and must show beyond question that
the legislature exceeded the limits marked by the
Constitution.,"120

The Hawaii Supreme Court in recent years has forcefully ap-
plied the ideas behind the public trust doctrine. Older Hawaii
public trust cases fall within the mainstream of U.S. public trust
law. Absolute state sovereignty is asserted over trust resources,
and the concomitant power of the Legislature to determine the
proper use and disposition of these resources is recognized. The
public trust doctrine was incorporated into Hawaii law in King v.
Oahu Railway and Land Co. (1899), 11which relied squarely upon
Illinois Central. The Hawaii Supreme Court there ruled that sub-
merged lands in Honolulu Harbor were "held in trust for the public
uses of navigation" 12and therefore the state, rather than a rail-
way company, had power to decide what uses of submerged lands would
be appropriate. 123

The public trust doctrine was also early applied by the
Hawaii Supreme Court in Territory v. Kerr (1905).l124 The court
overruled a decree of the Circuit Court dismissing an action by
the State to enjoin the construction of a seawall between high and
low water tidelines at Waikiki Beach. The court concluded:

"[A]s far as any obstruction can do so it [the
seawall] prevents public use of the shore for
passage over it and . . . if allowed to go on
to completion it would appropriate public terri-
tory to private use for no purpose conducive to
public interest. Walls and buildings extending
seaward beyond high water mark block the right-
of-way and furnish no compensatory advantages to
the public for purposes of navigation or fish-
eries. "125

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

In its stress on "compensatory advantages," Territory v. Kerr
demonstrates the Hawaii court's own use of a basic cost-benefit
formula to arrive at a public trust decision. Such judicial rea-
soning, however valid, makes it difficult to state absolutely that
the Hawaii court would judge a contemporary ocean leasing program
as providing a net public benefit. Cost-benefit analysis is open-
ended, in that judgments of costs and benefits may change, and are
to some extent personal and subjective, as noted in both this sub-
section and the Policy Issues section of this report. Resource
allocation judgments will differ from one jurisdiction to another,
and from one time to another, as circumstances and expectations
change.

Recently the public trust doctrine has provided in Hawaii "a
rationale for challenging uses of Hawaii State lands inconsistent
with protected public uses." ,126 In McBryde Sugar Co., Ltd. v.
Robinson (1973), 17the court reinterpreted on public trust grounds
the historical and legal principles of Hawaii water law. McBryde
has been seen as charting "the legal outline of a future resource
regime." 1~28 The court has shown that it favors public ownership
and use of the shoreline to the maximum extent practicable. 129

An ocean leasing program should therefore "be formulated so
as to be in accord with substantive judicial safeguards on coastal
resources." 1l30 These safeguards are similar to those formulated
by the Massachusetts Supreme Court, and thus include the carrying
out of thorough planning analyses to achieve the best allocation of
public resources, and "rigorous requirements of statutory explicit-
ness and conformity with statutory procedures in assessing agency
actions." .131

The Hawaii Supreme Court has demonstrated a willingness "to
employ public policy considerations in regulating key public re-
sources." 1,32 The State Legislature should therefore promulgate a
direct and explicit statement of public policy concerning priorities
in the use of marine resources within the State, as an integral

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

part of any ocean leasing legislation it might enact. If Hawaii's
ocean resources are to be effectively and legally exploited for
OTEC, mariculture or any other fixed-location ocean activities,
the State Legislature itself must establish that ocean leasing pro-
gram. This is one mandate of the public trust doctrine.13

The Hawaii State Constitution requires that the Legislature
set the guidelines for such a program's implementation, insofar as
that program touches mariculture operations. This is a constitu-
tional incorporation of the public trust doctrine, whose standards
would apply in any case to require such legislative guidelines for
the reallocation of public resources. If the Legislature chooses
to provide for leasing of ocean waters for any additional uses,
such as OTEC, the public trust doctrine thus operates to require
that legislative guidelines be adopted for the establishmient of
these uses as well. The doctrine also requires that these guide-
lines function to generate a net public benefit.

Any legislatively mandated ocean leasing program would have
to meet the substantive tests established by the United States
Supreme Court in Illinois Central and incorporated into Hawaii
state public trust law in O.R.&L. Co., and the procedural test of
explicitness. Such a program could not threaten to significantly
reduce the "fisheries open to the public," obstruct navigation, or
interfere with recreational uses of ocean resources. The program
would have to provide, for example, that no mariculture operation
could be sited off a prized recreational area, such as Sandy Beach.
A site inside Kaneohe Bay might be questioned. The overall circum-
stances, the extent of public restriction, must be weighed indivi-
dually in each instance of siting but the program itself must con-
tain clear procedures and policy objectives which will guide these
individual decisions.

Where interference with existing or other possible ocean uses
involves more of a "balancing of competing uses" judgment, the
designation of leasable areas, or at least the adoption of criteria

V- 104

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

for making such designations, if such designating is to be dele-
gated, becomes a legislative prerogative. The Legislature will
have to judge and declare at what point a diminution of public
resources, wrought by implementing actions taken under an ocean
leasing program, would no longer be affirmatively offset by general
benefits accruing to the public from that action.

To prevent a general public trust challenge to ocean leasing
legislation, any leasing program should contain clearly stated
limits, such as a designation of suitable and unsuitable zones for
leasing, or some other planned development formula which would
give assurance of the program's bounds. Such planning is not found
in the Florida, the California, or the recently enacted Rhode Is-
land mariculture leasing laws; but given the limited offshore space
in Hawaii and the very high degree of competition for use of that
space, from both a political and a legal point of view a more def-
inite procedure than case-by-case judgment of lease applications
appears warranted. The Legislature might direct the Department of
Land and Natural Resources to develop a site assessment to specify
leasable and non-leasable areas (and leasable for which ocean activ-
ities), which could then be ratified by the Legislature. The clar-
ity concerning future development which could be achieved through
such planning would mitigate opposition from present ocean resource
users, as well as judicial skepticism about the wisdom of reallo-
cating public resources through general ocean leasing legislation.

The Florida mariculture regulations contain a provision requir-
ing that the public be offered some "compensatory advantage" for
the loss of specific public resources which are given to private
users through the leasing program.13 The Hawaii Legislature might
consider such a requirement, if it does not feel lease rents and
less direct public benefits would guarantee adequate public compen-
sation. If enacted, however, such a requirement should be triggered
only in cases of clear public loss, and must be carefully drawn so
that an impossible burden is not placed upon a lease applicant.

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

Finally, public access should be protected to the maximum de-
gree practicable. Provision should be made to guarantee that leases
be no more extensive, and the degree of exclusiveness be no broader,
than is required by the nature of the operation.

A general leasing law containing such provisions would appear
to be insusceptible to a public trust challenge. Specific agency
decisions made in implementing the law, however, would always re-
main open to attack. The Hawaii State Constitution, Article XI,
Section 9, "Environmental Rights," states:

"Each person has the right to a clean and health-
ful environment, as defined by laws relating to
environmental quality, including control of pol-
lution and conservation, protection and enhance-
ment of natural resources. Any person may enforce
this right against any party, public or private,
through appropriate legal proceedings, subject to
reasonable limitations and regulation as provided
by law."

Administrative guidelines must therefore be clear, and administra-
tive agencies must follow these guidelines rigorously. Many public
trust cases have centered upon improper agency procedures rather
than upon authorizing statutes. 135

These strictures do not appear prohibitive. A leasing pro-
gram can be adopted which balances all competing ocean uses to
public advantage, excluding or seriously interfering with no one
use. That this is desirable and possible has been stated well by
a prominent land use planner:

"When there is an absence of reliable regulatory
controls and when real or imagined incompatibili-
ties exist between any two or more water using
activities which normally see themselves as being
in competition with one another for the right to
use a water area, anxiety will be felt by those
engaged in the most vulnerable activity. This
will usually lead to legislative effort to totally
prohibit the activity which gives rise to the
threat.

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PUBLIC TRUST DOCTRINE/hAWAII STATE CONSTITUTION V(D) (1)

"The key, as already suggested, is allocation of
suitable water areas to each incompatible compet-
ing interest. Thus you avoid or at least minimize
conflict arising out of the incompatible nature
of their respective activities. . . But just as
landowners have come to accept the legitimacy and
value of allocating land use activities to those
areas best suited to the carrying out of a parti-
cular activity, competing water use activities
must come to view offshore water areas in terms
of allocation--an allocation with both vertical
and horizontal dimensions. This view alone can
both remove conflict and preserve the long-run
existence and viability of each of these respec-
tive activities.,"136

The State of California, as an example, has recently taken
such a positive approach with the passage of the California Aqua-
137
culture Development Act (CADA). This Act authorizes the State
Department of Fish and Game to identify coastal sites it deems
appropriate for aquaculture, and directs the State Coastal Commis-
sion and local government to reserve these sites for aquaculture
138
uses wherever possible. The Act declares that "it is in the
interest of the people of the state that the practice of aquacul-
ture be encouraged in order to augment food supplies, expand employ-
ment, promote economic activity, increase native fish stocks, en-
hance commercial and recreational fishing, and protect and better
use the land and water resources of the state." 139 The Act specif-
ically identifies "salt-water" aquaculture, or mariculture, as a
coastal-dependent use which should be encouraged.140

The California legislation also establishes an aquaculture
advisory commission to develop and recommend criteria for identi-
fication and allocation of those areas or sites determined to be
141
suitable for aquaculture. Very importantly, the bill provides
$50,000 to carry out the purposes of the Act. 142 This substan-
tial and concrete program is particularly noteworthy in that, de-
spite the passage of a mariculture law in 1971, in California until
the mid-1970's "planning policy with respect to aquaculture was
non-existent. 143

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

Aquaculture activities in California have been characterized
as "a hidden force in the economy of the state" which has clear
potential to become a significant "contributor to the economy...
(and) a major food producer that will have a national and inter-
national impact." 14These potentials have also been recognized
in Hawaii, the first state to prepare a comprehensive statewide
aquaculture development plan. 145

The possible economic benefits of a "Blue Revolution,"'4 as
well as the possible benefits of an OTEC facility come "on-line,"
place attention on the "underlying economic nature" of the public
trust doctrine. At issue, as in the Boone case, is not a formal
doctrine containing absolute injunctions against alienation of pub-
lic resources, but a policy judgment to be made by the Legislature
concerning relative priorities to be set in the use of ocean re-
sources. What order of priorities will optimally advance the pub-
lic interest, broadly defined?

The view is commonly expressed by public trust advocates that
the ocean ought to be res communes, as it was under Roman law.
However, even the Romans granted exclusive ocean fishing privi-
leges. 17The courts have applied the public trust doctrine to
bring about practical, socially useful resolutions of use-conflicts.
Public and private users of trust resources develop certain expec-
tations about their use of these resources. The function of the
public trust concept "as a legal doctrine is to protect such expec-
tations against destabilizing changes." .148 The public trust doc-
trine does not enjoin the Legislature from enacting ocean leasing
legislation. It does provide, however, that "[wljhere traditional
expectations must give way to new techniques or new needs, the
transition must be as evolutionary (rather than revolutionary) as
the new needs will permit." 149

With the development of mariculture, the "legal tradition
which treats all fishermen as predators of public property"'5 will
no longer apply. in such circumstances a recognition of private

v-i 08

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

property rights will be evolutionary rather than revolutionary151
OTEC and mariculture are by nature conservative ocean uses which
do not "use up" resources; they produce gains in resources, at the
cost of ocean space.

In Hawaii, tradition and custom have long supported conserva-
tive ocean resource uses -- fish ponds, artificial enclosures and
exclusive fishing rights in ocean areas (konohiki rights) have been
recognized in Hawaiian law since its first codification in 1840.
This is a unique historical situation which adds a further dimen-
sion in Hawaii to the issue of ocean leasing. Konohiki and native
Hawaiian rights are therefore examined in the following subsection.

V-109

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

FOOTNOTES

1. Shively v. Bowlby 152 U.S. 331, 352 (1893).

2. United States v. Gerlach Livestock Co., 339 U.S. 725, 744
(1950). In City of Berkeley v. Superior Court, 606 P. 2d
362, 364 (1980), the California Supreme Court states: "The
doctrine that the public owns the right to tidelands . . .
originated in Roman law, which held the public's right to
such lands to be 'illimitable and unrestrainable' and incapa-
ble of individual exclusive appropriation."

3. David Nelson, "State Disposition of Submerged Lands Versus
Public Rights In Navigable Waters," 3 Natural Resources Law-
yer (1970), p. 493.

4. Note, (Author: Joseph Sax) "The Public Trust in Tidal Areas:
A Sometimes Submerged Traditional Doctrine," 79 Yale Law Jour-
nal (1970), pp. 763-774 (hereinafter cited as Traditional
Doctrine).

5. Albert Stone, Ch. 3, "Public Rights in Water Uses and Private
Rights in Land Adjacent to Water," in R. Clark, Waters and
Water Rights (1967), p. 190.

6. Daniel Finn, "Hawaii Caselaw Relating to Coastal Zone Manage-
ment," in Hawaii Coastal Zone Management Program Document 6,
Vol. 2, Legal Aspects of Hawaii's Coastal Zone Management
Program, Daniel Mandelker, ed. (December, 1976) p. H-29.

7. Orlando Delogu, "Land Use Control Principles Applied to Off-
shore Coastal Waters, 59 Kentucky Law Journal (1971), p. 607.

8. James Olson, "The Public Trust Doctrine: Procedural and Sub-
stantive Limitations on the Governmental Reallocation of
Natural Resources in Michigan," II Detroit College of Law
Review (1975), p. 161.

9. Id.

10. Joseph Sax, "The Public Trust Doctrine in Natural Resource
Law: Effective Judicial Intervention," 68 Michigan Law Re-
view (1970), p. 509.

11. Brusco Towboat Co. v. State of Oregon, Or. App., 567 P. 2d
1037, 1043 (1977), aff'd as modified, Or., 589 P. 2d 712
(1978).

V-110

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

12. Patrick Deveney, "Title, Jus Publicum, and the Public Trust:
An Historical Analysis," 1 Sea Grant Law Journal (1976), p.
72.

13. Traditional Doctrine, pp. 768-774.

14. Id., p. 768-769.

15. "The common law, or law of England, upon this subject was
brought to this country by our early ancestors and continues
to be the law of the land except so far as it may be affected
by express grant, by prescription, or by usage." Boone v.
Kingsbury, 273 P. 797, 811 (1928). The U.S. Supreme Court,
in Hardin v. Jordan, 140 US 371, 382, 11 S. Ct. 808, 812
(1891) states: "This right of the state to regulate and con-
trol the shores of tide waters and the land under is the same
as that which is exercised by the Crown in England." An
extensive discussion of English common law forms the judicial
backdrop for a leading public trust case, Shively v. Bowlby,
supra, note 1. In Hawaii caselaw, the major shoreline public
trust case, Territory v. Kerr, 16 Haw. 363 (1905) quotes
English law in detail on purprestures, public rights and
obstructions to navigation.

Like other aspects of the European heritage, however, the
public trust common law has undergone a distinct "Americani-
zation." The definition of "navigable waters," for example,
has been drastically changed by American jurists: "English
. . . common law very naturally divided waters into navigable
and non-navigable, and made the ebb and flow of the tide the
test of'navigability. In this country, while still retain-
ing the common-law classification of navigable and non-navi-
gable, we have, in view of our changed conditions, rejected
its test of navigability, and adopted in its place that of
navigability in fact." Lamprey v. Metcalf, 52 Minn. 181
(1893), at 199. This redefinition placed the Great Lakes,
inland U.S. waterways and most lakes and streams under the
servitude of the public trust doctrine.

16. Johnson & Johnson, "The Mississippi Public Trust Doctrine:
Public and Private Rights in the Coastal Zone," 46 Mississippi
Law Review (Winter, 1975), p. 84.

17. Gary Feess, "The Tidelands Trust: Economic Currents in a
Traditional Legal Doctrine," 21 UCLA Law Review (1974), p.
870.

18. Id., p. 891.

19. Id. pp. 863-864.

V-111

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D)(1)

20. Sax, supra, note 10, p. 509.

21. Id., p. 513.

22. Olson, supra, note 8, p. 190.

23. Id., p. 183.

24. Feess, supra, note 17, p. 870. Feess speaks elsewhere of
"the apparently intuitive balancing policy now being imple-
mented." Id., p. 879.

25. Deveney, supra, note 12, p. 13.

26. Leonard Jaffee, "The Public Trust Doctrine is Alive and Kick-
ing in New Jersey Tidal Waters: Neptune City v. Avon-By-The-
Sea - A Case of Happy Atavism?" 14 Natural Resources Journal
(1974), p. 312.

27. In re Application of Ashford, 50 Haw. 314, 440 P. 2d 76 (1968),
McBryde Sugar Co., Ltd. v. Robinson, 54 Haw. 1974, 504 P. 2d
1330, aff'd on rehearing, 55 Haw. 260, 517 P. 2d 26 (1973),
Neptune City v. Avon-By-The-Sea, 61 N.J. 296, 294 A. 2d 47
(1972), Gewirtz v. City of Long Beach, 69 Misc. 2d 763, 330
N.Y.S. 2d 495 (Sup. Ct., Nassau City, 1972), Marks v. Whitney,
6 Cal. 3rd 251, 98 Cal. Rpt. 374 (1971), City of Long Beach
v. Mansell, 3 Cal. 2d 462, 91 Cal. Rpts. 23 (1920), City of
Berkeley v. Superior Court of Alameda, 606 P. 2d 362 (1980),
Wilbour v. Gallagher, 77 Wn. 2d 306 (1969), Morse v. Oregon
Division of State Lands, 590 P. 2d 209 (1979).

28. Finn, supra, note 6, at H-2.

29. Gail Ishimoto, "Formulating a Mariculture Policy for Hawaii:
The Submerged Lands Leasing Issues," unpublished Master's
Thesis, University of Washington (1980), p. 33.

30. 6 N.J.L. 1 (Sup. Ct. 1821).

31. These concepts are concisely defined in an important recent
case, Brusco Towboat Co. v. State of Oregon, supra, note 11.
The court stated, at 1042-1043, "The state's ownership of
submerged and submersible land is not, however, limited to
the incidents of legal title. Rather, it is comprised of an
interrelationship of two distinct aspects, each possessing
its own characteristics. . . As sovereign, the state holds
full proprietary rights in such land; it is invested with a
fee simple title. This first element of the state's inter-
est is called the jus privatum. [Citations omitted] Domin-
ion, as opposed to title, over submerged and submersible

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

lands, is invested in the state in its capacity as the pub-
lic's representative. The state holds such dominion in trust
for the public. This second aspect of the state's ownership
is called the jus publicum. [Citations omitted] . . . Un-
like the state's jus privatum interest, the jus publicum can-
not be alienated." (Citations omitted]

32. The court asserted that public rights were paramount in "the
coasts of the sea including both the water and the land under
the water," explaining that such "property indeed vests in
the sovereign, but it vests in him for the sake of order and
protection, and not for his own use, but for the use of the
citizen." 6 N.J.L. 1 (Sup. Ct. 1821), at 12.

33. 41 U.S. (16 Pet.) 376 (1842).

34. Pollard's Lessee v. Hagan, 44 U.S. 12 (1845), Weber v. Board
of State Harbor Comm., 85 U.S. 798 (1873), Hardin v. Jordan,
140 U.S. 371 (1891), Shively v. Bowlby, 152 U.S. 331 (1893),
Port of Seattle v. 0 & W Railroad Co., 255 U.S. 49, 65 L.
Ed. 500 (1921).

35. The reasoning is well-put in Brusco Towboat, supra, note 11,
at 1043: "It is axiomatic that within the common law property
system all land must be owned by someone. Since submerged
and submersible lands are incapable of ordinary private occu-
pation and improvement and since their common uses are essen-
tially public in nature, full legal ownership in fee simple
devolved upon the sovereign." [Citations omitted] Also see
discussion this report, Section V(A) (1). The Supreme Court
in Martin and Pollard confirmed the title of the states as
against both holders of Crown patents (English, French or
Spanish) and the federal government.

36. Shively, supra, note 1, 352, held "the law of Oregon governs
the case . . . The (federal] donation land claim, bounded by
the Columbia River, upon which the plaintiff in error relies,
includes no title or right in the land below high water mark;
and the statutes of Oregon, under which the defendants in
error hold, are a constitutional and legal exercise by the
state of Oregon of its dominion over the lands under naviga-
ble waters." Port of Seattle v. 0 & W Railroad Co., supra,
note 34, states: "The shore of navigable waters, and the
tidelands thereunder, are owned by the state in which they
lie as a part of its sovereignty, and all rights therein
claimed under state grants are to be determined by the local
law of the state in which the lands are situated, and the
decisions of the courts of such state in the construction
of such grants and the law applicable thereto are binding
upon the Federal courts."

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D)(1)

37. See discussion Section V(A), supra, "State Ownership of Off-
shore Resources."

38. 104 Misc. 228, 171 N.Y.S. 716 (Sup. Ct. Kings County 1918),
aff'd 173 N.Y.S. 917.

39. Id., at 232.

40. Eg., see Comment, "Can New York's Tidal Wetlands Be Saved?
A Constitutional and Common Law Solution," 39 Albany Law Re-
view 451, pp. 482-489 (1975). Cf. Note, "State Citizen Rights
Respecting Greatwater Resource Allocation: From Rome to New
Jersey," 25 Rutgers Law Review 521, pp. 703-710 (1971). This
view is supported by the recent case, Neptune City v. Avon-
By-The-Sea, supra, note 27, in which the court asserted as
dicta, at 309: "A modern court must take the view that the
public trust doctrine dictates that the beach and the ocean
waters must be open to all on equal terms and without pref-
erence."

41. It is asserted, for example, in "Can New York's Tidal Wetlands
Be Saved," supra, note 40, p. 479, that "The New York courts
have held that the Parliament and the Crown together were
not competent to grant the jus publicum to individuals for
private purposes." Deveney, supra, note 12, p. 59, rebuts
this view: "The implication that the legislature cannot
extinguish the rights of the public in a specific area (fore-
shore or land under water) for a legislatively determined
public purpose (commerce or beneficial enjoyment) is not sup-
ported by even a single case decided by a court of appeals
and ignores the policy of the New York Legislature for almost
two hundred years." [Author's emphasis]

42. On federal law, see note 36, supra. State court decisions
which place a resource within or without the scope of the pub-
lic trust doctrine may be reviewed by federal courts. How-
ever, the actual disposition of resources recognized as public
by federal courts, e.g. submerged lands is not reviewable.
The irregularity of state law was noted in Shively v. Bowlby,
supra, note 1, at 341: "The foregoing summary of the laws
of the original states shows that there is no universal and
uniform law upon the subject; but that each state has dealt
with the lands under the tide waters within its borders ac-
cording to its own views of justice and policy, reserving
its own control over such lands, or granting rights therein
to individuals or corporations, whether owners of the adjoin-
ing upland or not, as it considered for the best interests
of the public. Great caution, therefore, is necessary in
applying precedents in one state to cases arising in another."

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

43. Finn, supra, note 6, at H-16. [Emphasis added]

44. Sanford Berland, "Toward the True Meaning of the Public Trust"
1 Sea Grant Law Journal (1976), p. 83, characterizes this
view as holding that "any legislatively authorized use or
disposition of such lands is justified if undertaken in the
public interest and is generally presumed to be so justified."

45. Id., p. 84. [Author's emphasis]

46. Joseph Sax, "Liberating the Public Trust Doctrine from Its
Historical Shackles," Keynote Address, The Public Trust Doc-
trine in Natural Resources Law and Management Conference,
University of California at Davis (September 25, 1980), p. 2.

47. 146 U.S. 387 (1892).

48. Illinois Central is described in City of Berkeley v. Superior
Court, 606 P. 2d 362, 365 (1980), for example, as "the semi-
nal case on the scope of the public trust doctrine and [so]
remains even today, almost nine decades after it was decided."

49. 146 U.S. 387, at 453.

50. Id.

51. Johnson and Johnson, supra, note 16, p. 90.

52. The Court stated that it would have approved this particular
grant as "a valid exercise of legislative power" if it had
been made only for "parcels of land under navigable waters,
that may afford foundation for wharves, piers, docks and other
structures in aid of commerce, and grants of parcels, which,
being occupied, do not substantially impair the public inter-
est in the lands and waters remaining." 146 U.S. 357, at 452.

53. Eg., Marks v. Whitney, City of Berkeley, supra, note 27;
Brusco Towboat, supra, note 11, Boone v. Kingsbury, supra,
note 15.

54. City of Berkeley, supra, note 27, at 375, J. Clark dissent-
ing. Clark cites City of Long Beach v. Mansell, supra, note
27, and three other cases to support this statement.

55. Id. A statutory version of this test is contained in New
York's Public Lands Law (45 McKinney's Consolidated Laws of
New York, Ann. Supp. 1974-75), Section 34(2), which permits
the state to release its title and interest in the waters
and tributaries of Jamaica Bay only for purposes consistent
with the public trust in that resource. Section 34(2) lists

V-115

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

such purposes, and "none of these purposes include or inti-
mate that landfilling or the construction of homes is a pro-
per use of wetlands for which the state may release its
trusteeship therein." Opinion of New York Attorney General,
supra, note 42, p. 57.

56. 273 P. 797 (1928).

57. Id., at 817: "We are satisfied that the state act under con-
sideration is a valid exercise of a right which inheres in
the state by virtue of its sovereign power. It does not im-
pinge upon the state or federal constitutions and is not in
conflict with any act of Congress or the state of California."
This leasing program was later enjoined by the U.S. Supreme
Court, U.S. v. California, 332 U.S. 19 (1947), but on national
interest, not public trust grounds. As earlier noted, Con-
gress in turn placed primary trust responsibilities for off-
shore resources (to the limit of state boundaries) with the
states, through passage of the Submerged Lands Act in 1953.
This action fully restored the state leasing program.

58. Traditional Doctrine, supra, note 4, p. 778.

59. 273 P. 797, at 812.

60. Feess, supra, note 17, p. 853.

61. 273 P. 797, at 812.

62. Id.

63. The court stated: "Gasoline is so closely allied with state
and national welfare as to make its production a matter of
state and national concern. If it can be said of any indus-
try that its output is 'in aid and furtherance of commerce
and navigation,' and its production 'a public benefit,' the
production of gasoline . . . would entitle it to a high clas-
sification in the scale of useful, natural products . . . The
state Legislature, by adopting the act before us, recognized
the use of gasoline and oil to be practically indispensable
to the needs of rapid, expanding industry and commerce." Id.

64. Id., at 816.

65. Id., at 812. "In this respect the instant case is widely dif-
ferent from Illinois Central R. Co. v. People of the State
of Illinois 146 U.S. 452, 13 S. Ct. 118 (36 L. Ed. 1018), the
case frequently cited by respondent, surveyor general, and
the amici curiae in sympathy with his position." Id.

V-116

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

66. Id., at 812-813.

67. John Briscoe, Deputy Attorney General, State of California,
personal communication, July 14, 1980. Another observer
has stated, "the legal boundaries established in response
to the growth of offshore oil recovery will determine the
legal regime in which the infant industry of mariculture
will develop its technology." Milford Shirley, "Maricul-
ture, The Law of the Continental Shelf and Offshore Oil Re-
covery: A Technology Affected by a Body of Law Effected by
A Technology," XI Natural Resources Lawyer (1976), p. 727.
The California Legislature in 1971 enacted a "Mariculture
Law" authorizing the State Department of Fish and Game to
lease ocean areas for the "exclusive privilege of cultivat-
ing marine life." CAL. STAT. Division 6, Ch. 5, Sections
6480-6504.

68. Boone v. Kingsbury, supra, note 56, at 817: "Florida, Texas,
Louisiana, Oklahoma, and other states have adopted statutes
strikingly similar to our statute, in recognition of the pub-
lic benefit that will accrue to the commonwealth by the devel-
oping of the phosphates, gas, oil, and other mineral wealth
which lies beneath submerged lands, and in no instance have
such statutes conferring the same powers upon private parties
and corporations as our act confers been condemned upon the
constitutional grounds which are here urged against our state
statute."

69. FLA. STAT. ANN. Section 253.68 (Supp. 1970), states: "To the
extent that it is not contrary to the public interest, and
subject to limitations contained in Sections 253.67-253.75,
the board of trustees may lease submerged lands to which it
has title for the conduct of aquaculture activities .

70. Id.

71. Delogu, supra, note 7, p. 611, n. 12.

72. Brusco Towboat Co., supra, note 11.

73. 6 Cal. 3d 251, 491 P. 2d 374 (1971).

74. The court stated it would "take judicial notice of public
trust burdens in quieting title to tidelands. This matter
is of great public importance, particularly in view of popu-
lation pressures, demands for recreational property, and the
increasing development of seashore and water front property.
A present declaration that the title of Marks in these tide-
lands is burdened with a public easement may avoid needless
future litigation." Id., 491 P. 2d at 378.

V-117

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

75. The Sierra Club, appearing as an amicus curiae in this case,
had asked the court "to declare the scope and extent of the
public servitude in areas of navigable waters over tidelands."
(491 P. 2d at 378, n. 2) The court in response ruled that
all traditional uses, and recreational uses, of navigable
waters were protected and "the public has the same rights in
and to tidelands." (Id., at 380) The court noted the chang-
ing nature of public needs and stated: "There is a growing
public recognition that one of the most important public uses
of the tidelands -- a use encompassed within the tidelands
trust -- is the preservation of those lands in their natural
state, so that they may serve as ecological units for scien-
tific study, as open space, and as environments which provide
food and habitat for birds and marine life, and which favor-
ably affect the scenery and climate of the area." Id., at
380.

Feess, supra, note 17, p. 866, states that in Marks the Court
"employed the broadest language ever used in defining the pub-
lic rights in the tidal zone." Gregory Taylor, "Patented
Tidelands: A Naked Fee? Marks v. Whitney and the Public
Trust Easement," 47 Cal. St. Bar Journal 420 (1972), concludes,
p. 487: "The Marks decision reaffirms the ability of the
state to protect its sovereign public trust interests in tide-
lands for purposes relevant to today's needs."

76. 491 P. 2d at 380.

77. 67 Cal. 2d 408, 432 P. 2d 3 (1967).

78. Id., at 416-417.

79. 491 P. 2d at 380-381. [Citations omitted]

80. Briscoe, personal communication, supra, note 67.

81. 606 P. 2nd 372 (1980).

82. Id., at 373.

83. Id., at 366. The court stated: "Even before Illinois Central
was decided, it was recognized in California that the state
had the authority as administrator of the trust on behalf of
the public to dispose absolutely of title to tidelands to pri-
vate persons if the purpose of the conveyance was to promote
navigation or commerce . . . From the early days of state-
hoodl it was held that conveyances made pursuant to such a
program passed title free of the public trust."

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PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

84. Id., at 371: "Illinois Central makes it clear that one Leg-
islature may not sell the discretion of its successors to
exercise the state's power as the trustee of tidelands."
The Court, in Boone, had stated on this point, at 273 P. 813:
"To justify an interference by courts with the right of the
Legislature to alienate tide or submerged lands, it must ap-
pear that such grants do or will impair the power of succeed-
ing Legislatures to regulate, protect, improve, or develop
the public rights of navigation and fishing . . . It cannot
be seen that the legislation in the instant case will embar-
rass immediate or remote legislation."

85. 61 N.J. 296, 294 A. 2d 47 (1972).

86. Jaffee, supra, note 26, p. 310.

87. Id., p. 213, note 24.

88. Id., p. 312.

89. Michael Town and William Yuen, "Public Access to Beaches in
Hawaii: A Social Necessity," X Hawaii Bar Journal (1973),
p. 28.

90. Eg., John Stuart, "Judicial Decisionmaking and the Adminis-
tration of Coastal Resources," 1 Sea Grant Law Journal (1976),
states, p. 193: "Before the California Constitution was
amended to prohibit tidelands sales, the Legislature thought
that the raising of revenue by these sales was a paramount
public benefit." See also City of Berkeley, supra, note 27,
at 370-371.

91. Deveney,-supra, note 12, p. 72.

92. Id., p. 13.

93. Feess, supra, note 17, p. 869.

94. Stephen Rees, "Conveyances of Sovereign Lands Under the Pub-
lic Trust Doctrine: When Are They In The Public Interest?"
XXIV University of Florida Law Review (1972), states, p.
292: "In White v. Hughes the [Florida Supreme] Court deter-
mined conclusively that bathing and recreation were the pri-
mary uses of the state's beaches." Rees concludes, however:
"It would appear that the trust doctrine is more readily ap-
plied to protect recreational activities directly associated
with Florida's beaches than those upon and under navigable
waters." Id.

V-119

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

It should be noted that Florida was also the first state to
enact legislation permitting exclusive uses of offshore waters
for mariculture. See note 69, supra.

95. The New Jersey Supreme Court has ruled that a State may even
sue for damage to public trust resources, State v. Jersey Cen-
tral Power and Light Co., 125 N.J. Super. 97, 308 A. 2d 671
(L. Div. 1973). According to one commentator, the court found
"that the state has the right and the fiduciary duty to col-
lect damages for destruction of wildlife, which are part of
the Corpus of the public trust." Wayne Christian, "Environ-
mental Law - Public Trust - Injury to Public Trust is Basis
for Award of Damages - State v. Jersey Central Power & Light
Co.," 5 Seton Hall Law Review (1974), p. 396. The Puerto Rico
Supreme Court ruled similarly in Comm. of Puerto Rico v. SS
Zoe Colocotroni, 456 F. Supp. 1327 (1978), stating at 1337:
"The Commonwealth therefore has standing to sue to recover for
oil pollution harm to Bahia Sucia and related resources because
it has a proprietary interest in the same." The Court speci-
fically cited the public trust doctrine as the basis for this
ruling. Id., at 1336. The U.S. Supreme Court ruled in Askew
v. American Waterways Operators, Inc., 411 U.S. 325 (1972),
that the Florida Oil Spill Prevention and Pollution Control
Act, Fla. Laws 1970, e. 70-244, Fla. Stat. Ann. Section
376.011 et. seq. (Supp. 1973), was property enacted by the
State of Florida pursuant to its police power over the health,
safety and welfare of living marine resources and of state
citizens. The court stated, at 328: "We find no constitu-
tional or statutory impediment to permitting Florida, in the
present setting of this case, to establish any 'requirement
or liability' concerning the impact of oil spillages on
Florida's interests or concerns."

96. Nelson, supra, note 3, states pp. 507-508: "There appears to
be no case in which a court has concluded that a state grant
of lands under navigable waters was not in the public inter-
est, or interfered with the public interest in the lands and
waters remaining. . . The few decisions which hold a sale
of submerged lands to be invalid are based on considerations
not relevant to the public interest. . . Where the legislature
asserts, by statute or otherwise, that the public interest
in the land and water remaining will not be harmed, and/or the
public interest will in some way be promoted, it is conclu-
sive."

97. Stone, supra, note 5, p. 196.

98. State of Arizona v. State of California, 298 U.S. 558, 56 S.
Ct. 848 (1936), reh. denied 299 U.S. 618, 57 S. Ct. 4 (1936).

V-120

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

99. Thomas Kane, Aquaculture and the Law, University of Miami
Sea Grant Program (1970), p. 54. Kane argues that the public
interest in "new and greater food resources from the sea . .
could be held to be a better right or use than the public
right of navigation." Id., p. 59.

100. Id., p. 58: "if dams, dykes or other artificial obstructions
in navigable waters are authorized by law and approval is ob-
tained from the Chief of Engineers and Secretary of the Army,
the public right of navigation can be limited or taken with-
out compensation."

101. Oregon Admission Acts, Section 2, 11 Stat. 383 (1859): "all
the navigable waters of said State, shall be common highways
and forever free, as well as to the inhabitants of said State
as to all other citizens of the United States, without any
tax, duty, import or toll therefor."

102. Hume v. Rogue River Packing Co., 51 Or. 237, 83 Pac. 391
(1908). Article I, Section 20 of the Oregon State Constitu-
tion reads: "No law shall be passed granting to any citizen
privileges or immunities which upon the same terms shall not
equally belong to all citizens." The Oregon Attorney General
has stated that on this matter, Hume and subsequent cases
are conclusive. Opinion of Oregon Attorney General James A.
Redden, No. 7791 (August 13, 1979) p. 8. The question re-
mains, however, whether a mariculture operation involves an
exclusive right "to fish." The same Attorney General Opinion
affirms the authority of the state to lease submerged lands
to a private company for the purpose of commercial harvest-
ing of clams, and further, to grant that company the exclu-
sive right to dredge the leased areas for those clams which
the company itself planted. Id., p. 1.

103. 35 Am. Jur. 2d, Fish and Game, Section 7, p. 652.

104. 589 Pac. 2d 712 (1978).

105. OAR 141-82-015(1): "Any person engaged in a permanent or
long-term use of state-owned submerged or submersible lands
not exempted from leasing by statute or these regulations
must obtain a lease from the Division (State Land Board)."

106. 589 Pac. 2d at 718.

107. Id.

V-121

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

108. Id., p. 724. Maryland is another state which has utilized
public trust resources to further commerce, broadly defined.
The Maryland Attorney General has stated: "although the pub-
lic trust doctrine has been raised in Maryland [citations
omitted], it has not been sanctioned by the Court of Appeals
so as to prevent the patenting and granting of submerged
areas nor the State's issuance of a license to reclaim such
areas from the sea." Opinion of Maryland Attorney General
Francis B. Burch, "Natural Resources-Wetlands-Effect on Lands
Submerged Further by Erosion or Avulsion-Effect of Artificial
Improvement Upon Further Submerged or Fast Lands-Effect of
Public Right of Navigation and Fishing Upon Subaqueous Land."
(August 24, 1972), p. 452.

109. Hawaii State Constitutional Convention Committee on Environ-
mental, Agriculture, Conservation and Land, Standing Commit-
tee Report 77 (September 7, 1978), pp. 1-4.

110. Sax, "Liberating the Public Trust Doctrine from Its Historic
Shackles," supra, note 46, p. 14.

111. Id., p. 2.

112. Id., p. 3.

113. Id., p. 4.

114. Id.

115. Id.

116. See Nelson, supra, note 3. Illinois Central actually did not
directly invalidate the grant made by the State Legislature;
it only confirmed the right of the Legislature to repeal that
grant.

117. Sax, supra, note 10, p. 502.

118. Joseph Sax, personal interview, Davis, California (September
25, 1980).

119. 35 Haw. 608 (1940).

120. Id., at 641.

121. 11 Haw. 717 (1899).

122. Id., at 725.

123. Finn, supra, note 6, at H-11. The recent case of State of
Hawaii v. Texaco, Inc., 53 Haw. 567, 498 P. 2d 631 (1972)

V-122

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

re-affirmed the authority of the state to determine uses of
harbor facilities. This case involved the proper interpre-
tation of Paragraph 9, Article IV of the lease given to
Texaco, a clause related to the public trust requirement
that the State not abdicate control over trust resources.
This clause reserved to the State the right to terminate the
lease if it determined that the demised premises were re-
quired by the State to be put "to other purposes." The court
ruled that the State's action terminating the lease was a
proper "exercise of an option reserved to the State, and
Texaco is in no position to compel the State to act other-
wise." Id., 498 P. 2d at 634.

124. 16 Haw. 363 (1905). Kerr is the latest Hawaii case on pub-
lic trust protection of the shoreline, according to Finn,
supra, note 6, at H-15.

125. 16 Haw. 363, 376.

126. Finn, supra, note 6, at H-68, n. 65.

127. 54 Haw. 174, 504 P. 2d 1330 aff'd on Deh., 55 Haw. 260, 517
P. 2d 26 (1973), app. dsmd., cert. den., 417 U.S. 976 (1974).

128. Finn, supra, note 6, at H-20. The U.S. District Court, in
Robinson v. Ariyoshi, 441 F. Supp. 559 (1977), reversed
McBryde as a violation of due process, resulting in a "tak-
ing" of private water rights. This decision has been appealed
by the State to the Ninth Circuit Court. The McBryde ruling
nonetheless shows the strong public trust views of the state
court.

129. County of Hawaii v. Sotomura, 50 Haw. 176, 434 P. 2d 750
(1973). The court stated, at 182: "Public policy, as inter-
preted by this court, favors extending to public use and
ownership as much of Hawaii's shoreline as is reasonably pos-
sible."

130. Finn, supra, note 6, at H-2.

131. Id., at H-37.

132. Id., at H-2, citing Sotomura.

133. The State Department of Land and Natural Resources presently
claims authority to lease ocean areas, including the vertical
water column in any area (Roger Evans, DLNR Conservation Dis-
trict Planner, personal interview, June, 1980). However, only
authority to lease submerged lands seems clear. The Depart-
ment's authority to lease areas of the ocean surface and/or
the vertical water column may be challenged on public trust

V-123

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D)(1)

grounds absent an explicit legislative act delegating admin-
istration of an ocean leasing program to that agency. See,
eg., Sacco v. Department of Public Works, 227 N.E. 2d 478
(Mass. S. Jud. Ct. 1967), holding that public resources can-
not be administratively diverted from one use to another with-
out an explicit legislative directive authorizing same.

134. Florida Aquaculture Lease Guidelines, Section 5.

135. Eg., Gould v. Greylock Reservation Commission, 350 Mass. 410,
215 N.E. 2d 114 (1966); Scenic Hudson Preservation Conference
v. U.S., Ct. of App. 2d Cir. No. 106 (1965); Morse v. Oregon
Division of State Lands, Or., 590 P. 2d 709 (1978).

136. Delogu, supra, note 7, p. 610.

137. Senate Bill No. 52, approved by Governor June 29, 1979, "an
act to amend Section 8345 of the Fish and Game Code, to amend
Section 30411 of, and to add Chapter 4 (commencing with Sec-
tion 825) to Division 1 of, the Public Resources Code, relat-
ing to aquaculture, making an appropriation therefor, and
declaring the urgency thereof, to take effect immediately."

138. CADA, Section 3, 30411(e).

139. Id. Section 2, 826.

140. Id. Section 3, 30411(c).

141. Id. Section 2, 834 and 832(c) and (d).

142. Id. Section 5.

143. Fred Conte and Andrew Manus, "Aquaculture and-Coastal Zone
Planning" (University of California Sea Grant Advisory Program,
1980), p. 4.

144. Id., p. 3. The authors state that "Conservative estimates of
wholesale figures place aquaculture producer income at 6.5
million dollars in 1977. Once in the retail market as food
items, or as fish and bait for the recreational industry,
this figure increases three to five times." Id.

145. Aquaculture Development for Hawaii, State Department of
Planning and Economic Development (1978). The plan empha-
sizes land-based aquaculture technology. However, as an
authority on mariculture has stated, aquaculture "has really
only begun its development . . . perhaps, in a few genera-
tions, mariculture will be as important as pond or raceway
culture in fresh water." Dr. John Bardach, Keynote Address,

V-124

PUBLIC TRUST DOCTRINE/HAWAII STATE CONSTITUTION V(D) (1)

Tenth Annual Meeting, World Mariculture Society, Honolulu,
Hawaii (Louisiana State University, 1979), pp. 11 and 18.

146. Taylor Pryor, "Hawaii and Aquaculture: The Blue Revolution,"
State of Hawaii Department of Planning and Economic Develop-
ment (1971), states: "Sea water itself is fertilizer, with
all of the needed elements available. Mix sea water and sun-
light and you have enormous energy. Add the fantastic repro-
duction capability of most marine organisms and then take
this rate under your control and you have the elements of a
new and massively important event. Call it the 'Blue Revo-
lution,' the capacity to not only feed the world but to do
so with a much increased level of economic well-being." The
situation can also be stated in the negative: "Many observers
see aquaculture as the only avenue toward mitigating the com-
ing shortage in seafood. Several countries have preceded us
[the United States] in this conclusion." Gerald Bowden,
Aquaculture Law and Policy in California, in press, p. 2.

147. Sax, personal interview (September 25, 1980).

148. Sax, "Liberating the Public Trust Doctrine from Its Historic
Shackles," supra, note 46, p. 5.

149. Id., p. 12.

150. Gerald Bowden, "Marine Aquaculture in California: An Over-
view," unpublished paper, 1977.

151. See discussion, Section III(A), supra.

V-125

KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

D. COMMON LAW AND STATE LAW RESTRICTIONS UPON STATE AUTHORITY

2. Konohiki Fisheries/Native Hawaiian Rights

Q: What are the common law and state law restrictions upon the
state's authority over its offshore waters?

A: In Hawaii, exclusive private fishing rights are rec-
ognized by law. Such rights may restrict the state's
ability to allocate its ocean resources.

Existing side-by-side with the public trust doctrine in Hawaii
state law is a system of exclusive fishing rights derived from
ancient Hawaiian custom and usage. IThis system, known today as
"konohiki fisheries,"1 presents a very different problem for state
authority than does the public trust doctrine. The restriction
operating here is upon the state's ability to lease marine waters
which are recognized by statute and case law as private, at least
for purposes of fishing. 3

Private fishing rights received official written recognition
in 1839 as a section of "An Act to Regulate the Taxes," and entered
the Laws of 1840 as Chapter I11-8, "Of free and prohibited fishing
grounds." Part I stated:

"His Majesty the King hereby takes the fishing
grounds from those who now possess them from
Hawaii to Kauai, and gives one portion of them
to the common people, another portion to the
landlords, and a portion he reserves to himself
. . . the fishing grounds from the co-ral reef
to the sea beach are for the landlords and for
the tenants of their several lands, but not for
others."

The landlords here referred to were the konohikis, overseers
originally appointed by the alii nui or high chief of each island
to administer the various ahupua'a which constituted the basic land

division at that time. 4Each ahupua'a was a pie-shaped strip of
land running from the mountain tops to the sea. The traditional
Hawaiian land system "did not distinguish between land and water
running over the land, or between the shoreline and the sea be-
yond."5 Fishing rights had become associated with these ahupua 'as

V- 126

KoNOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

as part of the self-sustaining concept which animated the decentral-
ized political system. 6The konohiki had authority to set apart
one species of fish for his exclusive use, or to taboo all fishing
during certain periods, while receiving one-third of all fish
caught within the konohiki fishing grounds during the rest of the
year.

Some commentators view this custom of exclusive fisheries as
a well-taken conservation measure. 7others have looked at the
practice less positively, as an oppressive device of the ruling
class to exact income from the common people. 8The fact that the
first written regulations on the matter were contained in "An Act
to Regulate the Taxes" suggests that whatever conservationist
results were intended, the immediate considerations were more
directly economic and political. In any case, the rights formally
granted to landlords by King Kamehameha III in 1840 were approved
by the Hawaii Legislature essentially intact in 1859, and became
Sections 387 to 395 of the Civil Code. State laws pertaining to
konohiki fishing rights have since undergone no substantial altera-
tion. 9

While the laws have little changed, the land system which gave
exclusive fisheries their context has been drastically altered.
The Great Mahele of 1848 "led to changes in the institutional
structure for land from the ahupua'a tenure system under which use
rights but not title to land existed, to the al-lodial tenure system
under which rights of ownership gained a solid foothold." 10 The
exclusive fisheries appurtenant to lands granted to private land-
lords during the Great Mahele period and thereafter also became
private property.
ownership of both lands and fisheries continued to be concen-
trated in the hands of a small elite class. The members of this
elite were for the most part not Hawaiians, however, for "in less
than fifteen years after the Mahele, three-fourths of the land
distributed to the alii had passed into the hands of haoles." 11
The role of the landlord "changed from a position whose social

V- 127

KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

responsibility it was to maintain a balance in natural resource use
for the welfare of the ahupua'a community, to a position of private
privileges in the harvests of the fisheries without necessarily the
responsibility for conservation."1

A konohiki could taboo one fish, or all fishing during speci-
fied periods. Otherwise the konohiki system did not allow the
owners of fisheries to regulate the taking of fish by tenants
within fishery bounds. owners could and did lease out fishing
privileges, however. 13Unfortunately, the economic value of these
fisheries has seen a long and steady decline. 14The konohiki fish-
eries had been predicated on a subsistence culture, 15and were not
economically viable in a modern market economy. Near-shore waters
in Hawaii simply do not contain adequate fish stocks to support
large-scale commercial fish~ing activities. 16The high costs of
enforcing konohiki rights, within a general system of public fish-
ing, combined with the realization of only marginal revenues, has
made this feature of the ancient Hawaiian land system of small
practical importance today. Private fishery owners are "not rely-
ing on their fisheries as a major source of food or income ...
little if any private enforcement efforts are being made on behalf
of these konohiki fisheries." 17

Contributing to the decline of the konohiki fisheries was the
public trust doctrine of U.S. law. When the Hawaiian islands were
annexed by the United States in 1900, the Hawaii Organic Act di-
rectly attacked the legal basis for the fisheries. Finding the
concept of such exclusive fisheries repugnant to public trust prin-
ciples, Congress in Section 95 of the Act repealed all laws confer-
ring exclusive fishing rights, "subject, however, to vested rights."
Section 96 required any claimant of such rights to register his
claim through a petition filed in the circuit court, and to do so
within two y~ears of the "taking effect" of the Act. The Territory
was then to condemn and purchase each adjudicated fishery.

The intent and the right of Congress to eliminate private
fishing rights has not been questioned. isThe validity of the

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KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

Section 96 "taking" provision, however, was challenged by Bishop
Estate in 1936 on due process grounds. The Hawaii Supreme Court
in Bishop v. Mahiko (1940) ruled that the provision was constitu-
tional. 19The court also made it clear that all unregistered fish-
eries were completely open to the public. 20

The saving clause in Section 95, "subject, however, to vested
rights," generated more immediate controversy. This clause was
interpreted very narrowly by the Hawaii Supreme Court in Carter v.
Hawaii and Damon v. Hawaii (1902). 21In each case the court ruled,
on basically public trust grounds, that statutes alone had created
konohiki fishing rights and those statutes now stood repealed. The
state was not responsible for compensating those who lost rights
when laws change, for laws create no "vested rights," particularly
in public resources such as the ocean. 2

Plaintiffs appealed separately to the United States Supreme
Court and in each case the Court reversed. 23The Court ruled the
Hawaii statutes had not "created only a revocable license, and if
they imported a grant or a confirmation of an existing title, of
course the repeal of the laws would not repeal the grant. . . if
the Hawaii statutes did not import a grant, it is hard to see their
meaning." ,24 " Vested" konohiki rights therefore continue to be
recognized and regulated in state statutes.

The U.S. Supreme Court rulings prevented a total elimination
of konohiki fisheries. The Organic Act nonetheless served to open
approximately 250 konohiki fisheries to the public through failure
of the owners to register these fisheries within two years, as
required by the Act. Only 101 fisheries were registered. 25Al-
though condemnation proceedings since 1900 have been anything but
vigorous, by one count at present only 42 konohiki fisheries re-
main, the majority of them located around Oahu. 26

In addition to konohiki rights, Hawaii statutory law recog-
nizes tenants' rights. 27These rights held by ahupuala residents,
or hoa' aia, have also received judicial attention, beginning with

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KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D)(2)

28
Haalelea v. Montgomery (1858). Protecting the rights of the
hoa'aina, the court held that the konohiki owner did not possess a
totally exclusive right to his fishery, for all ahupua'a tenants
were also privileged to fish. Haalelea also strongly questioned
whether fishing rights, though a form of private property, could
be apportioned as were property rights in the lands adjacent. The
court indicated that a fishery could not be subdivided, for prac-
tical reasons dictated only one owner per fishery, or "the rights
of the tenants [could become] worthless."29

The court viewed this case as involving a "question of con-
siderable magnitude, the decision of which may effect the rights
and interests of many individuals throughout the Kingdom."30 Much
konohiki fisheries litigation since has concerned the rights and
definition of "tenant," so Haalelea has received continuing atten-
tion. The rule established in Haalelea was that any occupier of
ahupua'a land, on whatever terms, was a tenant under the law and
had not only fishing privileges but rights, which could not be
abrogated. 31

This rule was followed until Damon v. Tsutsui (1930) 32 There
the court reiterated the Haalelea definition of tenant, but went
on to declare that "those persons who became tenants after April
30, 1900, as did Tsutsui in 1929, did not have any 'vested' rights
within the meaning of the Organic Act and therefore the repealing
clause was operative as against them."33 This new rule in effect
eliminated all but a very few tenant claims in konohiki fisheries.34
A conflict exists, however, between state court and federal court
rulings on this point. Konohiki fisheries in Pearl Harbor were
condemned and purchased by the United States during the 1930's.
The condemnations were carried out by the U.S. Attorney General in
federal court proceedings, and there the U.S. court found Damon v.
Tsutsui to be "clearly erroneous."35 The federal court held that
the statutory statement contained presently in H.R.S. Section 188-5,
"The konohiki shall be considered in law to hold the private fish-
eries for the equal use of themselves and of the tenants on their

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KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

respective lands," [Emphasis added] created "a trusteeship in the
holder of the legal title" on behalf of the tenants. 36The court
concluded that Congress had not intended the many tenants (hoa'aina)
to individually validate their rights through the courts under the
provisions of the Organic Act, and therefore any present tenant of
ahupua'a land adjacent to a registered konohiki fishery held the
same vested right which any tenant of 1900 held. 37

The federal courts possess no jurisdiction, however, over
other konohiki fisheries located within state waters. Whether the
State Supreme Court would today or sometime in the future recog-
nize hoalaina rights as upheld by the federal court is unknown.
The issue may arise for adjudication in one of two circumstances:
(1) a fishery appurtenant to an ahupua'a having tenants is con-
demned, and compensation for tenants is sought, or (2) the State
licenses a private fixed-location ocean activity within a konohiki
fishing area which restricts an ahupua'a tenant's access to the
konohiki fishing grounds. The State Supreme Court may re-evaluate
Damon v. Tsutsui in light of the contemporary regard for native
Hawaiian rights.

The Hawaii State Constitution, as amended in 1978 (Article
XII, Section 7, "Traditional and Customary Rights"), now states:

"The State reaffirms and shall protect all rights,
customarily and traditionally exercised for sub-
sistence, cultural and religious purposes and pos-
sessed by ahupua'a tenants who are descendants of
native Hawaiians who inhabited the Hawaiian Islands
prior to 1778, subject to the right of the State
to regulate such rights."

The Constitutional Convention Committee on Hawaiian Affairs in
its report on this proposed amendment stated that:

"Since practically all ancient Hawaiians prac-
ticed and possessed such vested rights which auto-
matically passed to their descendants and which
have never been condemned or compensated for, they
are, therefore, still held by Hawaiians today,
with the exception of fishing rights that were
condemned and compensated for.-

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KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D)(2)

The Committee argues that hoa'aina rights pass by descent, not
by statute or by trust, for they are to be considered "personal" in
39
nature. If a court were to accept this view, residency on a
ahupua'a as of 1900 would be immaterial; however, only those pres-
ent tenants who can claim Hawaiian descent would possess hoa'aina
rights.

Thus konohiki and especially hoa'aina rights may present a
"real question concerning the extent of public and private rights
in fisheries."40 It is not clear whether these private rights
would "limit this State in any way from leasing vertical columns
of water in submerged or coastal zone areas to private profit-mak-
ing organizations." 41

It appears that at present, due to the poor status of records
and the "low profile" of konohiki owners, the practice of the
Department of Land and Natural Resources is to treat konohiki
fishing areas "just like any other until the owner asserts rights."42
Recognition of hoa'aina rights, contra Damon v. Tsutsui, however,
would present a serious potential restriction upon state ocean
leasing within konohiki areas, in that any present ahupua'a tenant
could assert that his vested rights were being violated by his
exclusion from an area within the fishery. Given the different
interests of the hoa'aina and the konohiki owners, hoa'aina are
more likely to have reason to bring suit against the State and the
State's lessee than are the fishery owners, who for some time now
have shown little interest in exercising their konohiki rights.

Under Damon v. Tsutsui, very few tenants remain who could
bring such action. Under the federal court rule, however, any
present tenant of ahupua'a land adjacent to a konohiki fishery
could bring an action. Under the rule argued by the Con-Con Com-
mittee, any tenant of Hawaiian descent could bring an action.

The Con-Con Committee adopted a very broad position concern-
ing hoa'aina rights, seemingly asserting that all present native

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KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D)(2)

Hawaiians retain vested rights in all traditional konohiki fish-
eries which have not been condemned.43 This position is directly
opposed by not only Damon v. Tsutsui but also Bishop v. Mahiko,
which established, as stated previously, that those konohiki fish-
eries not registered according to the requirements of the Organic
Act by law no longer exist, that compensation was waived, and
neither konohikis nor tenants continue to possess vested rights to
those fisheries. It can be argued that the inaction of the kono-
hiki owner in failing to register the fishery should not invali-
date the vested rights of the hoa'aina, who never were expected to
individually register their claims. The mistake of the konohiki,
who had responsibility to act as "trustee" for the hoa'aina in
this matter according to the federal court, should not be visited
on the hoa'aina beneficiaries of the trust. Whatever the moral or
cultural merits of this view, it is one which has at present no
standing in state case law.

Should the State Supreme Court address this issue and overrule
Damon v. Tsutsui, on either the grounds asserted by the federal
courts in the "Pearl Harbor" cases or on the basis of the language
now found in the Hawaii State Constitution concerning native
Hawaiian traditional and customary rights (Article XII, Section 7),
any ocean lease restricting public access to ocean areas within
a registered konohiki fishery would be open to legal challenge by
(1) a present ahupua'a tenant (if Damon v. Tsutsui has been over-
ruled on "trustee" grounds) or (2) any native Hawaiian (if over-
ruled on constitutional grounds). Should the court adopt the Con-
Con Committee view that all native Hawaiians today hold vested
rights to fish in all former konohiki fisheries regardless of regis-
tration or non-registration according to the Hawaii Organic Act,
then any ocean lease restricting access to any ocean area within
"the fishing grounds from the coral reef to the sea beach" (or
where there is no reef, seaward one geographical mile), which have
not previously been formally condemned, would be open to challenge
by any native Hawaiian.

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KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

Article XII, Section 7 of the Hawaii Constitution also con-
tains a limiting privilege, which states that native Hawaiian rights
are "subject to the right of the State to regulate such rights."
Native Hawaiians must obey all State fish and game regulations.
It may be argued that the State's "right to regulate" here includes
the authority to license a mariculture operation located between
the reef and the shore if that operation in fact does not inter-
fere with the exercise by native Hawaiians of their rights of sub-
sistence fishing, and cultural and religious expression. The mere
presence of a mariculture operation in itself would not violate
these rights, any more than it would violate the general public's
rights under the public trust doctrine. Interference must be
shown. Still, the policy of the State at the most fundamental
level (i.e., the State Constitution) is to affirm and protect native
Hawaiian rights and tradition.

it may therefore be advisable to provide in all ocean leases
for the contingency that Damon v. Tsutsui might be overruled. A
lease provision might declare that the State affirms all traditional
and customary native Hawaiian rights and therefore the lessee may
not interfere with an ahupua'a tenant's right of subsistence fish-
ing. As presently recognized by state case law, such a right could
possibly be asserted only by pre-1900-to-the-present tenants of
ahupua'as adjacent to registered konohiki fisheries. The class of
persons who could possibly assert a cause of action in present
state case law is thus extremely small.

It does not appear likely that the Hawaii Supreme Court would
hold that native Hawaiian rights of subsistence fishing extend be-
yond the reef or beyond one mile offshore. The State Constitution
re-affirms only rights "possessed by ahupua'a tenants." The tra-
ditional right possessed specifically by ahupua'a tenants was the
right to fish in the area within the reef (or within one geographi-
cal mile of the shore). The area beyond the reef was a common
fishing ground open to all. There is no basis in Hawaiian law or

V-134

KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

custom for an assertion of special fishing privileges for ahupua'a
tenants beyond the reef or beyond one geographical mile, as there
is within the near-shore area.

Considering only state law (statutory and common) as it applies
at present, the existence of konohiki fisheries does place certain
restrictions upon state authority to license ocean activities with-
in those fisheries. Certainly, the state may not lease any portion
of the ocean lying within a konohiki fishery for the placement and
exclusive use of a fish attraction device, or for seaweed cultiva-
tion. Either of these actions would directly contradict the exclu-
sive konohiki fishing right. Since konohiki rights include only
exclusive fishing rights, however, non-fishing uses are not in con-
flict with konohiki rights, if the non-fishing use does not sub-
stantially interfere with the ability of the konohiki, his agents,
or ahupua'a tenants (at present, only those who can prove residence
or kuleana ownership back to 1900) to conduct fishing activities.

Whether a mariculturist, specifically, could rely on a state
lease to operate within a konohiki fishery would in this regard
then depend upon legislative and/or judicial declaration that marn-
culture activity is or is not "fishing." One commentator has
stated, "Mariculture, for purposes of regulation, undoubtedly will
be considered a fishery."44 In some states, however, aquaculture
activities are considered to be "industrial uses."45 Article XI,
Section 6 of the Hawaii State Constitution does not state that mari-
culture is "fishing," only that all fisheries not included in a
state-licensed mariculture operation, fish pond or artificial en-
closure are free to the public. In present law a State-licensed
mariculture operation would not be subject to the fish and game
regulations applicable to "fisheries."

If the Legislature desires to prohibit state leases for mari-
culture activities within private konohiki fisheries, it should
therefore in any ocean leasing legislation explicitly define a
mariculture operation as a fishery. If the Legislature desires

V-135

KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

to not so restrict the state's options, mariculture should be dis-
tinguished in any legislation from "fishing,"U and specific provi-
sion made to allow state mariculture leases within private fishery
bounds, subject to the vested rights of the owner (and any tenants)
to "not be molested" in their overall possession of the fishery. 46
The mariculturist in siting his activity must still consider the
possibility of a change in state law concerning native Hawaiian
rights, as discussed earlier, and must decide whether he wishes to
chance such interference as a change in the law might bring.

The state is not limited to the alternatives of either prohib-
iting or allowing ocean leasing within konohiki areas. The State
could: (1) complete the condemnation program intended in the Hawaii
Organic Act of 1900, or (2) attempt to open for public use those
remaining konohiki fisheries which have not been policed and used
for many years by their owners, on the basis of implied dedication
or adverse possession by the public. With regard to the first
alternative, condemnation of the remaining konohikis would be

opportune at this time. 47The value of the fisheries is presently
low; however, if potential for commercially successful mariculture
enterprises grows in the coming years, konohiki owners may them-
selves sub-lease their fishing rights to mariculturists. Such a
development ~Iduld definitely raise the value and the purchase price

of all konohiki fsei.48Moreover, the income generated by
such arrangements would flow to konohiki owners rather than to the
State through lease fees and royalties.

Concerning the second alternative, a case brought against
owners (and, necessarily any tenants) of unpoliced private fisher-
ies, arguing either implied dedication or adverse possession of
the fisheries, might be successful. Texas and California courts
have recently abrogated private property rights in shoreline areas

on implied dedication grounds. 49In New Hampshire, the State
Supreme Court has ruled that the public can acquire private prop-

erty by adverse possession. soThe court reasoned "that the policy

V- 136

KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

behind the law (of adverse possession) was full land utilization."51
Such reasoning could be applied to konohiki fisheries which have
fallen into disuse. Hawaii courts have stated a willingness to
re-examine "legal fictions and wooden rules of property."52 Given
the strong public trust stance of the Hawaii Supreme Court, the
53
constitutional mandate to further self-sufficiency, the desire of
the framers of the present State Constitution to see the "protec-
tion, development, and use of natural resources according to prin-
ciples that will assure their highest economic or social benefit,
and the disuse of most konohiki fisheries today, the implied dedi-
55
cation/adverse possession approach bears consideration.

In sum, the state may address the restrictions placed on an
ocean leasing program by the existence of konohiki fishing rights
in the following ways: (1) the Legislature may specifically ex-
clude konohiki fisheries from any ocean leasing program; (2) the
Legislature may determine that an ocean leasing program is to in-
clude konohiki areas for non-fishing and possibly mariculture uses
(a problematic course of action); (3) the state may choose to
condemn the remaining konohiki fisheries, as intended by Section 96
of the Hawaii Organic Act; or (4) the state may file a claim to
ownership of unused and unpoliced konohiki fisheries on behalf of
the public, based on implied dedication and/or adverse possession
by the public.

V-137

KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D)(2)

FOOTNOTES

1. David Starr Jordan and B. W. Evermann, "Preliminary Report on
An Investigation of the Fishes and Fisheries of the Hawaiian
Islands," (1902), pp. 359-360, state: "Previous to about 1830
a state of affairs very much resembling the feudal system of
Europe during the middle ages existed on the (Hawaiian) islands.
. . A unique feature of this system was that not only were
the lands owned by the Chief but the exclusive right to fish
in the waters of the ocean adjacent to the estates was in most
instances considered a part of the estates themselves."

2. Richard Kosaki, "Konohiki Fishing Rights," Legislature Ref-
erence Bureau, Report No. 1 (1954), p. I states: "The word
konohiki originally was the designation for the agent who
managed the chief's land. In the course of time, however, it
came to refer to the things that were the private property of
the chief himself, thus, konohiki fisheries means the chief's
or privately owned fisheries." The word konohiki replaced the
word "landlord" in Hawaiian law upon the adoption of the first
comprehensive Civil Code in 1859.

3. The U.S. Supreme Court has declared, in Damon v. Hawaii, 194
U.S. 158, 159 (1904), "The right claimed is a right within
certain metes and bounds to set apart one species of fish to
the owner's sole use, or, alternatively, to put a taboo on
all fishing within the limits for certain months, and to
receive from all fishermen one-third of the fish taken upon
the fishing grounds. A right of this sort is somewhat dif-
ferent from those familiar to the common law, but it seems to
be well known to Hawaii, and, if it is established, there is
no more theoretical difficulty in regarding it as property and
a vested right than there is regarding any ordinary easement
or profit a prendre as such. The plaintiff's claim is not to
be approached as if it were something anomalous or monstrous,
difficult to conceive and more difficult to admit. Moreover,
however anomalous it is, if it is sanctioned by legislation,
if the statutes have erected it into a property right, prop-
erty it will be, and there is nothing for the courts to do
except to recognize it as a right." (Citations omitted)

4. See generally, Nell Levy, "Native Hawaiian Land Rights" 63
California Law Review 848 (1975), J. Chinen, The Great Mahele
(1958).

5. Gordon Trimble, Legal and Administrative Aspects of An Aquacul-
ture Policy for Hawaii, Hawaii State Department of Planning
and Economic Development (1972), p. 31.

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KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D)(2)

6. See M. Kelly, Changes in Land Tenure in Hawaii (1956), unpub-
lished thesis in U.H. Library. Frank Goto, "Fishing Rights,"
unpublished manuscript, p. 1, states the ahupua'a "was looked
upon as an ideal self-sustaining piece of land. The typical
ahupua'a would be capable of yielding timber and food from
the mountains and forests, agricultural goods from the low-
lands and sea products from the ocean bordering it." (Foot-
notes omitted) The island fisheries were an important aspect
of this scheme. Seafood (fish, shellfish, limu) provided the
main source of protein in the traditional Hawaiian diet.
Margaret Titcomb, Native Use of Fish in Hawaii (1972), p. 1.

7. Goto, supra, note 6, p. 2, states "The kapus pertaining to
ocean fisheries, i.e., onshore and open sea fisheries, appear
to be part and parcel of a logical conservationist principle
which Native Hawaiians adhered to. The concepts of not over-
fishing a certain specie of fish and allowing a specie to bear
offspring in its spawning period insured an adequate supply of
fish for future needs." (Footnotes omitted) John Khil,
"Evolution of Sea Fishery Rights and Regulations in Hawaii and
Their Implications for Conservation," unpublished manuscript
dated December, 1978, concludes at p. 58: "We have seen in
the evolution of property rights and regulations, for sea
fisheries in Hawaii, a unique transformation of institutions
from the traditional ahupua'a system to the private konohiki
fishery system to the current system of government controls
under the common property concept. Throughout this institu-
tional transformation, fishery conservation concerns were
clearly evident." The Honolulu Advertiser stated in an edi-
torial, "Hawaii's Seafood at Issue," dated April 13, 1954:
"Proceedings in 'eminent domain' will be heard on May 26
before Judge Philip L. Rice at Lihue to determine how much
money the government must give owners of 'konohiki' rights for
their fishing grounds on Kauai's shores. . . The courts can
determine only the value of the fishing rights, they have no
power to say whether it is wise to open to public exploitation
the fishing grounds that heretofore have been safeguarded by
konohikis. . . Owners of fishing rights who are far-sighted--
and many of them are--do not allow their fishermen to keep
inshore fish that have not reached the spawning stage. This
is of special concern in the propagation of mullet."

8. Jordan and Evermann, supra, note 1, p. 360, severely criti-
cized the system of exclusive fisheries: "As a result of this
condition of affairs the common people were prevented from
gathering from the sea, without vexatious restrictions and
grievious exactions, that very necessary part of their food
supply which they so much loved and which the sea could fur-
nish in such abundance. The only redeeming feature in this
was that if his landlord became too exacting the tenant could
move on to the land of some more lenient taskmaster. As the

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KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D)(2)

importance of the chief was determined largely by the number
of tenants he had on his lands, this proved at times a check
on the rapaciousness of some of the chiefs." Jordan and
Evermann do acknowledge the conservation benefits of the pri-
vate fisheries, however, p. 370: "The abolishment of these
fishery rights will, in some instances, work very serious
damage to the commercial fisheries if proper laws are not
provided to take the place of the old restrictions. Under the
laws governing these fisheries at present, the owner can, and
in some places does, protect certain species, particularly the
mullet, during the spawning season by placing a tabu on them,
and as everybody had to account to him when fishing he could
easily prevent the use of destructive forms of apparatus or
overfishing."

9. Laws regulating konohiki fishing rights are found at present
in H.R.S. Sections 188-4 through 13. They are basically those
stated by the U.S. Supreme Court in Damon v. Hawaii, supra,
note 3. In addition, there is a section on tenants' rights
(188-5), which is discussed in more detail later. See speci-
fically note 27 below. The Civil Code of 1859 added to the
laws of 1840 the proviso that the konohiki fishing grounds
extend "where there happen to be no reefs, from the distance
of one geographical mile seaward to the beach at low water
mark." (Section 387) Jordan and Evermann, supra, note 1, pp.
366-370, detail the relevant official dicta on konohikis from
1839 to the Organic Act. Kosaki, supra, note 2, pp. 1-2, Goto,
supra, note 6, pp. 3-8, and Khil, supra, note 7, pp. 9-17 all
review the declaration and clarification of konohiki rights
from 1839 to the present.

10. Khil, supra, note 7, p. 11. The allodial tenure system recog-
nizes hereditary rights of property. James Shon, Hawaii Con-
stitutional Convention Studies, 1978: Article X, Article XI,
Legislative Reference Bureau (1978), p. 42 states: "The Great
Mahele was a dramatic departure from the traditional system of
land ownership where, if a chief or a landholder died, the
land did not pass to the chief or landholder's family, but
reverted back to the King. The Great Mahele changed this by
incorporating the concepts of private ownership." (Footnotes
omitted)

11. Theon Wright, The Disenchanted Isles (New York:Dial Press,
1972), p. 35. A list of konohiki fishery owners compiled by
Khil, supra, note 7, pp. 33a and 33b, based on data from the
Attorney General's office, the Division of Land Management
(DLNR) and the State of Hawaii Survey Division obtained in
1978, shows for example that most of the konohiki fisheries
still existing today were at the time of their registration
owned by Bishop Estate, Campbell Estate, L. L. McCandless,
Liliuokalani, McBryde Sugar Company, Puna Sugar Company, and

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KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

other large estate holders who for the most part today remain
the owners. Other fishery owners have included Kapiolani
Estate, Ltd., Hawaiian Dredging and Construction Co., Bishop
Trust, H.K.L. Castle, and Damon Estate. Id., data charts on
pp. 27, 33; State v. Hawaiian Dredging, 397 P. 2d 593 (1964).

12. Khil, supra, note 7, p. 12.

13. Jordan and Evermann, supra, note 1, p. 370 state: "The
owners of fishery rights usually lease them to Japanese,
Chinese and Hawaiians." An appraisal team of Campbell
Crozier, Deputy Tax Commissioner, Samuel W. King and John
Child, Jr. reported in 1947 that "several fisheries in the
Kaneohe Bay area were being leased to the Hawaiian Tuna Pack-
ers, Ltd. as a source of nehu baitfish for tuna. This was
true also for the Kahaluu and Heeia fisheries." Khil, supra,
note 7, p. 30.

14. Jordan and Evermann, supra, note 1, p. 371 noted that already
in 1902 the valuable fisheries near Honolulu "are rapidly
falling off in amount, with a corresponding rise in the prices
for fish, which are now perhaps higher than in any other sea-
port town in the world." A 1939 State Legislature Judiciary
Committee report on a proposal to fund fishery condemnations
stated: "Experts have told us that, within the next eight or
ten years, the value of these fisheries will be reduced to a
comparatively low figure as, at the present rate, most of the
fish which are still found in large numbers in these fisher-
ies, will have disappeared by reason of depletion." Quoted in
Kosaki, supra, note 2, p. 19. The 1947 Crozier, King, and
Childs appraisal bore these experts out; the appraisals "were
downward biased compared to earlier appraisal attempts."
Khil, supra, note 7, p. 30. The Honolulu Advertiser, supra,
note 7, stated in 1954: "Nearly everyone who has lived in the
Islands for three or more decades noticed the rapid decline
of the inshore fish food supply."

15. The Hawaii State Constitutional Convention Committee on
Hawaiian Affairs, Standing Committee Report No. 57 (August 29,
1978), p. 7, states that the traditional Hawaiian culture cen-
tered on the ahupua'a, with the tenants (common people) engag-
ing "in subsistence gathering and hunting activities that con-
sumed but did not deplete the natural resources."

16. See Hawaii Fisheries Development Plan, State Department of
Land and Natural Resources (1979), pp. 3, 6, 13. This docu-
ment "focuses upon distant water fisheries since the near-
shore fisheries offer little hope for substantially increased
landings." Id., p. 3.

17. Khil, supra, note 6, p. 34. This statement was directly
affirmed by one konohiki owner, Robert Hanohano. Personal

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KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

interview May, 1980. An earlier confirmation is found in
a letter written by then Hawaii Attorney General Howitt, dated
July 27, 1931, regarding his investigation of konohiki fishing
riqhts: "I have discussed fishery matters with various owners;
and from many of them have found that this pseudofeudal system
prevailing in respect to private ownership of fisheries is
resulting in a source more of annoyance and unpleasantness
than profit; that, due to the difficulty of adequately pro-
tecting private rights, it has been impossible in many in-
stances to maintain lessees in these fisheries or to secure
adequate rentals therefor." Quoted in Kosaki, supra, note 2,
p. 16. Trimible, supra, note 5, pp. 34, states: "At present
this is largely a moot question for few people exercise their
konohiki fishing rights."

18. Kosaki, supra, note 2, p. 6. The Hawaii Supreme Court in
Bishop v. Mahiko, 35 Haw. 608 (1940) stated at 637: "Explicit
and implicit in sections 95 and 96 of the Hawaiian Organic
Act is the purpose of the Congress of the United States to
make all fisheries in the sea waters of the Territory, not
included in any fish pond or artificial enclosure, free to all
citizens of the United States . . . No claim is made [by plain-
tiffs] that the Congress of the United States was without
authority to repeal the pre-existing laws of the Republic of
Hawaii which conferred exclusive fishing rights."

19. 35 Haw. 608, 676-677: "Upon this branch of the case we con-
clude that, even though statutory rights to private fisheries
in the sea waters of the Territory of Hawaii at the time of
annexation of the Hawaiian Islands to the United States were
vested rights and the titles of the owners thereof were en-
tire, complete and not inchoate, in the absence of official
records of the boundaries of such private fisheries, it was
within the power of the Congress of the United States, in
accomplishment of its declared purpose to make all sea fish-
eries in the sea waters of the Territory not included in any
fish pond or artificial enclosure free to the citizens of the
United States, to provide reasonable means for the segregation
and final acquisition of such fishing rights." The court
continued at 679: "Holding as we do that the establishment of
a private fishery is but the preliminary step provided in the
proceedings in condemnation authorized by section 96 of the
Hawaiian Organic Act, the failure to establish a private
fishing right constitutes, in legal effect, a waiver to
compensation."

20. id., 679: "The legal effect of failing to assert a claim to
a private fishing right was not to vest the right in the
United States in a proprietary sense but simply to relinquish
the fishery subject thereto to the free use and enjoyment of
all citizens of the United States--to convert an exclusive

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KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

private fishing right into a public fishing right, the free
use of which might be enjoyed in common by all citizens of the
United States, including, if citizens, the trustees and
tenants."

21. 14 Haw. 465 (1902).

22. The court stated, 14 Haw. at 473: "'It is clear from a review
of these statutes that the following are necessary inferences,
to-wit, that the plaintiffs cannot base any claim to the
fisheries on ancient custom or prescription; that no right
that they may have possessed can antedate the Act of 1839;
that all right in the fisheries of whatever nature that had
been enjoyed by any subject prior to that date was revoked and
annulled by said Act and that all claims must now date from
the Act of 1839 or from some subsequent date." The court
continued at 475: "If the 'private property' possessed by the
konohiki in the fishery was only the right given by the sta-
tute then it follows that when the statute was repealed there
was no further claim of 'private property' in the fishery
because that which gave the right or 'private property ' was no
longer in existence. In this view, and we take it to be the
correct view, the plaintiffs could acquire no vested right in
the fishery. While the statutes were in force plaintiffs'
private property in the fishery was protected but when they
were repealed there was no property in the res. These sta-
tutes were general laws. 'Citizens have no vested rights in
the existing general laws of the State which can preclude
their amendment or repeal, and there is no implied promise on
the part of the State to protect its citizens against inci-
dental injury occasioned by change in the law.' Cooley,
Const. Lim., p. 343." The court also dismissed arguments that
the claimants held vested interests based on grant or as an
appurtenance to the land. The court held that while the
konohiki statutes were in force, the statutes declared fishing
rights to be private property, "and as such could not pass as
an appurtenance to the land; that in order to convey it [the
konohiki rights] specific words of grant must be used in the
conveyance for that purpose." Id., 476. In the claimants'
cases, their grants were defective. Turning directly to
public trust arguments, the court concluded, at 479-480:
"Under the common law the right of fishing in the open sea
like that of navigation was a public right. The grant of an
exclusive right to a sea fishery cannot be presumed. Every
presumption is against the grant and in favor of the public.
Every ambiguity or doubt in the instrument by which the right
is claimed to be granted will be construed most strongly
against the grantee."

23. Damon v. Hawaii, 194 U.S. 154 (1904), Carter v. Hawaii, 200
U.S. 255 (1906). See quote from Damon, footnote 3, supra.

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KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D)(2)

24. Damon v. Hawaii, 194 U.S. 154, 160 (1904).

25. Kosaki, supra, note 2, p. 10, reproducing data submitted to
Attorney General J. V. Hodgson in 1939 by Commissioner of
Public Lands and Surveyor L. M. Whitehouse.

26. Khil, supra, note 7, p. 25 and maps on pp. 33c-33f, based on
data compiled in 1978 from Attorney General's office, DLNR
Division of Land Management, and the Survey Division. Shon,
supra, note 10, p. 28 says state officials in 1977 estimated
there were only ten to 20 outstanding konohiki fisheries yet
to be condemned. Khil's figure, seemingly based on more
specific data than was available to Shon, and bearing a later
research date, will be taken here as accurate. As to why
condemnation efforts have not been more forceful, these are
described by Kosaki, supra, note 2, pp. 21-30. The reasons
come down to cost, and conservation. Condemnations have
occurred only where a public need has arisen which clearly
required the institution of proceedings to end private access
rights, or to open fisheries to the public. Eg., fourteen and
1/2 fisheries were acquired by the United States in the Pearl
Harbor area during the 1930's pursuant to H.R. 8294 approved
by Congress on April 14, 1930. In 1941 the Territory of
Hawaii instituted a condemnation action to obtain the fishery
of Mokauea in Keehi Lagoon in aid of the Keehi Lagoon trans-
pacific seaplane harbor. State v. Hawaiian Dredging Co. et.
al., 397 P. 2d 593, 596 (1964). The Kahana fishery was con-
demned in 1970 "when the City and County bought beach lands
around the bay for conversion into a public park and recog-
nized the need for an open fishery for the full enjoyment of
the area." Khil, supra, note 7, p. 33. The most recent
condemnation occurred for a similar reason. The Keawaula
fishery at Kaena Point was condemned following the State's
purchase of lands in that area to develop a beach park. Id.

27. This recognition is presently found in H.R.S. Section 188-5:
"The konohiki shall be considered in law to hold the private
fisheries for the equal use of themselves and of their tenants
on their respective lands, and the tenants shall be at liberty
to take from the fisheries, either for their own use, or for
sale or exportation, but subject to the restrictions imposed
by law, all fish, seaweed, shellfish, and other edible pro-
ducts of the fisheries."

28. 2 Haw. 62 (1858).

29. Id., at 70-71: "M. Kekauonohi [the konohiki owner] herself
was not possessed of an exclusive right. It may even be
doubted whether she could have conveyed away the portion of
the fishing ground lying opposite to Puuloa, or her special
rights therein, so as to divide the fishery, without infring-

V-144

KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D)(2)

ing on the rights of the tenants living on 'Honouliuli.'
Certainly if her grantee had tabooed one kind of fish, on his
part of the ground, while she tabooed another kind upon the
other part, the rights of the tenants would have been vio-
lated. And if she could have divided the fishing ground into
two parts, she could have divided into twenty, and so have
rendered the rights of the tenants worthless."

30. Id., 68.

31. 2 Haw. 62. The court stated at 71: "When he [Montgomery]
received a conveyance of a portion of the Ahupuaa of 'Hono-
uliuli,' he acquired along with it a common right of piscary
in the fishing ground adjacent. That is to say, he became,
for the purpose of the law, governing this subject, a tenant
of the Ahupuaa, and as such entitled to take fish in the sea
adjoining. We understand the word tenant, as used in this
connection, to have lost its ancient restricted meaning, and
to be almost synonymous, at the present time, with the word
occupant, or occupier, and that every person occupying law-
fully, any part of 'Honouliuli,' is a tenant within the mean-
ing of the law."

32. 31 Haw. 678 (1930).

33. Id., 693. The court held that "the statutory provisions of
1846 amounted to nothing more than an offer to give them
certain fishing rights when they should become tenants,--an
offer which was withdrawn before they were in a position to
accept it. When the repealing statute went into effect there
had been no identification of the tenant or of the land or of
the fishery. Under these circumstances it cannot properly be
said that there had been any vesting." Id. The court stated
at 696: "After April 30, 1900, the repealed laws were no
longer in existence and no new rights could be created there-
under on behalf of persons becoming for the first time tenants."

34. The vested rights of hoa'aina who were tenants prior to 1900
are not even certain. The most the court would say in Damon
v. Tsutsui was dicta that "the laws now repealed were in force
and effect until April 30, 1900, and . . . certain rights
became vested thereunder in konohikis and perhaps also in
tenants who occupied the land before that date. (This latter
point also we do not decide.)" (Emphasis added) Id., at 696.

35. U.S. v. Shingle, Civil No. 290 (1934), p. 9.

36. U.S. v. J.L.P. Robinson, Civil No. 292 (1934), p. 28.

37. Id., p. 30: "It seems a just and reasonable view that the
validation by the konohikis would satisfy the intention of the

V-145

KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

law and would be held such a validation as would preserve and
perpetuate the rights of all tenants having vested, though
subordinate, rights." With regard to the compensation ques-
tion which raised the legal issue of tenant rights, however,
the court in U.S. v. Robinson did not set a compensation value
on the hoa'aina right, but stated, "It is not humanly possi-
ble to compute the value of this hoa'aina right under the evi-
dence adduced at the hearing of this proceeding. . . There
is, in short, no showing in this case (and doubtless no show-
ing could be made) upon which may be predicated any award, in
any definite amount, as 'just compensation' for the taking of
the hoa'aina right of piscary Of Dowsett Co., Ltd. . . The
result must be that out of the aggregate sum of $5,833.33
which the Government must pay as compensation for the property
actually taken (the Hoaeae and Apokaa fisheries) it should be
adjudged that Dowsett Co., Ltd. [the tenant] is entitled to
share in the sum thus awarded and should receive such portion
of said sum as represents (a) the value of its Hoa'aina right
of piscary in (b) the Hoaeae fishery only. . . If an amicable
adjustment can be made between the parties hereto the Court
will approve such distribution of the said fund as may be
agreed to; and this is all the Court at this time can do."
Quoted in Kosaki, supra, note 2, p. 28. In the other cases
involving hoa'aina awards, the court specified that only
nominal damages of $1.00 were to be paid. Kosaki, p. 29.

38. Con-Con Committee Report No. 57, supra, note 14, p. 6.

39. Id. The Committee stated: "While for the most part the
courts have treated such vested rights as proprietary inter-
ests, your Committee feels that a more accurate description of
these rights is to refer to them as personal rights. . . Al-
though a tenant may not own any land in the ahupua'a, since
these rights are personal in nature, as a resident of the
ahupua'a, he may assert any traditional and customary rights
necessary for subsistence, cultural or religious purposes."
Id., pp. 6-7.

40. Daniel Finn, "Hawaii Caselaw Relating to Coastal Zone Manage-
ment," in Legal Aspects of Hawaii's Coastal Zone Management
Programs, Daniel Mendelker, ed., Hawaii State Department of
Planning and Economic Development (1976), p. H-16.

41. Trimble, supra, note 5, p. 34.

42. Shon, supra, note 10, p. 28.

43. Con-Con Committee Report No. 57, supra, note 15, pp. 6.

44. Thomas Kane, Aquaculture and The Law, University of Miami Sea
Grant Program (1970), p. 30.

V-146

KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

45. Polly McGlew and David Brown, "Legal and Institutional Factors
Affecting Mariculture in Texas," Coastal Zone Management
Journal (Vol. 6, No. 1, 1979), p. 71.

46. H.R.S. Section 188-4, Konohiki rights, states: "The fishing
grounds from the reefs and where there happen to be no reefs,
from the distance of one geographical mile seaward to the
beach at low watermark, shall, in law, be considered the pri-
vate property of the konohiki, whose lands, by ancient regu-
lation, belong to the same; in the possession of which private
fisheries, the konohiki shall not be molested, except to the
extent of the reservations and prohibitions hereafter in this
chapter set forth." The private owner and tenants must be
able to continue their activities without significant impair-
ment, or the State's action in licensing a mariculture opera-
tion would constitute a "taking," and compensation would have
to be paid.

47. The Constitutional Convention Committee on Environmental,
Agriculture, Conservation and Land, Standing Committee Report
No. 77 (September 7, 1978), p. 4, recommended that the con-
stitutional provision mandating condemnation of vested fish-
ing rights (former Article XVI, Section 13) be consolidated
with then Article X, Section 3, dealing with marine resources,
and that condemnation be made optional rather than mandatory.
The Committee made this recommendation upon "the belief that
it may not be in the public interest to condemn all konohiki
rights." Id. The Committee did not give its specific rea-
sons for this belief, but since this statement followed a
discussion of mariculture potential in Hawaii, the Committee
may have had in mind the possibility of konohiki owners pri-
vately leasing ocean areas to mariculturists to expedite the
development of mariculture. See discussion of this possibility,
note 48, below, and accompanying text. The recommendation of
the Committee was followed. The condemnation provision is
now part of Article XI, Section 6, on "Marine Resources," and
reads simply, "All fisheries in the sea waters of the State
not included in any fish pond, artificial enclosure or state-
licensed mariculture operation shall be free to the public,
subject to vested rights. . . The State may condemn such
vested rights for public use." Despite the view expressed
by the Con-Con Committee, this report suggests that condemna-
tion of existing private fisheries would presently serve the
public interest, if carried out in conjunction with the enact-
ment of ocean leasing legislation.

48. A konohiki owner could lease his exclusive fishing right to a
mariculturist, subject only to shared use with any ahupua'a
tenants, or he could taboo the particular species of animal or
plant being raised, if the mariculture enterprise is a monocul-
ture operation. If the latter, tenants would have to observe
the taboo as well as the general public. Khil, supra, note

V-147

KONOHIKI FISHERIES/NATIVE HAWAIIAN RIGHTS V(D) (2)

7, pp. 36-38, discusses this possibility. Khil states, p. 37,
"The major deterrent for offshore aquaculture development,
which appears to be an inability of entrepreneurs to enforce
private claims to aquatic products under culture, may be re-
solved through the use of konohiki privileges." It appears
that a mariculturist could commence operations now within a
konohiki fishery, with the owner's permission, and receive
the protections at law which the mariculturist needs--security
of tenure and security of property.

49. Seaway Company v. Attorney General, 375 S.W. 2d 923 (Tex. Civ.
App. 1964), Gion v. City of Santa Cruz, 2 Cal. 3d 29, 465 P.
2d 50, 84 Cal. Rpts. 162 (1970). The court in Seaway stated,
at 936: "The act of throwing property open to the public use,
without any other formality, is sufficient to establish the
fact of dedication to the public." In Gion, the court found
dedication implied where the public had used a beach "for a
period of more than five years with full knowledge of the
owner, without asking or receiving permission to do so and
without objection being made by anyone." 2 Cal. at 38, 465 P.
2d at 56, 84 Cal. Rpts. at 168.

50. Elmer v. Rodgers, 106 N.H. 512, 214 A. 2d. 750 (1965).

51. Michael Town and William Yuen, "Public Access to Beaches in
Hawaii: 'A Social Necessity'," X Hawaii Bar Journal (1973),
p. 20.

52. Lemle v. Breeden, 50 Haw. 426, 433, 462 P. 2d 470, 474 (1969).

53. Hawaii State Constitution, Article XI, Section 1.

54. Hawaii State Constitutional Convention Committee on Environ-
ment, Agriculture, Conservation and Land, Standing Committee
Report 77 (September 7, 1978), p. 2.

55. The objection can be raised, however, that litigation seeking
public ownership on these grounds may turn out to be more
costly to the state than simply condemning and purchasing the
fisheries. Also, the mandate and past actions to condemn
konohiki fisheries stemming from the Hawaii Organic Act may
nullify in the court's judgment arguments supporting the
dedication/prescription contention.

V-148

RIPARIAN AND LITTORAL RIGHTS V(D) (3)

D. COMMON LAW AND STATE LAW RESTRICTIONS UPON STATE AUTHORITY

3. Riparian and Littoral Rights

Q: What are the common law and state law restrictions upon the
state's authority over its offshore waters?

A: Riparian owners may have certain rights, such as
the right to ingress and egress to and from the
ocean waters adjoining their property. However,
there is no statutory law in Hawaii which recog-
nizes any riparian rights in ocean waters.

A riparian or littoral owner is a landowner who has certain
property rights in a body of water adjacent to his land. Riparian
rights are determined wholly by state law. They are common law
rights as modified by statute, custom, or judicial precedent. 2In
Hawaii, no statute exists concerning riparian or littoral rights
in ocean waters.

Broadly speaking, the common law riparian rights that may be
applicable to landowners abutting ocean waters are the right of
access to the water, 3and the reasonable use of the water for bath-
ing, swimming, boating, fishing, etc. 4Some states recognize a
common law riparian right to build a pier or wharf out to the point

of navigability.5 The right of a riparian owner to an unobstructed
view of or over adjacent waters has been recognized in Florida. 6

However, there is no uniformity in the recognition of ripar-
ian rights in other states. in some jurisdictions, no riparian
rights whatsoever can be claimed against the state in navigable
waters.7

The one riparian right applicable to ocean waters which seems
to be almost universally recognized is the right of ingress and
egress to and from the navigable waters adjoining the riparian
owner's property.a8 This may have an impact on mariculture activi-
ties which utilize structures which may block access of the ripar-
ian owner to the ocean for purposes of navigation. If such is the
case, the riparian owner may be entitled to compensation for the

V-149

RIPARIAN AND LITTORAL RIGHTS V(D) (3)

loss of his property right of access to the water. This right of
access may be a problem where a small bay or enclosure is closed
off for a mariculture activity. However, if the riparian right
of ingress and egress is not substantially impaired, no compensa-

tion will be required.9 Also where the State clearly acts to fur-
ther the purposes of the public trust over public resources, com-

pensation may not be required. in Colberg, Inc. v. State (1967), 1
the Supreme Court of California stated:

"Whatever the scope and character of their (ripar-
ian owners) right to have access to those naviga-
ble waters, we hold that such right is burdened
with a servitude in favor of the state which comes
into operation when the state properly exercises
its power to control, regulate, and utilize such
waters."ll1

In State v. Zimring (1977), 12the Hawaii Supreme Court stated
that "the law in other jurisdictions makes it clear that the pre-
servation of littoral access is not sacrosanct and must sometimes
defer to other interests and cnieaos.13The court cited
the California case of Los Angeles Athletic Club v. Santa Monica
(1944) 14which stated,

"It is well settled that the littoral rights of
an upland owner who owns no title to tidelands
adjoining his property are subject to termination
by whatever disposition of tidelands the state,
or its grantees, in the exercise of their trust,
choose to make.15

The riparian right to build a pier or wharf appears to have
some judicial recognition in Hawaii. In Territory v. Kerr (1905), 1
the Hawaii Supreme Court upheld an injunction against a riparian
owner who was building a seawall between the high and low water
marks fronting his property. (The wall projected at one point be-
low the low water mark.) The riparian owner was attempting to fill
the space enclosed by the wall with coral and sand for the purpose
of building a residence thereon. Stating the riparian owner's
property extended only to the high water mark, the court held that
the proposed private use of public property could not be allowed.

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RIPARIAN AND LITTORAL RIGHTS V(D) (3)

In making its decision, the court stated,

"The immunity with which littoral proprietors
whose grants are bounded by the shore may con-
struct and maintain below high water mark wharves,
landings and piers not interfering with or ob-
structing navigation, rights-of-way or of fish-
ing may be termed a right incident to such pro-
prietorship or otherwise designated; but to erect
wharves, landings and piers on the shore when the
shore is owned by the United States cannot be re-
garded from the point of view of the public inter-
ests as the same with the erection of residences."17

The court concluded that the structures being built by the ripar-
ian owner were impermissible because they prevented public use of
the shore for passage over it, and furnished no compensatory advan-
tages to the public. 18However, it is important to note that the
court did recognize (in dictum) the right of a riparian owner to
build wharves, landings and piers so long as they do not interfere
with navigation, rights-of-way, or fishing. of course, in order
to exercise the riparian right to build a wharf or pier, the ripar-
ian owner must obtain proper permission from federal and state
authorities. 19

A riparian owner may also be entitled, in common with the pub-
lic, to the right of boating, bathing and fishing within ocean
waters adjacent to his land. 20An ocean leasing scheme with spe-
cific protections for public activities will minimize adverse
effects upon the rights of riparian owners in addition to protect-
ing the public trust. 21

Whether Hawaii would recognize other riparian rights, such
as the right to an unobstructed view over the waters, remains to
be seen. Since neither the Hawaii Legislature nor the Hawaii
courts have directly addressed the issue of compensation for the
impairment of ocean littoral rights, the status of such rights in
Hawaii remains unsettled.

V- 151

RIPARIAN AND LITTORAL RIGHTS V(D) (3)

FOOTNOTES

1. Strictly speaking, a riparian owner is one whose land borders
a river or stream, and a littoral owner is one whose land
borders a lake or sea. However, the term "riparian" is com-
monly used to refer to land abutting any body of water. Here-
inafter, "riparian owners" will be used to refer to those
landowners abutting the ocean. See, T. Kane, Aquaculture and
the Law, 36, University of Miami Sea Grant Program (1970).

2. In Carter v. Territory of Hawaii, 24 Hawaii 47 (1917), the
Hawaii Supreme Court stated, "Private water rights in this
Territory are governed by the principles of the common law
of England except so far as they have been modified by or are
inconsistent with Hawaiian statutes, custom or judicial prece-
dent." Id. at 57. In McBryde Sugar Co. v. Robinson, 54
Hawaii 174 (1973), cert. denied and appeal dismissed sub. nom.
McBryde Sugar Co. v. Hawaii, 417 U.S. 962 (1974), the Hawaii
Supreme Court, relying on Counter has made rulings regarding
appurtenant and riparian rights to freshwater. The court ruled
that water rights acquired by virtue of ownership of lands
adjoining a stream could not be transferred to other parcels.
The court also held that the State owned all surplus water.
These rulings have been challenged and enjoined by the federal
District Court of Hawaii; Robinson v. Ariyoshi, 441 F. Supp.
559 (D. Hawaii 1977), appeal docketed, Civ. No. 78-2264 (Ninth
Cir., filed November 28, 1978) and Patterson v. Burns, 327 F.
Supp. 745 (D. Hawaii 1971).

3. Peck v. Alfred Olsen Constr. Co., 238 N.W. 416 (Iowa 1931);
Yates v. Milwaukee, 10 Wall. 497, 19 L. Ed. 984 (1870);
Colberg, Inc. v. State, 67 C. 2d 408, 62 Cal. Rptr. 401, 432
P. 2d 3 (1967), cert. den. 390 U.S. 949 (1968); Brusco Towboat
Co. v. State, 30 Or. App. 509, 567 P. 2d 1.037 (1977), affd.
in part, revd. in part on oth. grds., 284 Or. 627, 589 P. 2d
712 (1978). See generally, 1 Farnharm, Waters and Water
Rights 278 (1904).

4. Freed v. Miami Beach Pier Corp., 112 So. 841 (Fla. 1927).

5. Thiesan v. Gulf, F. & A. R. Co., 75 Fla. 28, 78 So. 491 (1917).

6. Brusco Towboat Co. v. State, supra, note 3; Freed v. Miami
Beach Pier Corp., supra, note 4.

7. Port of Seattle v. Oregon & Washington R. Co., 255 U.S. 56
(1921) (The U.S. Supreme Court stated, "It appears . . . that
the law of Washington does not recognize as appurtenant to
upland, tideland, or shore land in its natural condition,

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RIPARIAN AND LITTORAL RIGHTS V(D)(3)

rights of any sort beyond the boundaries of the property."
Id. at 67.); Harris v. Hylebos Industries, Inc., 81 Wash. 2d
770, 505 P. 2d 457 (1973).

8. See note 3, supra.

9. Kane, supra, note 1, at 40.

10. 67 C. 2d 408, 62 Cal. Rptr. 401, 432 P. 2d 3 (1967), cert.
den. 390 U.S. 949 (1968).

11. Id., 67 C. 2d at 422.

12. 58 Hawaii 106, 566 P. 2d 725 (1977).

13. 58 Hawaii at 119, 566 P. 2d. at 734. (The court made this
statement in a discussion of the riparian right of accretion,
whereby the area of owned land is increased by the gradual
deposit of soil due to the action of a bounding body of water.
It has sometimes been held that accretions do not belong to
the riparian owner and therefore the right of access to the
water is cut off.)

14. 63 Cal. App. 2d 795, 147 P. 2d 976 (1944) (Again, this state-
ment was made in regard to accretions.)

15. 58 Hawaii at 120, 566 P. 2d at 734.

16. 16 Hawaii 363 (1905).

17. Id. at 369.

18. Id. at 376.

19. At present, in order to construct a wharf or pier in state
navigable waters, the applicant must obtain a federal permit
from the U.S. Army Corps of Engineers (See subsection V(C)(1))
and a state permit from the Department of Land and Natural
Resources (i.e. a Conservation District Use Permit.
See Section VI).

20. Kane, supra, note 1, at 46.

21. In Colberg, Inc. v. State, supra, note 3, the California
Supreme Court stated,

"It appears that in some states the [state's] servitude
operates only when the state acts upon its navigable
waters for the purpose of improving navigation, and
that private rights 'damaged' by acts not in aid of

V-153

RIPARIAN AND LITTORAL RIGHTS V(D) (3)

navigation are therefore compensable. . . .This appears
to be the law of the State of New York. . . .Other
jurisdictions hold as we do in the instant case, that
the state's servitude operates upon certain private
rights, including those of access, whenever the state
deals with its navigable waters in a manner consistent
with the public trust under which they are held."
[Emphasis supplied] [citations omitted] 432 P. 2d at
13.

V-154

SECTION9
6

CURRENT REGULATORY FRAMEWORK VI (A)

VI. THE CURRENT REGULATORY FRAMEWORK
OF THE STATE OF HAWAII

A. INTRODUCTION

This section lists and briefly describes state and county per-
mit and environmental review processes which are, or may be applic-

able to activities seaward of the shoreline. IThe State Department
of Planning and Economic Development (DPED) publication, Permits
and Environmental Requirements for Aquaculture in Hawaii 2is the
basic reference for the information contained herein.

At the outset it should be noted that activities which require
a lease of state land (offshore submerged lands included) require
approval by the Board of Land and Natural Resources (BLNR). 3All
leases issued are required to identify the specific uses for which
the land is to be employed, any improvements required, restrictions
against alienation, and the length of the next term (as established
by the Board or at public auction). Leases must contain provisions
reserving public rights-of-way and access to beaches, and prevent-
ing nuisances and waste. Leases may also stipulate other terms
and conditions as the Board deems advisable to effectuate the pur-
poses of the State Constitution. 4

Uses seaward of the shoreline are regulated principally by
permit procedures of various State and Federal agencies. overlay-
ing these individual agency jurisdictions are the broad goals,
objectives and policy statements of the Hawaii Coastal Zone Manage-
ment Act, 5which complies with the requirements of the national
Coastal Zone Management Act of 1972. 6 State government regulations
are subject to the objectives and policies of the Hawaii State Plan,
specifically to those relating to shoreline and marine resources7
and to Article XI, Section 6 of the Hawaii Constitution which ad-
dresses concerns regarding marine resources.

Since the laws governing land and water uses are broadly
written, agency discretion is necessary for determining their

VI-l

CURRENT REGULATORY FRAMEWORK VI(B) (1)

applicability to specific offshore projects or operations. Mari-
culture projects, for example, may take various forms as a function
of the type of culture system, the location of the facilities,
water usage, proposed effluent management practices and overall
environmental impact considerations. The actual number, or types
of permits which might be required by any specific mariculture
operation would depend on how the proposed operation interfaced
with these regulatory concerns. OTEC and other fixed-location
ocean activities for which state licensing may be sought would
also be subject to these same concerns.

However, while individual state agencies would thus exercise
jurisdiction over various specific aspects of any offshore commer-
cial or experimental ocean activity, there is serious question
whether any one agency, or all collectively, have the legal autho-
rity at present to approve a fixed-location ocean activity. There
is no question but that serious gaps exist in the present statutes,
which prevent the development of a viable commercial ocean resource
industry in Hawaii. Actions to remedy these gaps have been dis-
cussed throughout this report.

In broad outline, new offshore activities such as mariculture,
OTEC, floating platforms, or fish aggregation buoys would presently
be affected by the following state regulatory mechanisms.

B. CURRENT DEPARTMENT OF LAND AND NATURAL RESOURCES REGULATIONS

1. State Land Use Law

The Hawaii State Legislature adopted in 1961 a landmark
State Land Use Law 8which established the State Land Use Commission
and gave the Commission the responsibility to classify all land,
public and private, into Urban, Agricultural, Rural, or Conservation
districts. The individual counties exercise sole jurisdiction of
land uses within Urban districts. The counties and the State Land
Use Commission jointly regulate land uses within the Agricultural
and Rural districts. The State Department of Land and Natural

VI-2

CURRENT REGULATORY FRAMEWORK VI(B)(2)

Resources (DLNR), however, regulates uses within Conservation dis-
tricts.

Included in the Conservation districts are the beach areas
seaward of the maximum inland line of wave action, and all offshore
submerged lands under State jurisdiction including nearshore lands
beneath tidal waters, fish ponds, tidepools, and territorial waters.
The State Land Use Law thus gives the State sole formal jurisdic-
tion over activities conducted on submerged lands or in offshore
waters. Certain operations clearly fall under DLNR's regulatory
control. DLNR administers the Marine Life Conservation Program,9
for example, which includes all the marine waters of the State and
which authorizes DLNR to regulate the taking of all fish and other
marine animals within those waters.

2. Conservation District Use Permit

Anyone proposing to use Conservation district lands or
waters for commercial gain must apply to the Department of Land
and Natural Resources for a Conservation District Use Permit (CDUP).
The Board of Land and Natural Resources (BLNR) then approves, denies
or approves with conditions, such proposed uses.

Conservation district lands and waters are divided into
four subzones, each with attendant permitted uses and nonconforming
uses. The divisions and permitted uses are governed by DLNR's Reg-
ulation No. 4.10 The divisions include Protective (P), Limited
(L), Resource (R), and General (G) subzones.

The Protective (P) subzone was established to conserve
valuable resources in designated areas such as restricted water-
sheds; significant historic, archaeological, and geological sites;
fish, plant, and wildlife sanctuaries; and other designated sites
of unique physiographic significance. The objective of the Limited
(L) subzones is to restrict uses where natural conditions (floods,
erosion, volcanic activity, tsunamis, etc.) would suggest con-
straints on human activity. Resource (R) subzones are designated

VI-3

CURRENT REGULATORY FRAMEWORK VI(B) (3)

as those areas where sustained use of the natural resources of the
area can be assured with proper management. The General (G) sub-
zone includes areas of open space where specific conservation uses
may not be defined, but where urban use would be premature.

"Mariculture" and OTEC are not presently listed as per-
mitted uses in Resource (R) and General (G) subzones. However,
BLNR may determine whether a specific proposed use may be approved
as a Conditional Use, or in the case of ocean farming activities,
whether such use may be defined as "acquaculture" which is a per-
mitted use. 1

Application forms for Conservation District Use Permits
must identify the site of the proposed use, describe the plan and
schedule of activities, set out the environmental conditions of the
property, and include other information pertinent to project eval-
uation.

Applications are reviewed during regular Board meetings
which are open to the public. Public hearings are required for all
proposed commercial operations in Conservation districts and are
held in the county in which the proposed site is located.

3. Historic Site Review

offshore activities and projects are also subject to His-
toric Site Review. 12 DLNR reviews all projects which may affect
designated (or eligible for designation) State or Federal historic
sites. This review would be particularly pertinent to projects
affecting traditional Hawaiian fish ponds or other submerged or
partially submerged historic sites. Projects or activities which
may adversely affect historic sites will not necessary be prohib-
ited as a result of this review, but Historic Site Program off i-
cials make every effort to preserve and protect such resources to
the extent permissible by law.

Applicants must file a notice of intention to work on a
site 90 days in advance of the proposed starting date. The

VI-4

CURRENT REGULATORY FRAMEWORK VI(B) (4)

application must state the nature of the proposed construction,
the precise location of such activities with respect to any his-
toric site, and any efforts at preserving or limiting any disrup-
tion of historic sites which are to be affected. The Department
of Land and Natural Resources must respond to the application within
the 90-day notification period.

4. Enforcement Procedures

Under H.R.S. Chapter 199, the DLNR has an enforcement pro-
gram for conservation and resources which includes enforcement off i-
cers. 13The enforcement officers investigate complaints, gather
evidence, conduct investigations, check and verify all leases, per-
mits and licenses issued by the Department. 14In addition, the
enforcement officers have police powers which include the power to
serve and execute warrants, issue citations, and arrest offenders
and take them to a police station or before a district judge. 15
Any equipment used in violation is declared to be a public nuisance
and seizable, and, upon conviction, forfeitable to the State. 16
The basic components of this system would be adequate as an enforce-
ment program for ocean leasing. With minor modifications, Chapter
199 could be revised so as to include enforcement of ocean leasing
statutes and regulations as part of the duties of DLNR and its
enforcement officers.

C. DEPARTMENT OF TRANSPORTATION/DEPARTMENT OF-HEALTH PERMITS

Two other State agencies also evaluate and give approval to
most offshore activities. The Harbors Division of the State De-
partment of Transportation (DOT) has authority to regulate construc-
tion activities and the erection or placement of any structure or
material within shores or shorewaters of the State for protection
of navigation and shoreline processes.1

Since January 1, 1978, permit application procedures for Con-
servation District Use Permits and DOT permits for work within
shores or shorewaters have been consolidated into a single permit

VI-5

CURRENT REGULATORY FRAMEWORK VI(C

system. Under this system only a Conservation District Use Per-
mit need be submitted to the Department of Land and Natural Re-
sources for shorewater projects.

The State Department of Health (DOH) has authority to regulate
the discharge of wastewaters from fixed point sources into surface
waters. 18Any project proposing to discharge effluent from defined
point sources into coastal or estuarine environments is required
to obtain a National Pollutant Discharge Elimination System (NPDES)
Permit from DOH.

The NPDES permit process includes "zone of mixing" variance
procedures for wastewater discharges which exceed the established
standards of the receiving waters. The intent of the control pro-
gram is to ensure that receiving waters are not degraded by any
discharge.

Applicants must adequately describe the contents of the pro-
posed discharge, provide data as to the nature and composition of
aquatic, wetland, and marine species which might be affected by
the proposed discharge, and submit an analysis of prevailing water
currents, circulation and turnover rates.

Under new NPDES approval rules published by the federal gov-
ernment in 1979, a number of constraints relating to discharges
from aquaculture facilities were eliminated. The regulations now
allow an exemption (on a case-by-case basis) for concentrated aqua-
tic animal production facilities (warmwater species) that produce
less than 100,000 pounds of aquatic animals per year and for facil-
ities which discharge less than 30 days per year. These new regu-
lations remove the previous mandatory permit requirements for facil-
ities culturing aquatic animals nonindigenous (non-native) to the
United States. 19

in line with its jurisdiction over water quality control the
DOH also has authority to regulate the production and processing
of shellfish grown in both natural and artificial environments. 20

VI-6

CURRENT REGULATORY FRAMEWORK VI (D)

Thus any offshore project which engages in the growing, harvesting,
packing, shipping of fresh or frozen shellfish for sale to the pub-
lic must possess a valid Shellfish Sanitation Certificate issued
by the DOE. Certificates are generally issued on the basis of a
DOH-conducted sanitary survey which determines actual or potential
sources of pollution in the culture area.

D. ENVIRONMENTAL IMPACT STATEMENT REQUIREMENT

With the CDUP (DLNR/DOT) or NPDES (DOH) application a State
Environmental Impact Statement (EIS) may also be required. 21An
EIS is necessary for projects which will have a significant effect
upon the environment and which fall within any of the'following
categories:

1. Projects involving State or County lands or funds;

2. Projects involving use of Conservation district lands
(coastal waters included);

3. Projects proposing the use of any historic site listed
in the National Register of Historic Places or the Hawaii
Register (some fish ponds fall into this category); and

4. Projects requiring State or County permits or review
actions.

State Environmental Quality Commission regulations grant decision-
making authority regarding the necessity of an EIS to the first
agency receiving the project approval application. This may be
DLNR, DOT or DOEl.

An EIS for any project must include a detailed description of
the proposed project and a definition of the real or potential
environmental impacts which might ensue if the project is imple-
men ted.

E. DEPARTMENT OF AGRICULTURE QUARANTINE LAW

Any offshore project calling for importation of species into
Hawaii for research or commercial purposes would be regulated by

VI-7'

CURRENT REGULATORY FRAMEWORK VI(F)

the Hawaii Plant Quarantine Law. 22This law is administered by
the Department of Agriculture (DOA) under Regulation No. 2. 23Ap-
plicants wishing to import any species into the Hawaiian marine
ecosystem must obtain a permit from the Plant Quarantine Branch,
DOA. Permit applications must include a detailed description of
the imported species, the method of shipment, the facility in which
the species is to be confined or cultured and the methods or tech-
niques used to prevent the animal or plant from escaping into the
wild.

F. COUNTY PERMIT AUTHORITY

County permit authority does not normally extend seaward of
the legally defined shoreline, except for restrictions on the com-
mercial removal of sand within 1,000 feet seaward of the shoreline
or in shorewaters less than 30 feet in depth. However, as a policy
matter, State and Federal agencies send project proposals to the
respective county authorities to obtain input on a project's con-
formity to the applicable County General Plan.

It must be noted, however, that many offshore water projects
will involve land-based support facilities and that these facili-
ties, if located in the county's Special Management Area (SMA) or
Shoreline Setback area, will require a county permit or variance. 24
The SMA permit is required for any development within the desig-
nated SMA which may significantly affect the shoreline and coastal
zone. In each county the SMA is usually defined as including lands
and waters lying between the shoreline and an established boundary
at least 100 yards inland.

Applicants who seek an SMA permit must present data proving
the proposed development will have no substantial adverse envi-
ronmental or ecological effect, except as such adverse effect is
minimized or clearly outweighed by public health, safety or com-
pelling public interest.

VI-8

CURRENT REGULATORY FRAMEWORK VI(F)

A Shoreline Setback variance can be granted for a new struc-
ture, facility, or activity in most counties if it can be shown
to be in the public interest, and if denial of the variance would
pose a hardship to the applicant.

Since the SMA permit system overlaps the Shoreline Setback
Area, the variance procedure is generally combined for ease of
processing. Applicants must usually meet the data requirements
of the SMA in order to obtain a Shoreline Setback variance.

A 1979 amendment to Chapter 250A, H.R.S., allows an exclusion
from SMA permit requirements for aquaculture or mariculture facil-
ities provided the cumulative impacts of the project do not pose
a significant environmental effect on the SMA.25

VI-9

CURRENT REGULATORY FRAMEWORK VI

FOOTNOTES

1. The shoreline is defined in Chapter 205, Section 31[2], H.R.S.,
as the upper reaches of the wash of waves, usually evidenced
by the edge of vegetation growth, or the upper line of debris
left by the wash of waves.

2. Brewer, William A., Permits and Enironmental Requirements for
Aqauculture in Hawaii (Honolulu: Aquaculture Planning Pro-
gram, Department of Planning and Economic Development, January,
1980).

3. Chapter 171-13, H.R.S., "Disposition of public lands."

4. Chapter 171-35, H.R.S., "Lease provisions; generally."

5. Chapter 205A, H.R.S., as Amended, "Coastal Zone Management."

6. Public Law 92-582 as Amended (16 U.S.C. 1451 et seq.).

7. Chapter 226-11, H.R.S., "Objectives and policies for the phy-
sical environment--land-based, shoreline, and marine resources."

8. Chapter 205, H.R.S., as Amended, "Land Use Commission"; Regu-
lation No. 4, DLNR.

9. Chapter 190, H.R.S.

10. Established pursuant to Section 183-41, H.R.S., as Amended,
"Forest and water reserve zones."

11. Roger Evans, Department of Land and Natural Resources, Conser-
vation District Planner, personal interview, June, 1980.

12. Chapter 6E, H.R.S., "Historic Objects and Sites"; National
Historic Preservation Act of 1966, as Amended (P.L. 89-665);
Presidential Executive Order 11593; "Protection and Enhance-
ment of the Cultural Environment" (May 13, 1977).

13. H.R.S. �199-1 and 2.

14. H.R.S. �199-3.

15. H.R.S. �199-4.

16. H.R.S. �199-7.

17. Chapter 266, H.R.S., "Harbors"; State of Hawaii Department of
Transportation; Harbors Division, Rules and Regulations and
Tariff No. 4.

VI-10

CURRENT REGULATORY FRAMEWORK VI

18. Clean Water Act of 1977 (33 U.S.C. 1344); Chapter, 342, Part
III, H.R.S., "Water Pollution."

19. New Rules are published in the Federal Register (Vol. 44[111]:
32854-32956; June 7, 1979).

20. Chapter 328-9 and 321-11, H.R.S., and Hawaii Public Health
Regulations, Chapter 4A.

21. Chapter 343, H.R.S., and Environmental Quality Commission,
Environmental Impact Statement Regulations.

22. Chapter 150A, H.R.S.; Lacey Act (18 U.S.C. 42); Presidential
Executive Order 11987 of May 24, 1977, Relating to Exotic
Organisms.

23. Regulation No. 2 of the Division of Plant Industry; Department
of Agriculture Policy PI-8, Amended December 2, 1976.

24. Hawaii Coastal Zone Management Program, Chapter 205A, H.R.S.,
as Amended, along with rules and regulations adopted by the
respective Counties.

25. House Bill 1642 of the Tenth Legislature (1979).

VI-11

SECTION
7

INTRODUCTION TO LEGISLATIVE PROPOSALS

The following pages contain legislative proposals as drafted
by the authors. At the outset, the authors would like to point
out that these legislative proposals are a method of taking the
reader through a complete application and leasing process. The
legislative proposals are an exhaustive summary of possible legis-
lative answers to the legal and policy issues and recommendations
raised in the text.

However, the legislative proposals are by no means meant to
be adopted by any legislature in whole and as stated. Rather, the
proposals are meant to be a "shopping list" or "trigger device" to
a legislator or legislative draftor.

The authors would also like to point out that the amount of
detail in the legislation is noL' necessarily recommended nor re-
quired. Rather, many of the items detailed within the legislation
may more appropriately be left -to administrative discretion.

Please note that there have been annotations to the various
legislative proposals referring to appropriate sections of this
report, Hawaii State Constitution, statutes and regulations, and
relevant federal statutes. It is hoped that the reader will be
able to use the reference material to determine his own position
and thinking regarding an appropriate legislative response to the
legal and policy issues and recommendations raised in the text.

VII -l

VII. PROPOSALS FOR LEGISLATION FOR OCEAN LEASING

SECTION 1. FINDINGS AND PURPOSE

The Legislature finds that:

(1) Certain new uses of state marine waters hold great poten-
tial for contributing to the energy and protein self-sufficiency
goals of the State of Hawaii,

See State-of-the-Art, Technological Assessment, II(A),
(B), (C); Public Trust Doctrine, IV(D)(l), p. 19-20, 28.

(2) These new ocean activities will require some degree of
exclusive use of portions of the ocean bottom, the vertical water
column, and/or the ocean surface within state marine waters, and

See Commercial Development, Property Rights and Security
of Tenure, III(B)(C); State-of-the-Art, Technological
Assessement, III(A), (B), (C).

(3) These new ocean activities will require defined rights
of property and of tenure in state marine waters,

See Commercial Development, Property Rights and Security
of Tenure, III(A), (B).

The Legislature declares that it is in the interest of the
people of the State to grant leases of ocean water in order to per-
mit such activities in state marine waters. The policy of this
State shall be to permit and support such activities to the extent
they do not significantly interfere with other ocean uses which
also benefit the people of this State. The purpose of this Act is
to establish guidelines and procedures for leasing private experi-
mental, educational and commercial ocean activities within state
marine waters, and to guarantee property rights and protections
for any such activities approved under this Act.

See Public Trust Doctrine V(D)(l); Commercial Development,
III.

VII-2

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

SECTION 2. DEFINITIONS

(A) "Administrative Lease" means the applicant proposes to use or
a lessee is using a designated portion of state marine waters
pursuant to a grant of a lease for those activities designed
for profit but from which the lease anticipates gross revenues
of no more than $150,000 in a fiscal year and requires no more
than one acre of state marine waters.

See Commercial Development, Security of Tenure, 111(B).

(B) "Board" means the Board of Land and Natural Resources.

(D) "Commercial Lease" means the applicant proposes to use or a
lessee is using a designated portion of state marine waters
pursuant to a grant by the department of a lease for those
activities designed for profit, which include the exchange of
or buying and selling of commodities, or the providing of ser-
vices, or relating to or connected with trade, traffic or com-
merce in general.

See Commercial Development, Security of Tenure, II(B);
Regulation No. 4, DLNR, promulgated pursuant to Chapter
183-41, H.R.S., as amended, Section l(A)(5), hereinafter
referred to as Reg. 4, DLNR, for a similar definition of
commercial purpose as relates to the use of the public
lands.

(E) "Department" means the Department of Land and Natural Resources.

(F) "Experimental Lease" means the applicant proposes to use or a
lessee is using a designated portion of state marine waters
pursuant to a grant of a lease for those activities designed
for research, scientific endeavors, or educational purposes.

See Commercial Development, Security of Tenure, III(B).

(G) "Lessee" means the holder of a valid lease for the exclusive
use of a clearly defined area in state marine waters.

VII-3

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

(H) "Mariculture" means the cultivation and production of animal
and plant life within a marine environment.

See Technology Assessments, Mariculture, II(A).

(I) "OTEC" means an offshore ocean thermal energy conversion
facility which is standing or moored in marine waters or mov-
ing through such waters and which is designed to use tempera-
ture differences in ocean water to produce electricity or
other forms of energy and which includes any surface and sub-
surface structures, intake and discharge pipes, and underwater
power cables integrated with such a facility.

See State-of-the-Art, Technology Assessments, OTEC and OTEC-
Related Activities, 11(B); OTEC Act of 1980, Public Law 96-
320 - August 3, 1980, hereinafter "OTEC Act of 1980," Section
2(11) for a similar definition.

(J) "Person" means any individual (whether or not a citizen of
the U.S.), any corporation, partnership, association, or other
entity, organized or existing under the laws of any nation,
and any Federal, State, local or foreign government or any
entity of any such government.

(K) "Proprietary Information" means any trade secrets, patents,
engineering, technological or other scientific methods, pro-
tected by law.

(L) "State Marine Waters" means all territorial waters of the
State including the water column and water surface below the
upper reaches of the wash of the waves.

See Reg. 4, DLNR, Section 2(D)(l)(e) for a similar boundary
definition.

(M) "Water Column" means the vertical extent of marine water, in-
cluding the surface thereof, above a designated area of ocean
bottom.

SECTION 3. STATE LICENSING OF PRIVATE USES OF STATE MARINE WATERS

(A) The Board is hereby granted authority to license mariculture
and OTEC operations within state marine waters, including the

VII-4

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

ocean bottom, the vertical water column and the water surface
pursuant to the approval by the Board of a CDUA to conduct
such operations. The Board shall designate licenses as com-
mercial, experimental or administrative, and shall not license
state marine waters unless a finding has been made that the
proposed activity is in the public interest and consistent
with other state policy goals and objectives, including con-
servation, self-sufficiency and environmental quality.

See Public Trust Doctrine, V(D)(1); Article XI, Section 1,
Hawaii Constitution "Conservation and Development of Resources"
for requirements of conservation and self-sufficiency; OTEC
Act of 1980, Section ZOl(C)(2) for similar requirement of
environmental quality; Article XI, Section 9, Hawaii Consti-
tution, "Environmental Rights" which gives each person the
right to a clean and healthful environment; Hawaii State Plan-
ning Act, H.R.S. 226-11; "Objectives and policies for the
physical environment--land-based, shoreline, and marine
resources."

(B) No person may engage in the operation of mariculture or the
ownership, construction, or operation of an OTEC facility
which is located in the state marine waters, except as have
been approved by the Board and have been established and have
been established pursuant to regulations and conditions pres-
cribed by the Board.

SECTION 4. LICENSE APPLICATION AND GUIDELINES FOR LICENSE APPROVAL

(A) An applicant must submit a written application to the Board
to obtain a license to conduct any activity listed in Section
3(A). If the applicant desires to utilize the ocean bottom
as well as the state marine waters, the application for use
of the ocean bottom shall be made under the provisions con-
tained herein. Such application shall be treated as a Con-
servation District Use Application (CDUA) and shall be approved
or denied by the Board according to the CDUA permit procedure
rules and regulations, subject to the following specific re-
quirements:

See The Current Regulatory Framework, DLNR Regulations and
Law, VI(B).

VII-5

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

1. Applications made pursuant to this Act shall contain:

(a) A reasonably concise description of the location
and extent of the ocean bottom, water column and/or
water surface desired to be used, with an attached
map or plat of a survey of such. An applicant may
request the Department to itself conduct a survey,
but must enclose with the application a sum deter-
mined by the Department to defray the cost to the
public of such a survey.

See Commercial Development, Government Regulation,
II(C); OTEC Act of 1980, 102(e)(Z).

(b) A statement by the applicant setting forth alterna-
tive locations considered and the reasons for select-
ing the proposed location over all alternatives.

See Public Trust Doctrine, V(D)(l); Commercial De-
velopment, Security of Tenure, III(B).

(c) A description of the activities to be conducted,
including a specification whether such activities
are to be experimental, scientific, educational,
or commercial.

See Policy Issues, Private/Public Ownership and
Development, IV(D)(3); Public Trust Doctrine,
V(D)(l).

(d) A description of the current financial and techni-
cal capability of the applicant to carry on such
activities.

See Commercial Development, Security of Tenure,
III(B).

(e) An assessment of the environmental impact of such
activities, including the impact upon other exist-
ing ocean uses in the area.

See Public Trust Doctrine, V(C)(l); H.R.S., Chapter
343, "Environmental Quality Commission and Environ-
mental Impact Statement."

VII-6

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

(f) An assessment of the potential economic rate of re-
turn to the applicant and to the State from the
conducting of such activities.

See Commercial Development, Government Regulation,
Ill(C).

(g) Such financial, technical and other information as
the Board may determine to be necessary or appro-
priate to process the application.

See OTEC Act of 1980, Section lOl(d)(l), "Issuance
Conditions. "

2. The Board shall not require an applicant to reveal pro-
prietary information concerning the nature or method of
his proposed activity or activities.

3. The Board shall not approve a Conservation District Use
Permit (CDUP) for private use of ocean space unless it
finds the applicant is competent to perform the activity
or activities for which the CDUP is being sought.

See Commercial Development, Security of Tenure, 111(B);
Appendix A, Table 1, n.b. Florida provisions.

(B) Guidelines for License Approval; Prerequisites

1. The Board shall consider in its evaluation of each appli-
cation:

See Public Trust Doctrine, V(D)(l); Commercial Develop-
ment, Government Regulation, III(C); Chapter 343, H.R.S.,
Environmental Commission and Environmental Impact State-
ment.

(a) To what extent the proposed activity shall have a
significant adverse effect upon any existing private
industry or public activity, or shall interfere with
the use of state marine waters for the purposes of
navigation, fishing and public recreation.

VII-7

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

(b) Whether the proposed activity shall have an adverse
or permanent effect upon the wildlife or ecology of
the immediate and surrounding area.

2. The Board shall not approve an application if the proposed
activity is shown to be contrary to the public interest,
based upon consideration of the overall economic, social
and environmental impacts as required by Section 4(B) (1).

See Reg. 4, DLNR, Section 6, "Standards: Land Use Con-
ditions and Guidelines."

3. The Board shall specify in any license granted the extent
of the area in which the proposed activity may take place,
and such area shall be no more extensive than:

See Public Trust Doctrine, V(C)(2); Appendix A, Tables
1, 2, and 3, n.b., Florida provisions.

(a) Is required to properly conduct the approved activ-
ity; and

(b) Can be used competently by the applicant for his
approved purposes.

4. The Board shall specify in any permit granted the extent
of the exclusive use being reserved, and such reservation
shall be no more broad than is required to conduct the
activity without undue interference.

See Public Trust Doctrine, V(C)(2); Appendix A, Table 1,
n.b. Florida provisions.

5. For a proposed mariculture activity, the Board shall spe-
cify in any permit granted the species of marine plant(s)
and/or animal(s) approved for private culturing and har-
vesting.

See Commercial Development, Property Rights, 111(A).

6. In issuing a license for the construction and operation
of a mariculture or OTEC facility, the Board shall pre-
scribe conditions which it deems necessary to carry out
the provisions of this Act.

VII-8

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

SECTION 5. NOTICE; HEARINGS

(A) Notice and hearings shall be conducted pursuant to the Con-
servation District Use Application process.

See Reg. No. 4, DLNR, Section 5, "Notice; Hearings."

SECTION 6. OCEAN RESOURCES LIAISON OFFICER

(A) An ocean resources liaison officer shall be appointed within
the Department whose function shall be:

See Commercial Development, Government Regulation, 111(C).

1. To inform prospective applicants of the procedures they
will have to follow and of the requirements they will
have to meet in order to receive permission to conduct
a private ocean activity.

2. To coordinate state and federal permit applications and
approval procedures for the conduct of private ocean
activities.

SECTION 7. LEASING PROCEDURE

(A) The Board is hereby authorized to lease state marine waters
and the ocean bottom, the vertical water column and the ocean
surface for mariculture and OTEC operations pursuant to the
approval by the Board of a license to conduct private ocean
activities as permitted by Section 3(A).

See Rights Granted to the States by the SLA, V(A)(2).

(B) Leases may be negotiated between the CDUP holder and the De-
partment and brought to the Board for final approval or they
may be assigned by competitive bid, at the discretion of the
Board.

See The Current Regulatory Framework, DLNR Regulations and
Law, VI(B); See H.R.S. Chapter 171, Part II(B) "Leases or
Sales"; H.R.S. Chapter 171, Part III, "Special Dispositions:
Sale and Leases Permitted Without Public Auction." Commer-
cial Development, Security of Tenure, III(B).

VII-9

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

(C) Should a lease be assigned by competitive bid and the high
bidder not be the holder of the license authorizing the ac-
tivity or activities for which the lease is being awarded:

See Commercial Development, Government Regulation, 111(C).

1. The Board must determine that the high bidder is techni-
cally and financially competent to perform the activity
or activities for which the CDUP has been approved.

2. If the Board finds technical and financial competence,
it shall:

(a) Transfer the CDUP to the high bidder.

(b) Require as a condition for such transfer that the
new CDUP holder indemnify the initial permit holder
for all legitimate costs incurred by the initial
permit holder pursuant to his successful application
for a CDUP.

3. If the Board does not find technical and financial com-
petence, it shall:

(a) Reject the high bid and assign the lease to the
highest bidder remaining who can establish such
competency.

SECTION 8. LEASE PROVISIONS

(A) Leases approved by the Board under authority of Section 7 of
this Act shall be drawn up in accordance with the following
requirements, in addition to any others determined desirable
by the Board:

VII -10

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

1. Term

See Commercial Development, Security of Tenure, III(B);
Public Trust Doctrine, V(C)(1); OTEC Act of 1980, Sec-
tion l0l(g), identical terms for OTEC licenses and re-
newal; Appendix A, Table l, n.b. Florida provisions.

(a) The maximum initial term for experimental and admin-
istrative leases shall be five years. The maximum
initial term for a commercial lease shall be 20
years, with the exception of a lease for an OTEC
facility which shall be for a maximum of 25 years.

(b) Commercial and administrative leases shall be renew-
able for successive terms of up to ten years; expe-
rimental leases shall be renewable of up to one
term of up to five years. Before renewing any
lease, the Board shall give public notice that it
is considering such action, and invite objections
to the renewal.

(c) If significant objections to a lease renewal are
presented, the Board shall announce a public hearing
to consider the objections.

(d) If competitive bidding is required upon lease expi-
ration, the leaseholder shall have the right of first
refusal and may match the high bid. Should the
leaseholder choose not to do so, the Board may re-
assign the lease, subject to the conditions that the
new leaseholder purchase the initial leaseholder's
unamortized improvements and assets in the lease
area, if the initial leaseholder so demands.

2. Rents and Royalties

See Commercial Development, Financing and Insurance,
IV(D).

(a) Leases shall specify an annual rent of space set by
the Board per horizontal acre of leased ocean. The

VII-11

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

basic rental charge shall be supplemented, in the
case of a commercial activity, by royalty payments,
beginning at some set date following the inception
of the lease, and based upon either gross productiv-
ity or net operating profit.

(b) All leases shall stipulate payment of annual rental
in advance on or before July 1. Failure of the les-
see to pay such rent within 30 days of such date
shall constitute ground for cancellation of the lease
and forfeiture to the State of all works, improve-
ments, and animal and plant life in and upon the
leased ocean bottom, vertical water column or ocean
surface.

3. Maximum Size of Area to be Leased

See Public Trust Doctrine, V(D)(l); Appendix A, Tables
1J 2, and 3, n.b. Florida provisions.

(a) The Board shall not lease to any applicant an area
of state marine waters larger than the applicant
has demonstrated a capacity to efficiently use,
and the Board has determined to be consistent with
the public interest.

(b) The Board may reserve a reasonable area of adjacent
state marine waters for later lease by a lessee
conducting an experimental activity. Successful
conduct of experimental activities shall be accepted
as a demonstration of capacity to conduct commer-
cial activities within a larger area.

4. Performance Requirements; Bond

See Commercial Development, Security of Tenure, 111(B);
Appendix A, Table Z, n.b. Florida provisions.

(a) Failure of the lessee to perform substantially the
ocean use activities for which the lease was granted

VII -12

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

shall constitute ground for cancellation of the
lease and forfeiture to the state of all the works,
improvements, and animal and plant life in and upon
the leased ocean bottom and water column.

(b) The Board shall require execution of a bond condi-
tioned upon the active pursuit of the ocean use
activities specified in the lease. The amount of
the bond so executed shall be appropriate to the
size and scale of the activity for which the lease
is being granted, and shall be sufficient to pro-
tect the public interest in the removal of all struc-
tures and plants or animals cultivated within a
leased area should the lease be forfeited for non-
performance.

5. Assignability

Leases granted by the Board may be assignable in whole
or in part if the Board determines that such assignment
is in the public interest and that the assignee meets
the provisions of this Act and the prerequisites to
issuance under Section 4(B).

See Public Trust Doctrine, V(D)(1); H.R.S. 171-36,
Lease restrictions; generally"; OTEC Act of 1980, 101(e),
"License Transfer."

6. Amendments

A lease granted by the Board may be amended with the
approval of the Board if the Board determines that such
amendment is in the public interest and that the amend-
ment meets the provisions of this Act and the prerequi-
sites to issuance under Section 4(B).

See Public Trust Doctrine, V(D)(l).

7. Revocation of Lease

(a) A lease granted by the Board shall be revocable for
violation of any lease provision.

VII-13

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

(b) A lease granted by the Board shall be revoked upon
a determination by the Board that unacceptable ad-
verse environmental effects are being produced by
the private activity or activities being conducted
within the leased area.

See Commercial Development, Government Regulation,
III(C).

(c) A lease granted by the Board shall be revoked upon
a determination by the State that the public inter-
est requires that the area leased be used for other
purposes.

See Public Trust Doctrine, V(D)(l).

(d) A lessee shall have the right to a public hearing
prior to the revocation of his lease.

See Commercial Development, Security of Tenure,
111(B).

8. Abandonment of Lease

In the event of abandonment of a leased area by a lessee
the Board may order removal or sale at public auction
of all improvements, assets, plants, animals, parapher-
nalia, and equipment 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. Alterna-
tively, the Board may permit use of the improvements,
assets, plants, animals, paraphernalia, and equipment
for educational purposes or purposes consistent with a
benefit to the general public.

See Police Powers of the States, V(B)(l); c.f. OTEC Act
of 1980, lZl(d)(3), "Disposal or removal requirements."

9. General Rights of Lessee

Leases granted by the Board shall specify that the les-
see has the right of exclusive harvest within the leased

VII-14

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

area of the marine plant(s) or animal(s) identified in
the Conservation District Use Permit held by the lessee.

See Commercial Development, Property Rights, III(A).

10. Property Rights of Lessee

See Commercial Development, Property Rights, 111(A).

(a) Marine plants or animals approved for cultivation
by a Conservation District Use Permit held by the
lessee, and contained within the leased area, are
the private property of the lessee. Any marine
plant or animal which escapes from the leased area,
however, shall become common property and may be
taken or caught by any person without violating
the rights of the lessee.

(b) The lessee shall be responsible for removal of any
cultivated marine plants or animals found outside
the leased area, if such removal is demanded by the
Board. The lessee is solely responsible for all
costs of removal of such plants or animals. If
action must be taken by the Department to eradicate
escaped marine plants or animals, all costs of such
eradication shall be borne by the lessee.

(c) Actions for the recovery of compensation for damage
or injury to persons, property, or state waters
shall be instituted within two years after the cause
of action secured.

See H.R.S. Chapter 657, "Limitations of Actions."

11. Rights of the Public

Leases granted by the Board shall specify that the les-
see shall provide reasonable means of public ingress and
egress to and from the leased area. The lessee shall,
if necessary, construct and maintain gates, openings or
lanes at reasonable distance one from another throughout

VII -15

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

a leased area which includes surface waters and in which
any type of enclosure presents an obstacle to free navi-
gation, unless such public transit, in or through the
enclosed waters will cause undue interference with the
operation being conducted by the lessee within the leased
area.

See Public Trust Doctrine, V(D)(l).

12. Rights of the State of Hawaii

Leases granted by the Board shall specify that:

(a) The State may require the lessee to surrender the
demised state marine waters when such space is re-
quired by the State to be put to other public pur-
poses. In this event, the Board shall terminate
the lease.

See Public Trust Doctrine, V(D)l) Commercial De-
velopment3 Security of Tenure, 111(B); Constitu-
tional Powers of the Federal Government, V(C)(l).

(b) Notwithstanding the provisions of this act or any
other provisions of law, if the Chairman finds or
has reasonable cause to believe that an activity
conducted in or upon a leased ocean area is causing
an immediate danger to human or marine life or the
environment of the coastal waters of the state,
said Chairman shall notify the Board. The Board
shall immediately order lessee or lessees affected
by such notice to show cause why their activities
should not be terminated, and any cultured marine
plants or animals or paraphernalia removed from the
waters of the state. The Board shall proceed to
hold a public hearing and issue its order with re-
spect to such hearing within a reasonable period.
In its order following such hearing the Board may
direct a temporary or permanent suspension of com-
mercial or experimental activities in the affected

VII -16

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

area, removal of equipment or animals, or such
other measures as shall be deemed necessary for
protection of the marine life and environment of
the waters of the state, including forfeiture to
and destruction by the state of any plant or animal
species.

See Police Powers of the State, V(B)(l); OTEC Act
of 1980, Section 108, "Marine Environmental Pro tec-
tion and Safety of Life and Property at Sea."

13. Correction of Violations

The Board shall provide a lessee reasonable opportunity
to correct minor violations of the terms and provisions
of a Conservation District Use Permit or an ocean area
lease granted pursuant to such a permit. Continuing dis-
regard of formal notice of such violations shall be
grounds, however, for cancellation of the lessee's per-
mit and/or lease.

See OTEC Act of 1980, Section lii, "Suspension, Revoca-
tion, or Termination of License."

14. Public Compensation

The Board shall negotiate with each lessee to mitigate
or to offset any significant loss of public resources
resulting from the assignment of an ocean lease. A les-
see may be required by the Board to provide some positive,
direct benefit to the public as a compensation to the
public for its loss. Such compensatory conditions placed
in a lease shall be directed only toward balancing the
loss to the public and shall not be used to provide a
direct benefit to the public greater than the public's
direct loss.

See Public Trust Doctrine, V(D)(l); Appendix A, Table 1,
n.b. Florida provisions.

VII-17

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

15. Marking of Leased Areas; Restrictions on Public Use

See Appendix A, Table 1.

(a) Board may require, where necessary, all lessees to
mark off the areas under lease by appropriate ranges
monuments, stakes, buoys, or fences, so placed as
not to interfere unnecessarily with navigation and
other traditional uses of the water surface. All
lessees shall cause the area under lease and the
names of the lessees to be shown by signs appropri-
ately placed pursuant to regulations of the Board.
The Board shall establish rules and regulations
which are consistent with federal regulations con-
cerning such markings.

See Appendix A, Table Z.

(b) All lessees shall give notice to appropriate fed-
eral agencies of placement of such markings, and of
navigational restrictions resulting from commercial
or experimental operations within a leased ocean
area.

See The Constitutional Powers of the Federal Govern-
ment, V(C)(l); Federal Preemption, V(C)(2).

(c) All limitations upon the use by the public of an
ocean area under lease shall be clearly posted by
the lessee pursuant to regulations established by
the Board. Any person willfully violating posted
restrictions shall be guilty of a misdemeanor.

See Commercial Development, Property Rights, 111(A).

(B) The Chairman or his authorized agents shall have the authority
to enter and inspect any and all areas subject to a Conserva-
tion District Use Permit and leased by the Board for commer-
cial, administrative or experimental uses for the purpose of
determining compliance with the terms and provisions of any
such permit or lease.

VII -18

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

See The Current Regulatory Framework, DLNR Regulations and
Law, Vr(B); Police Powers of the States, V(B)(1).

SECTION 9. MARICULTURE PARKS

See H.R.S. Chapter 171, Part V, "Lands for Agricultural Pur-
poses; Commercial Development, Security of Tenure, III(B).

(A) The Board is empowered to develop, on behalf of the State or
county in partnership with others, state marine waters as
mariculture parks for commercial, administrative, experimen-
tal, scientific or educational purposes.

(B) Mariculture parks shall mean any mariculture operation com-
plex which combines and concentrates in a common location
mariculture activities for the purpose of production and dis-
tribution economies or experimental, scientific or educational
purposes.

SECTION 10. RULES AND REGULATIONS

The Board shall promulgate such rules and regulations as are
necessary and appropriate to carry out the purposes and pro-
visions of this Act, in accordance with the provisions of
Chapter 91, H.R.S.

SECTION 11. KONOHIKI FISHING RIGHTS

See Konohiki Fisheries/Native Hawaiian Rights, V(C)(2).

(A) The provisions of this Act do not abridge or alter in any way
konohiki fishing rights recognized in H.R.S. 188-4 and 188-5,
including the right to sub-lease private konohiki fishing
grounds for mariculture activities.

(B) Any traditional fishing or mariculture activity conducted
within konohiki fishing grounds is subject to all applicable
state laws and regulations enacted pursuant to the state's
police powers over fisheries and navigable waters.

SECTION 12. PENALTIES

See Appendix A, Table 1; Police Powers of the States, V(B)(l).

VII-19

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

(A) Any person who conducts any activities listed in Section 3(A)
of this Act in excess of those authorized by lease from the
Board, or who conducts such activities in or upon state marine
waters without having previously obtained a lease from the
Board, shall be guilty of a misdemeanor and subject to impris-
onment for not more than one year or a fine of not more than
$1,000, or both. In addition to such fine and imprisonment,
all works, improvements, and animal and plant life involved
in the activity may be forfeited to the state.

(B) Any person who continues to conduct any activities listed in
Section 3(A) of this Act despite a suspension or revocation
by the Board of the license and/or lease authorizing such
activities shall be guilty of a misdemeanor and subject to
imprisonment for not more than two years or a fine of not more
than $500 per day, or both. In addition to such fine and im-
prisonment, all works, improvements, and animal and plant life
involved in the activity may be forfeited to the state.

(C) Any person who willfully damages, disturbs or interferes with
any activity listed in Section 3(A) of this Act and which has
been licensed by the Board through this Act, or who damages,
disturbs, interferes, takes by any means whatsoever, or pos-
sesses any cultivated species in an area leased to a private
person or corporation, without the permission of that person
or corporation, shall be guilty of a misdemeanor and subject
to imprisonment for not more than one year or a fine of not
more than $1000, or both. In addition to such fine and im-
prisonment, all vessels, dredges, tongs, rakes or other im-
plements used to damage, disturb, interfere or take such spe-
cies in such leased areas may be forfeited to the state.

SECTION 13. ENFORCEMENT

Enforcement shall be in accordance with Chapter 199, H.R.S.

See The Current Regulatory Framework, VIT(B)(4); Commercial
Development, Property Rights, IV(B).

VII-20

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

SECTION 14. AQUACULTURE LOAN PROGRAM

Section 219-2(1) of the Hawaii Revised Statutes is hereby
amended to read: "'Aquaculture' means the production of aqua-
tic plant and animal life for food and fiber within the ponds
and other bodies of water that are within the real property
for which real property taxes are assessed and paid by the
owner or producer, or within state marine waters for which
rents and product royalties are to be paid by the lessee."

See Commercial Development, Financial and Insurance, 111(D).

SECTION 15. MARICULTURE INSURANCE PROGRAM

A Mariculture Insurance Program shall be established within
the Department of Agriculture and administered by the Board
of Agriculture.

1. The Department of Agriculture shall negotiate with appro-
priate private insurance companies to provide a compre-
hensive insurance plan for mariculturists, and shall
grant such subsidies to mariculturists as it deems appro-
priate to reduce the financial impact of premiums paid
by mariculturists for such insurance.

See Commercial Development, Financial and Insurance,
ITT[D).

2. The sum of $ is hereby appropriated to the Depart-
ment of Agriculture to implement this program.

SECTION 16. DESIGNATION OF ZONES SUITABLE FOR PRIVATE, TRADITIONAL,
RECREATIONAL, PRESERVATION, OR OTHER USES

(A) The Department of Land and Natural Resources shall prepare a
site assessment recommending areas within state marine waters
which may be designated as zones suitable for private, tradi-
tional, recreational, preservation, or other uses.

See Public Trust Doctrine, V(D)(1), Konohiki Fisheries/Native
Hawaiiaan Ri.hts, V(D)(2).

VII-21

PROPOSALS FOR LEGISLATION FOR OCEAN LEASING VII

(B) The sum of $____ is hereby appropriated for the Depart-
ment's use in implementing this site assessment.

(C) The Board in evaluating each application for private use of
state marine waters shall consider but shall not necessarily
be bound by the findings as contained in said site assessment.

c~f. Appendix A, Table 1, n.b. Florida provisions.

(D) Until said site assessment has been completed by the Depart-
ment, the Board shall evaluate applications for private ocean
uses on the basis of available data and informed testimony.

(E) The Department shall update said site assessment at least
every ten years.

See Public Trust Doctrine, V(D)(l).

SECTION 17. COMPATIBILITY WITH OTHER STATE LAWS

See The Current Regulatory Framework, VI.

(A) All commercial, administrative and experimental ocean leases
approved by the Board pursuant to this act shall be conducted
in a manner compatible with other existing state laws.

(B) All cultivation of marine plants and animals approved by the
Board pursuant to this act shall be subject to existing state
sanitation laws and state laws applying to infected or
diseased animals and plants.

SECTION 18. SEVERABILITY

If any provision of this act or any rule, regulation or deter-
mination made thereunder, or the application thereof to any
person, agency, or circumstances, is held invalid by a court
of competent jurisdiction, the remainder of this act, rule,
regulation, or determination and the application of such pro-
visions to other persons, agencies, or circumstances shall
not be affected thereby. The invalidity of any section or
sections or parts of any section or sections of this act shall
not affect the validity of the remainder of this act.

SECTION 19. This act shall take effect upon passage.

VII -22

APPENDDI
A

APPENDIX A

INTRODUCTION TO TABLES 1, 2, AND 3

Table 1 outlines, examines, and compares the various provi-
sions of the mariculture laws of California, Maine, Florida, and
Rhode Island. The laws of these particular states are noted for
comparison purposes. Tables 2 and 3 list the leasing, licensing,
and permit requirements which regulate shellfish, fisheries, and
aquaculture activities in the other coastal states. These provi-
sions are outlined here so that a nationwide view and comparison
can be made of them.

The tables may also help to point out the interplay between
the leasing provisions and the licensing and permit requirements
of the states. Mariculture projects may necessitate the exclusive
possession and use of submerged lands, the water column, and water
surface. As such, leasing of the needed area may be required for
the project. Uses of the leased land, however, will still be sub-
ject to governmental regulation. In these States as noted herein,
several permits or licenses may be required in order to obtain per-
mission to carry out various facets of a mariculture operation.

TABLE 1. THE MARICULTURE LAWS OF CALIFORNIA, MAINE, FLORIDA, AND RHODE ISLAND

California Maine Florida Rhode Island

Eligibility Leases restricted to None None None
Requirements citizens of the
state and to corpo-
rations organized
under California
laws. Cal. Fish and
Game Code �6488.

Type of Area Exclusive privilege Area in, on and under Leases of submerged Land submerged under
that may be of cultivating marine the coastal waters lands include exclusive the coastal waters of
Leased life on state marine including the public use of the water column the state including
waters or water bot- lands beneath those above the leased area any coastal ponds or
toms may be granted. waters and portions to the extent required estuaries to coastal
�6488. of the intertidal by the aquaculture rivers, and the water
zone. Marine Rev. activity. Flor. Rev. column above such
Statutes �6072(1). Statutes �253.68. submerged lands. Gen.
Laws of Rhode Island,
20-10-6.

Restrictions Prohibitions on The Commissioner of Dept. of Natural Re- No specific restric-
on Leasing Leasing: Maine Resources sources designates tions. Coastal Re-
Certain Areas (1) Clam digging grants leases with areas for which it sources Management
areas �6496. the advice and con- recommends reserva- Council (CRMC) along
(2) Native oyster sent of an advisory tion for nonaquacul- with Marine Fisher-
beds �6512 council. The commis- tural uses. ies Council and the
(3) Certain state- sioner must be sure �253.75(2)(c). Director of the Dept.
owned lands in that the lease will of Environmental Man-
Humboldt Bay not unreasonably agement reviews all
�6503 interfere with the lease applications
(4) Areas that have ingress and egress of and decides on its
been set aside riparian owners, navi- approval. 20-10-5.
as reserves for gation, fishing or
state cultivation other uses of the
of marine life. area and is not in
�6483. conflict with the
Maine Coastal Plan
or other applicable
coastal zoning ordi-
nance. �6072(7)

California Maine Florida Rhode Island

Rents By competitive bid- The commissioner Rent left up the dis- To be determined by
ding system, but not after consulting with cretion of the admin- CRMC. 00-10-7
to be less than ten the Director of the istering agency.
dollars ($10) per Bureau of Public S253.71(2)
acre for each fiscal Lands shall determine
year. 56492 the rent which shall
be paid under each
lease. The estab-
lished rent should
represent a fair
value based upon the
leased areas use.
�6072 (9)

Lease Must designate the All applications Written applications Application must
Applications the particular area shall: must include: include:
desired. The appli- (1) Describe the lo- (1) Concise description (1) Description of the
cation should be cation of the of the location and location and
accompanied by a map proposed lease amount of submerged amount of submerged
of the area desired, tract. land desired and land and water
showing sufficient (2) Identify the spe- either; column to be sub-
adjacent geography cies to be culti- a. Map or plot of a ject to permit.
ready for placement, vated. survey of such (2) Description of
and the acreage of (3) Describe the impact b. Payment to defray aquaculture activ-
the area. A fee of of the project on the cost of such ities.
$50.00 is assessed. existing or poten- a survey. (3) Assessment of the
56488 tial uses of the (2) Description of the current capability
area. activities to be of the applicant
(4) Describe the de- conducted, includ- to carry out such
gree of exclusive ing a specification activities.
use required by whether such activ- (4) Offer information
the project. ities are to be ex- as the CRMC may
(5) Include written perimental or com- by regulation re-
permission of mercial and an as- quire.
every riparian sessment of the cur-
owner whose land rent capability of
to the low water the applicant to

California Maine Florida Rhode Island

Size of Area No size restriction. Size of tract is lim- Lease of areas only No size restrictions.
to be Leased Administering agency ited to a maximum of large enough to be ef-
has discretion in of 5 acres, but any ficiently used by les-
determining the size person may accumulate see. �253.71(3)
of the lease so long tracts of up to 200
as lease is in the acres. �6072(2)
public interest.
�6487

Duration of Leases may be granted Leases may be granted Maximum initial term Not to initially ex-
Lease/Renewal for up to 25 years. for up to 10 years. shall be 10 years. ceed 10 years. Leases
Leases may be renewed �6072(2) Leases shall be renew- shall be renewable
after 20 years with Renewals may be able for successive upon application by
the lessee having a granted unless the terms up to the same the permittee for suc-
prior right to meet the prior lessee has maximum upon agreement cessive periods up to
the best bid and ob- not complied with of the parties. 5 years for each re-
tain a renewal of his the lease agreement, �258.71(1) newable period.
lease. �6490 substantially no re- 20-10-3
search or aquaculture
has been conducted or
the commissioner
finds that it is not
in the best interest
of the state to renew
the lease. �6072(12)

Preference Lease award goes to Preference goes to An important factor Current capability of
in Granting to the highest bid- those with preexist- would be the current of applicant to carry
Leases der, as long as bid ing interests in the capability of the ap- on aquaculture activ-
is above the minimum area to be leased. plicant to carry on ity is important.
established by the �6072(8) the proposed aquacul- 20-10-4(3) (d)
administering agency. ture activity.
�6492 �253.69(3)

California Maine Florida Rhode Island

mark will actually carry on such activ-
be used. ities.

(6) Include a map of (3) Other information as
the lease area and the board or trustees
its adjoining may by regulation
waters and shore- require.
lands, with the �253.69
names and ad-
dresses of the
known riparian
owners. �6072(4)

Revocation Inactivity, failure No research or aqua- Failure to perform sub- Failure to comply
of Lease to pay fees or taxes, culture has been stantially the aquacul- with the terms and
or failure to pro- conducted within the tural activities for conditions of the
perly utilize the preceding year, or which the lease was aquaculture permit
the leashold. if it has been con- granted. �253.71(A) or renewal, the pro-
�6493 ducted so as to be visions, rules, re-
substantially injur- gulations of Chapt.
ious to marine or- 20 shall be grounds
ganisms, or if any for termination of
other lease condi- the lease at the
tion has been vio- discretion of the
lated. �6072(11) CRMC. 20-10-6(c)

Hearings None provided for. The commissioner, If written objections Approval by CRMC
after reviewing the are filed then a public shall be subject to
lease application hearing shall be held public hearings con-
shall hold a hearing in the county from sistent with Rhode
if he is satisfied which the application Island Gen. Laws
that the application was received. Chapt. 42-35.
is complete and that �253.70(3) 20-10-5(e)
there is the possi-
bility that the
lease could be
granted. �6072(5&6)

California Maine Florida Rhode Island

Enfocement Anyone who take ma- Anyone interfering Any person willfully Any person who shall
of Lease- rine life from a with a lessee's in- violating posted re- disturb an area sub-
holder's leased area or will- terest may be fined strictions shall be ject to an aquacul-
Rights fully destroys the $100 to $500 or im- guilty of trespass and ture permit, or take
marine life or mark- prisoned for 90 days. shall be punished by or possess the spe-
ers on the leased 12 Maine Per. Stat. imprisonment for not cies of marine or-
property can be im- �3731 more than 60 days or ganism being culti-
prisoned up to 6 or by fine not exceed- vated in an area sub-
months, fined up to ing $500, or both. ject to an aquacul-
$500, or both. �253.72(2) ture permit, without
�6500 the permission of the
permittee, shall be
guilty of a misdeame-
nor and subject to
imprisonment for not
more than one year
or a fine not more
than $500 or both.

Application Mariculturists need Existing fishery laws Determination of the The CRMC may adopt,
of Existing not obtain packing will apply to aqua- applicability of ex- repeal, and amend
Fishery Laws and processing li- culturists unless isting fishery laws such rules and re-
to Aquacul- censes. �6482 they request and ob- to the particular gulations as are
ture Activ- tain a variance from mariculture activity necessary and appro-
ity the commissioner. requires a review of priate to carry out
12 Maine Rev. Stat. the salt water fish- provisions of the
�6074 ing law regarding the Aquaculture Chapter
species involved. (2). 20-10-11

Degree of Lessee may only cul- Each lease shall be Except to the extent Same as Florida.
Exclusive tivate and harvest exclusive for the necessary to permit 20-10-9(b)
Use of the "non-native marine species and to the the effective develop-
Area Leased life" in the culture extent provided by ment of the species of
area. The lessee is commissioner in the animal or plant being

California Maine Florida Rhode Island

entitled to the ex- lease. �6073(1) cultivated, the public
clusive privilege of shall have means of rea-
cultivating, main- sonable ingress and
taining, and harvest- egress to and from the
ing non-native marine leased area for tradi-
life in the culture tional water activities
area. The commission such as boating, swim-
may allow, however, ming and fishing.
the cultivation and �253.72(2)
harvest of native
marine life in the
mariculture area if
it determines that
this would be in
the best public in-
terest. �6484

Interference Leased area must be Leased area must be All lessees are to mark Same as Florida.
with marked so as not to marked in a manner the area under lease so 20-10-9(a)
Navigation pose a navigational prescribed by the as not to interfere un-
hazard. 56499 commissioner. necessarily with navi-
�6072(10) gational uses of the
surface. �253.72(1)

Protection The administrative Lease may be revoked Aquaculture lease The director of en-
of Marine agency may prohibit if cultivation has guidelines require vironmental manage-
Species placing marine life been injurious to that the proposed use ment shall determine
it considers injur- marine species in the of the leased lands, whether the aquacul-
ious to the develop- area. �6072(11) have no permanent ef- ture activities pro-
ment of the maricul- fect on the wildlife posed in any appli-
ture industry in or ecology of the area cation are: (1) not
coastal waters. Aquaculture Lease likely to cause an
�6486 Guidelines �2. Pro- adverse effect on
tection is also af- the marine life ad-
forded by laws and re- jacent to the area

California Maine Florida Rhode Island

gulations administered subject to permit and
by the Div. of Marine the waters of the
Resources within the state, (2) not likely
Florida Dept. of Na- to have an adverse
tural Resources. effect on the con-
Fla. Rev. Stat. tinued vitality of
S370.01 et seq. indigenous fisheries
of the state.
20-10-5(c)

TABLE 2. COASTAL STATES PROVISIONS FOR THE LEASING OF TIDE AND SUBMERGED LANDS
(For Shellfish, Fisheries, Aquaculture)

State Purpose Restrictions-Qualifications Authority

Alaska Shore fisheries develop- All unappropriated state As 38.05.082 Regs under
ment mainly salmon set tide, submerged and shore 11 AAC 64.050 (Set Net
gill netting and anchor- lands wherein set net fish- Leasing Regulations)
ing of oyster culture ing is allowed by the Dept. Correspondence with
rafts. of Fish and Game shall be Richard A. Lefebrve,
available for leasing if Chief Land Management
classified as open to leas- Section.
ing by the Director, Div.
Lands, Dept. of Natural
Resources.

California Refer to table on "The Mariculture Laws of California, Maine, Florida, and Rhode
Island."

Delaware Protecting, planting, Dept. of Natural Resources 7 Del. C. �1905
harvesting shellfish. & Environmental Control is
Also special provisions authorized to lease, in the
for scientific leases. name of the state, tracts
or parcels of shellfish
grounds beneath the waters
of this state.

Florida To conduct commercial or Subject to board of trustees Ch. 253, Sections 253.67
experimental aquaculture approval of lease applica- and 253.77.
activities. tion.

Note: Florida grants exclusive use of the bottom and the water column to the
extent required by such aquaculture activities.

Georgia Oyster beds, clam beds, Dept. of Natural Resources Ga. Code �45-920.
or both. may lease any state-owned
oyster or clam beds.

Louisiana None specified. Director may lease any water Louisiana Revised
bottoms and natural reefs in Statutes 56:�424.
the waters of this state.

State Purpose Restrictions-Qualifications Authority

Maine Scientific research or for Subject to approval of Com- Chapt. 605, subchapt. II,
aquaculture of marine or- missioner. Commissioner �6072 (Research and Aqua-
ganisms. may lease areas in, on and culture Leases).
under the coastal waters
including the public lands
beneath those waters and
portions of the intertidal
zone.

Maryland Protection, sowing, bed- Dept. of Natural Resources �4-1108 Natural Resources
ding or cultivating oys- may lease tracts of land Article, Annotated Code
ters or other shellfish. beneath state waters to of Maryland. Correspon-
state residents. Corpora- dence with Charles M.
tions or joint stock com- Frisbie, Deputy Director
panies may not lease sub- of Tidal Fisheries
merged lands for oyster
cultivation.

Massachusetts Growing shellfish by Selectmen or Mayor may Chapt. 931, :9, S68A.
means of racks, rafts, or grant an aquaculture license Aquaculture Licenses.
floats in waters. for waters of the common-
wealth below the line of ex-
treme low water. Said li-
censee shall have the right
to the exclusive use of the
lands and waters for pur-
poses of growing shellfish
within 100 feet of said
racks, rafts, or floats.

Michigan No lease provisions.

Minnesota No lease provisions.

Mississippi Oysters Mississippi Marine Conser- Mississippi Code S49-15-27.
vation Commission has author-
ity to lease the bottoms
within its jurisdiction.

State Purpose Restrictionls-Qualificationls Authority

New Hampshire No lease provisions.

New Jersey Planting and cultivating Leases for the lands of the Ch. 199 Marine Fisheries
of shellfish. state under the tidal waters Management and Commercial
subject to approval by Coun- Fisheries Act. C.23:2B-1.
cil and Commissioner. No
lease shall be granted to
anyone who was not a citizen
and actual resident of the
state for the previous 12
months.

New York Shellfish cultivation. The Dept. of Environmental Environmental Conservation
Conservation may lease state Law (ECL) �13-0301.
owned lands underwater for
the cultivation of shellfish,
except such lands within 500
feet of high water mark.
Lands underwater shall not
be leased where there is an
indicated presence of shell-
fish in sufficient quantity
and quality and so located
as to support significant
hand raking and/or tonging
harvesting. Underwater
lands where bay scallops are
produced regularly on a com-
mercial basis shall not be
leased for shellfish culti-
vation.

Note: From personal correspondence with Stephen A. Hendrickson, NY State Dept.
of Environmental Conservation, Division of Marine Resources, Shellfish
Management - There is presently no legal mechanism for the assignment
of underwater lands or water column areas for mariculture activities
involving marine species other than shellfish. Because of conflicting
user interest and adverse public opinion, for all intents and purposes,
there have been no leases issued in New York State during the past 50
years. Refer also to ECL �13-0316.

State Purpose Restrictions-Qualifications Authority

New York Off-bottom culture of The dept., in its discre- ECL �13-0316
(Continued) shellfish. tion may issue permits for
off-bottom culture of shell-
fish. A permit entitles the
holder to purchase and pos-
sess, from within or without
the state, shellfish of less
than legal size for purposes
of off-bottom culture only.

North Carolina Commercial cultivation of Marine Fisheries Commission Title 15, Chapt. 3, sub-
oysters and clams. may lease to residents of chapter �.0301.
N.C. any of the public bot-
toms underlying coastal
fishing waters which do not
contain a natural oyster or
clam bed, in accordance
with the provision of G.S.
113-202.

Oregon Oyster plots. The commission may grant to ORS 509.431(3). Appli-
the applicant an area ap- cations for new oyster
plied for if the area is plots.
known to be available and
if the commission has clas-
sified the area as suitable
for oyster cultivation.

Puerto Rico Cultivation of fishes or The Corporation for the De- Act Number 82, Section
plants. velopment and Administra- 11, Aquaculture (e).
tion of Marine, Lacustrine,
and Fluvial Resources of
Puerto Rico may lease to
any citizen or domestic
corporation of Puerto Rico
areas of and in, any body of
water in which the exclusive
privilege of cultivating

State Purpose Restrictions-Qualifications Authority

Puerto Rico fishes or plants may be exe-
(Continued) cuted. Such areas shall be
used in accordance with the
use established by the corp-
oration. No lands or bodies
of water shall be leased,
unless the corporation de-
termines that said lease
would be in the public in-
terest.

Rhode Island Conducting aquaculture. Rhode Island Coastal Re- Correspondence with John
sources Management Council N. Cronan, Chief, Div.
may issue permits and Fish and Wildlife. Chapt.
leases for conducting aqua- 219, 20-10-6 Leases.
culture within -the territo-
rial waters of Rhode Island.

The CRMC is authorized and Chapt. 219, 20-10-6
empowered to lease the land Leases.
submerged under the coastal
waters of the state, includ-
ing any coastal ponds or
estuaries to coastal rivers,
and the water column above
such submerged lands.

South Carolina Shellfish culture for South Carolina Wildlife and Code of Laws of South
commercial purposes. Marine Resources Commission Carolina �50-17-530.
may lease to any state resi-
dent portions of the bottoms
owned or controlled by the
state.

Texas Note: By law (�48.001 and 51.001), mariculture or aqua- Correspondence with
culture activities must be carried out in private Robert J. Kemp, Director
ponds and reservoirs in the state - not in public of Fisheries.
waters.

State Purpose Restrictions-Qualifications Authority

Virgin Islands No lease provisions.

Virginia Shellfish propagation. All individuals desiring to �28.1-108 and �28.1-109.
acquire bottoms for propa- Correspondence with
gation of shellfish must Russel A. Short, Fish-
apply to the Virginia Ma- eries Management Plans
rine Resources Commission. Coordinator.

Washington Cultivation of food fish Cultivation may be permitted RCW 75.16.100.
and shellfish or other on privately owned uplands,
aquatic animals for com- tidelands, shorelands, or
mercial purposes (also beds of navigable waters in
known as fish farming or accordance with procedures
aquaculture). established for administra-
tion of such areas.

TABLE 3. COASTAL STATES LICENSES AND PERMITS FOR THE
REGULATION OF SHELLFISH, FISHERIES, AND AQUACULTURE

State Purpose Provisons-Restrictions Authority

Alaska Improvements (permit) When tidelands are not under AAC 62.730, AS 38.05.020,
the director of the Div. of AS 38.05.320, and AS
Lands, Dept. of Natural Re- 38.05.330.
sources may issue permits
for improvements to be
placed or constructed upon
State-owned tide or contigu-
ous submerged lands. (per-
mit for oyster raft anchor-
age)

California Cultivating Marine Life A mariculture license or an �6480
oyster cultivation license
is required by every person
cultivating marine life in
any waters and other areas
of the state, whether pub-
lic or private.

Delaware Fish-Cultural Operations The U.S. Commissioner of 75572
and investigations by Fisheries and his duly
U.S. Commissioner of Fish- authorized agents may con-
eries duct fish-cultural opera-
tions and investigations
connected there within the
waters of Delaware, in
such manner and at such
times as are considered
necessary and proper by
the Commissioner or his
agents.

Florida Refer to table on "The Mariculture Laws of California, Maine, Florida, and Rhode
island."

State Purpose Provisions-Restrictions Authority

Georgia Oyster collector's permit, Permit for collecting oys- Sa. Code �45-321.
taking oysters for per- ters. (Restricted from
sonal use. polluted areas, areas not
on master chart.)

Louisiana Raising domesticated fish Fin fish farmers are prohib- La. R.S. 56:412(1) and
for commercial markets. ited from using public bodies (2). La. R.S. 56:412(5)
of water to raise fish. Thus
ponds or reservoirs for fish
farming must be constructed
on private land.

Maine Refer to table on "The Mariculture Laws of California, Maine, Florida, and Rhode
Island."

Maryland Dredging license for oys- Any lessee desiring to catch �4-1116(b)
ters. oysters from any leased oys-
ter bottom, (except in Wor-
chester County) by dredge or
handscrape shall apply annual-
ly to the Dept. for a special
license.

Oyster taking by non- A lessee may authorize a non- �4-1116(d)
resident in Somerset resident to take oysters by
County. tong in Somerset County.

Massachusetts Plant, grow and take License good for planting, �57
shellfish. growing and taking shellfish
and to plant cultch for the
purpose of catching shell-
fish in, upon, or from a spe-
cific portion of flats or
land under coastal waters.

State Purpose Provisions-Restrictions Authority

Massachusetts Aquaculture license to Aquaculture license to grow 568A
(Continued) grow shellfish. shellfish by means of racks,
rafts or flats in waters of
the Commonwealth below the
line of extreme low water.

Mississippi Vessels used to catch, Each vessel used to catch, �49-15-29 (a)
carry, take or transport carry, take or transport
oysters. oysters in any of the waters
within the territorial jur-
isdiction of the State Of
Mississippi must be licensed.

Carrying oysters. it shall be unlawful for any �49-15-29(c)
person to carry or ship raw
oysters without paying an
annual privilege tax and re-
ceiving a license.

New Jersey Oyster culture. The Commissioner may issue 25.Rs. 50:1-35
such permission after due
inspection and examination
of the nature, species,
quantity, source, location
of proposed planting or lodg-
ing and the condition of the
oysters and after his deter-
mination that the same will
not be detrimental to the
native oysters or to the oys-
ter industry of this state.

New York Shipping and processing Prior to the processing, �13-0315
of shellfish. transportation or shipment
of shellfish either in intra-
state or inter-state commerce
an appropriate permit so to
do shall be obtained from the
department.

State Purpose Provisions-Restrictions Authority

New York off-bottom culture of The dept., in its discretion �13-0316
(Continued) shellfish -marine may issue permits for oper-
hatcheries ation of marine hatcheries.
A marine hatchery permit en-
titles the holder to possess,
raise and breed shellfish,
lobster, crab, shrimp and
food fish and the young there
of. An off-bottom culture of
shellfish permit entitles the
holder to purchase and pos-
sess from within or without
the state, shellfish of less
than legal size for the pur-
pose of off-bottom culture
only.

North Carolina Taking oyster for plant- No person shall take oysters 3c.0206
ing from the public grounds of
the state for the purpose of
planting the same on private
beds except as authorized by
6.S. 113-158 and 113-203 and
Reg. 15 NCAC 3B.1107.

Taking oysters for pri- No person shall take oysters 3C.0207
vate gardens. from private beds during the
closed season unless such
person shall have first se-
cured from the secretary a
permit to take oysters from
private gardens during
closed season as provided
in 15 NCAC 3B.1106.

State Purpose Provisions-Restrictions Authority

Oregon Cultivation fees and use Persons using state lands �509.441
taxes. for cultivating oysters shall
pay annual cultivation fees
and use taxes. Use taxes
shall be in the amount of
$0.05 per gallon of oysters
or $0.05 per bushel.

Oyster import permit Any person before importing 635-05-140
into this state any oysters
for the purpose of planting
shall first apply in writ-
ing to the State Fisheries
Director for a permit to
import oysters.

Salmon hatchery Permit allows the release ORS 508.700-508.745 and
and recapture of Chum, coho OAR 625-30-100-625-30-130.
and chinook salmon.

Puerto Rico Cultivating fishes or Any person engaged in the Act No. 82 �Na
plants business of cultivating
fishes or plants, whether
they be planted, their
growth stimulated, or har-
vested; in, over or from
waters and public or pri-
vate areas in Puerto Rico,
shall have a license to
such effects.

Rhode Island Refer to table on "The Mariculture Laws of California, Maine, Florida, and Rhode
Island."

South Carolina Floating equipment for Div. of Commercial Fisheries �50-17-350
taking shellfish. shall license floating equip-
ment used to take shellfish.

State Purpose Provisions-Restrictions Authority

Texas Fish farming. No person may be a fish �48.002
farmer without first having
acquired from the Dept. a
fish farmer's license.

Fish farm vehicles. A vehicle used to transport �48.003
fish from a fish farm for
sale from the vehicle that
is not owned and operated
by the fish farm license
holder is required to have
a fish farm vehicle license.

Virgin Islands General Business Every person or association Chapt. 9�301.
wishing to engage in any
business, occupation, pro-
fession or trade shall apply
and obtain a license from
the Director of Consumer
Affairs.

Virginia Carrying oysters out of A permit is required before Code of Virginia
state. any oysters from the natural �28.1-96.
rocks, beds or shoals in the
waters of this commonwealth
may be carried out of state.

Buying or carrying seed It shall be unlawful for any �28.1-97
oysters from certain person to buy or carry oys-
grounds. ters to be placed in this
State; whose shells measure
less than 3 inches without
first having obtained a per-
mit.

State Purpose Provisions-Restrictions Authority

Salmon hatchery Permit allows the release ORS 508.700-508.745 and
and recapture of Chumn, coho OAR 625-30-100-625-30-130.
and chinook salmon.

Puerto Rica Cultivating fishes or Any person engaged in the Act No. 82 �Na
plants business of cultivating
fishes or plants, whether
they be planted, their
growth stimulated, or har-
vested; in, over or from
waters and public or pri-
vate areas in Puerto Rico,
shall have a license to
such effects.

Rhode Island Refer to table on "The Mariculture Laws of California, Maine, Florida, and Rhode
Island."

South Carolina Floating equipment for Div. of Commercial Fisheries �50-17-350
taking shellfish. shall license floating equip-
ment used to take shellfish.

State Purpose Provisions-Restrictions Authority

Texas Fish farming. No person may be a fish �48.002
farmer without first having
acquired from the Dept. a
fish farmer's license.

Virgin islands General Business Every person or association Chapt. 9�301.
wishing to engage in any
business, occupation, pro-
fession or trade shall apply
and obtain a license from
the Director of Consumer
Affairs.

State Purpose Provisions-Restrictions Authority

Washington Aquaculture A permit is required from Chapt. 35
the Director of Fisheries WAC 220.76.010
for the culture of food
fish, shellfish, or other
aquatic animals by private
interest for commercial pur-
poses. (A separate permit
is required for each fish
farm site.)

Salmon Aquaculture Any salmon aquaculture oper- RCW 65.16.100
ation requires possession
of a permit and valid an-
nual license as provided in
the Dept. of Fisheries code.

A~PPEN~DIX)
B

APPENDIX B

The following section contains the views and comments of cer-
tain members of the Advisory Committee concerning this report.

The following committee members submitting letters are:

Dr. John P. Craven
Dean, University of Hawaii Marine Programs
State Marine Affairs Coordinator

Kenji Ego
Director, Fish and Game Division
Department of Land and Natural Resources

Roger Evans
Conservation District Planner
Department of Land and Natural Resources

Kent Keith
Coordinator, Office of the Director
Department of Planning and Economic Development

Kenneth R. Kupchak
Attorney at Law

George Lindsey
Attorney at Law

Dr. James E. Maragos
Chief, Environmental Resources Section
U.S. Army Corps of Engineers

James McCormick
Deputy Director, Department of Transportation

Frank McHale
Project Manager-OTEC
Hawaiian Dredging and Construction Company

Richard G. Poirier
Chief, Long Range Plans Branch
Planning Division
Department of Planning and Economic Development

Taylor Pryor
President, Systemculture, Inc.

Guy Rothwell
Senior Engineer, Oceanic Institute

Justin Rutka
Fisheries Advisor

GEORGE R. ARTYOSHI JOHN P. CRAVEN, PH. D.. J.D.
GOVERNOR MARINE AFFAIRS COORDINATOR

STATE OF HAWAII
MARINE AFFAIRS COORDINATOR
OFFICE OF THE GOVERNOR
P. 0. BOX 2840
HONOLULU. HAWAII 96803

November 17, 1980

MEMORANDUM

TO: STANTON AND CLAY
Attorneys at Law

JOHN P. CRAVEN~
Marine Affairs Coordinator

SUBJECT: OCEAN MARICULTURE STUDY

This Etudy is an important and timely threshold in Hawaii's evolution
towards a fuller utilization of the ocean's resources. It will be read and
digested again and again as leaders, decision makers, entrepreneurs, and the
general public chart Hawaii's tenuous transition from a land based to an ocean
oriented society.

Because of its seminal role in our attitudes and policies towards
ocean development, such a study must be scrutinized with great care. Its
wisdom and accuracy will lead us to success, but similarly its ormmissions and
errors will frustrate our best efforts.

It is basically a useful study, but there are several areas that
demand attention. They include an excessively narrow definition of mariculture;
an overemphasis on ocean leasing as opposed to ocean use;an underemphasis on
the unique legal and cultural traditions that have governed Hawaii's relation-
ship with the sea; an unresolved tension between small-scale operations in near
shore waters and large-scale open ocean enterprises; an underemphasis on the
problems of enforcement; and a slight timidity in offering legislative alter-
natives.

The first and foremost concern is highly significant. For some
incomprehensible reason, "mariculture" is defined so narrowly as to exclude
the most dramatic, imrediate and practical boost to Hawaii's economy: the fish
aggregation buoys. Any efforts that improve the cultivation or nutrition of
marine organisms should be considered mariculture. Those fish which are at-
tracted to an aggregation device, and which would not normally be found near
such a habitat, should be considered "under cultivation." Today fishermen
are catching upwards of 1000 lbs of fish per day near these tremendously

Stanton and Clay Page 2
November 17, 1980

successful devices. They have indicated individual and collective interest
in providing some of the investment costs. Our study must explore ways to
encourage their investients. The strained arguments that our Constitutional
reference to "fisheries" does not involve mariculture, or that mariculture
does not include the artificial attraction of fish to a new habitat or area,
are without basis. Fish aggregation devices, far from being excluded frcm
this study, should have been prominently featured. They are here-and-now
practical use of the ocean and should be one of our first concerns.

A second constraint artificially established by the study is its
total reliance upon ocean leasing as the context for ocean mariculture and
development. While sane forms of ocean activity appear to fit neatly into
the ocean leasing scheme, a broader examination of the technology will reveal
that the key factor is not exclusive rights to the ocean floor, but rather
exclusive use of the ocean resources. The report apparently failed to con-
sider the possiblity of mobile ocean mariculture technologies, such as move-
able or "grazing" fish aggregation devices, moving cage culture arrangements,
and even grazing OTEC plants. In fact, one of the most important features
of ocean energy and food producing technology is the ability to transport
it easily from site to site. It may be that due to environmental or biological
factors the relocation of such devices during stages of life cycles, or during
different times of the year would be desirable. This could be an important
factor in the non-interference or enhancement of certain marine life during
critical phases of their development. In the early years of technological
experimentation, it would be wise to permit the experimentation of technology
at various sites in order to gather relevant data for proper management. To
constrain the entire develorment of ocean food and energy production by demand-
ing a fixed location via a lease could reduce the economic, social, environ-
mental and regulatory advantages we all seek. I would strongly recommend that
ocean leasing be viewed as only one approach, and that further exploration of
alternatives be seriously considered.

A third area of concern is the general tone and scope of the study.
While a thorough review of ocean leasing and other aspects of mariculture in
the context of U.S. caselaw and mainland experience is helpful, it should not
be the primary enphasis. The very impetus of this study was the understanding
that Hawaii's cultural and legal (i.e. Constitutional) traditions are unique
and perhaps more restrictive than that of other states. Exclusive use of the
ocean for mariculture was specifically added to the State Constitution because
of the recognition of our publically oriented traditions. Similarly, the
extension of mariculture privileges beyond to OTEC and other non-mariculture
development must be viewed carefully within this context. If we are to develop
a public understanding and support for a fuller utilization of our ocean
resources, it is incumbant upon such a study to meet those concerns head-on.
Throughout our review of the earlier drafts it has been apparent that the
Hawaii Constitutional restrictions were seen as insignificant, if not irrel-
evant. Whether or not this judgement is accurate, it is unacceptable to
dismiss legitimate concerns over public rights of access. The public use of

Stanton and Clay Page 3
November 17, 1980

the "fisheries" versus the development of exclusive uses must be addressed
directly, not sidestepped. I personally believe that these opposing public
benefits can be satisfactorily reconciled. But in order to accomplish this,
the study must fully indicate an appreciation of the dilemma.

Fourth, and perhaps related to the ultimate acceptance or rejection
of ocean exclusive use, is the unresolved tension between a legal regime
for large scale operations and small scale operators. We need to accommodate
both, as well as address the particular challenges that both present to the
community. Of particular concern are the legal strategies for near shore
waters, where conflicts over recreational and other uses will be intense, and
off-shore developments, where conflicts would be less important. The State's
attitude in prconting and assisting mariculture cooperatives, primarily for
the small entrepreneurs, could play a key role in the irmediate future of
mariculture in Hawaii. The proposed legislation in later drafts of the study
does make provisions for small operations and research and develognment, and
this is welcome. But it appears that the main thrust of the study is con-
cerned with the large scale developers. Near shore coastal conflicts and
strategies for encouraging cooperatives remain essentially unexplored features
of the reports recxm,,ndations.

A fifth item is the underemphasis on the practical problems of
enforcement. No legal regime will be worth considering if the enforcement is
impractical or beyond the State's resources. This dilemma is tied intimately
to the technologies under consideration. I would have hoped that the sections
on technology would have included discussion of alternative methods of enforce-
ment appropriate for each.

Related to enforcement is the limited scope of the legislative
reccnendations. Rather than a singular approach, a greater variety of "guide-
lines," from the most innocuous tinkering with existing rules and regulations
to the most comprehensive approach should be developed. In part, the study
suffers from an a priori decision that ocean leasing is the way to go. As
noted above, that assumption creates unnecessary and undesirable restraints.

Finally, one item apparently left out in regard to mariculture
is the nature of the product being cultivated. As we attempt to set priorities
for exclusive use of the ocean and its resources, we ought to have a set of
criteria of which efforts are more in keeping with our State's goals. If self
sufficiency is important, we ought to consider preference for operations that
indeed prcrrote it. The interplay between the production of luxuries for export
and the production of food for local consumption might be relevant starting
points in the development of these criteria.

In conclusion, the Marine Affairs Coordinator finds the study helpful,
but slightly incomplete. It certainly serves a valuable purpose in focusing
attention on a number of legal problems and constraints under which any State
must operate. Its assumptions are somewhat subject to question, but if read
as an important contribution, rather than as the definitive and last word on
mariculture, it will have served its purpose. Much still remains to be done.

GEORGE R. ARIYOSHI DIVISIONS
GOVERNOR OF HAWAII CONVEYANCES
FISH AND GAME
FORESTRY
LAND MANAGEMENT
STATE PARKS
STATE OF HAWAIISTEPAK
WATER AND LAND DEVELOPMENT
DEPARTMENT OF LAND AND NATURAL RESOURCES
DIVISION OF FISH AND GAME
1151 PUNCHBOWL STREET
HONOLULU, HAWAII 96813

November 12, 1980

Gerald S. Clay, Esq.
Stanton and Clay
Suite 1655, Pioneer Plaza
900 Fort Street
Honolulu, Hawaii 96813

Dear Mr. Clay:

RE: Ocean Leasing Study

The Ocean Leasing draft report represents a major undertaking which will act
as a source document for many years to come. It reflects great efforts toward pre-
senting the history of and rationale for instituting an ocean leasing system in
Hawaii. We concur that this emphasis is necessary to identify and, therefore, avoid
the many pitfalls associated with the establishment of such unique legislation in
Hawaii. The authors are to be comTended for their work. The following comments re-
flect a general response to the concept of ocean leasing in Hawaii as well as sane
suggestions for viewing this subject.

The emphasis of the report is on streamlining the process for obtaining per-
mission to develop mariculture activities by creating a procedure for ocean leasing.
Despite the need to streamline a permitting procedure for mariculture operations,
there is value in requiring various agencies and organizations to review proposed
mariculture operations prior to approval. Mariculture interfaces with many and
diverse disciplines, such that no single agency review would be adequate to encompass
total concerns. For example, the use of disease-controlling chemicals, introduction
of exotic species, nutrient and thermal enrichment, point and non-point discharges,
dredging and filling, shoreline access, beach erosion, wetland protection, and navi-
gation are but a few of the issues which are likely to arise in any mariculture leas-
ing proposal. Therefore, it would appear to be in the best interests of the State
and the public to require as exhaustive an effort as possible to ensure that no ir-
reparable damage or unnecessary infringements are encountered. In this regard, the
report fails to explain how existing legislation, including the CZM Act, BLNR lease
authority, State Land Use Law, DOT, DOH, Army Corps, DOA, and County permitting pro-
cedures and laws and their multitude of legal and administrative processes already
in effect can be effectively utilized or consolidated for ocean leasing activities.
Does the proposed legislation avoid conflict with existing laws and regulations?

The major obstacle to a successful ocean leasing program at this time is not
the varied jurisdictions and governmental red tape but the experimental nature of
current technology. The technology has not been tested sufficiently for ocean-based
mariculture projects to ensure a safe and productive commercial venture. Mariculture
e

-2-

is in its infancy and the vast majority of mariculture operations are shore-based.
Hawaii is lacking the protected nutrient-rich waters essential to most mariculture
operations. Our clean oceanic waters are presently being utilized for intensive
raceway mariculture on land. The degree of attention applied to 0IPC and its poten-
tial application to mariculture may be over-emphasized, inasmuch as OTEC itself is
still viewed as experimental at this point in time, and the success of mariculture
operations tied to OTEC operations is even more tentative. In evaluating OTEC-mari-
culture operations, one must remember that the production of inexpensive power is
the primary objective of an electric generating operation, and mariculture may co-
exist only to the degree it does not interfere with this goal.

The experimental nature of the current technology also mandates a periodic re-
view of the effects of the technology on the environment. This must be a covenant
of the leases until such time as our experience is at least equivalent to our expec-
tations. While the report reconmends that the term of lease be a "maximum of twenty
years," we contend that inasmuch as mariculture is new and as yet unproven in Hawaii,
duration terms should be kept to a minimum with options for renewal so as to leave
the State flexible in managing its ocean areas. A major drawback to long term leases
lies in the lack of any equivalent commitment on the part of the lessee to provide
the State with either minimum power supplies or mariculture products. This would be
extremely difficult to require due to the experimental nature of both OTEC and mari-
culture operations. Therefore, the State need not feel committed to lengthy leases
if the performance standards of the lessee are unsatisfactory or if the land is re-
quired for the greater public use.

One final aspect worthy of greater scrutiny concerns the competitive bidding of
lease assignments. A small farmer must be protected from the large corporation in
this bidding process to prevent big business aspects from dominating the shoreline
mariculture areas. Despite the financial resources available to the larger corpora-
tions, all too frequently it takes a small farmer and his individual efforts to success-
fully operate an aquaculture venture.

We well realize that the enactment of ocean leasing legislation in Hawaii will
be fraught with a multitude of difficulties associated with traditional coastal zone
issues. Nevertheless, we feel that immediate attention should be directed to evolving
an ocean leasing program so that appropriate and orderly implementation of leasing
activities can be undertaken to ensure protection of Hawaii's valuable ocean environ-
ment while stimulating the fledgling mariculture industry. This report has accomplished
the essential tasks of focusing on the long range benefits of ocean leasing guidelines
at the earliest possible stage; that of organizing and proposing unique legislation,
and identifying the associated dangers worthy of further attention. Many more related
issues will arise as technology evolves in this area. The State leasing plans should
be flexible enough to adapt to any important developing industry. In fact, thought
could be given to broadening the concept of ocean leasing to encompass many more uses,
both commercial and recreational, extractive (e.g. mining) and non-extractive (e.g.
boating). With this in mind, ocean leasing legislation may be premature at this time.

Sincerely,

KENJI EGO, Director
Division of Fish and GCame

KE:MS:kp

GEORGE R. ARIYOSHI DtRECTOR'S OFRFCE SUSUMU ONO. CHAIRMAN
GOVERNOR OF HAWAII ( Be RO OF LAND & NATURAL RESOURCES

-g DE C 8.190 1 EDGAR A. HAMASL
DOEPUTY TO THE CHAIRMAN
se~~~~~~~z,;, ~ ~ ~ ~ ~ 0 ' ItSIONS:
__ 'PED CONSERVATION AND
_____D ~ RESOURCES ENFORCEMENT
.... - I ~~~~CONVEYANCES
STATE OF HAWAII FISH AND GAME
FORESTRY
DEPARTMENT OF LAND AND NATURAL RESOURCES LAND MANAGEMENT
STATE PARKS
P. 0. BOX 621 WATER AND LAND DEVELOPMENT
HONOLULU, HAWAII 96809
REF. NO.: CPO-2380
December 2, 1980

MEMORANDUM

TO: Honorable Hideto Kono, Director
Department of Planning and Economic Development

FROM: Susumu Ono, Chairman
Board of Land and Natural Resources

SUBJEC: Final Project Draft; Ocean Leasing Study

Wlie have had the opportunity to review the Final Draft of the Ocean
Leasing Study, less the section on State of the Art; Technology Assessments
and have the follcving conments to offer:

A. General Comments

1. The final draft is well written, easy to understand, and
appears to focus clearly on the issues of importance, the
concept, the need, an evaluation or alternatives as they
relate to public policy and legal constraints.

2. Throughout the process leading to this draft, you have been
in conmunication with our Department, and the draft appears
to reflect many of the concerns that we articulated through
the process.

3. On a general basis, we support the endeavors of the DPED
and their consultant in this matter. The study provides,
what we feel is a solid foundation from which a framework
was molded for possible implementation.

B. Specific Comments

1. Consistency

We would view any program as it relates to ocean leasing in
a perspective requiring consistency with existing land leases.
tort ' ,mThe concept of viewing this program in consonance with exist-
_' , %~ ating State agricultural parks, agricultural financing and
agricultural awards of State lands would, of course, be
uppermDst in our minds as the program progresses.

SI?,;~'- !

Honorable Hideto Kono
Page 2

We would view any maward of ocean lands (suhmerged, water,
column, surface) in the sara perspective as presently
expressed and provided for in Chapter 171, MRS, as arended.

We would vie� the police poxer (zoning) given the State in
the same aspect as is presently exercised under Chanter 183-41,
HRS, as amended.

2. Proposed Legislation

The final draft provides for several proposals for legislation
for ocean leasing. Our understaning is that these proposals
will now be analyzed by the DPED such thrat a proposal evolves
which will eventually be presented to the legislators for
consideration. Wre wonuld appreciate tihe continued involvrment
of our Departmnt in analyzing these measures such that the
DFED and DiENR are in concert as novement through the process
continues.

We appreciate the opportunity to conment on this matter. Further,
please feel free to contact MAr. Roger C. Evans of our Planning Office at
7837 for any assistance your department ray require. Ile would appreciate
working closely with you such that a successful program, in the interest
of all our people, is established.

cc: Air. Gerald Clay

GEORGE R. ARIYOSHI

DEPARTMENT OF PLANNING EOR
FRANK SKRIVANEK
AND ECONOMIC DEVELOPMENT Deputy Director
Kamamalu Building, 250 South King St., Honolulu, Hawaii � Mailing Address: P.O. Box 2359, Honolulu, Hawaii 96804

November 13, 1980

Stanton and Clay
Attorneys-at-Law
Suite 1655
Pioneer Plaza
900 Fort Street Mall
Honolulu, Hawaii 96813

Dear Sirs:

It was a pleasure to review the final draft of the ocean leasing study undertaken
by your office. This comprehensive study provides an excellent foundation for further
thought and action in regard to the development of Hawaii's ocean resources. It is a
most welcome guide to the issues which must be addressed in a mariculture or OTEC
licensing regime.

For those who may not have the opportunity to read the entire report, I would
like to recommend reading: (1) the Executive Summary, (2) the discussion of the
Submerged Lands Act in Sections V(A)(1) and (2); (3) the discussion of privileges and
immunities and equal protection, found in Sections V(C)(4) and (5); and (4) the discussion
of the public trust doctrine at Section V(D)(1). These Sections form the basic
parameters for ocean leasing. They demonstrate that the State's authority to lease the
water column is not completely assured under the Submerged Lands Act; the State must
be careful to avoid undesirable or illegal discrimination against potential commercial
users; and the purpose and language of an ocean leasing act must meet the
requirements of the public trust doctrine. After those sections, I would recommend to
the busy reader the very interesting State variations which may result from Hawaii's
archipelagic claims, as described in Section V(B)(4), and Konohiki fisheries/native
Hawaiian rights, described in Section V(E)(2).

While the historical record and current State practice support a State's right to
lease ocean space for commercial activities, the language of the Submerged Lands Act
is not conclusive in this regard. The study makes a number of good arguments to
support State jurisdiction. However, the potential importance of Hawaii's ocean
activities is such that it may be worthwhile joining with other States and their
Congressional delegations to discuss the possibility of amending the Submerged Lands
Act to clearly include State jurisdiction over the water column.

The study also indicates the need to avoid the difficulty of not excluding potential
commercial users of the ocean. For example, in the commercial development
discussion, it is noted that the high cost of environmental impact statements and
licensing procedures could make it nearly impossible for small companies and
individuals to obtain licenses. The exclusion of small operators due to high costs could
forestall the development of numerous small projects which, when added together,

Stanton and Clay
November 13, 1980
Page Two

could become very significant to the economy. The "administrative lease" and
"mariculture park" are thus of great importance. The study also points out that non-
resident companies and individuals may not be excluded if it would be a violation of
the privileges and immunities or equal protection clauses of the U.S. Constitution. This
is important, since the exclusion of non-resident corporations could forestall the
development of projects such as'OTEC which require far larger amounts of capital than
are likely be accumulated within the State.

The study arrives at a time when ocean resources are receiving new attention.
The Hawaii Coastal Zone Management Program, which is part of DPED, is currently
undertaking an "Ocean Management Program" to lay the foundation for ocean planning.
One of the goals of the DPED is to produce an ocean resources functional plan by June,
1981. The need for a State ocean resources functional plan is underscored by the
requirements of the public trust doctrine. A marine resources inventory and ocean
development plan are necessary under the doctrine to justify the allocation of ocean
resources. A particular site for mariculture use, for example, can best be justified by
describing the total number of sites and their comparative potential. Finally,
discussions are underway in regard to the formation of an Ocean Resources Office
within the DPED. This office would coordinate activities with the Office of the Marine
Affairs Coordinator, which has been assigned to the DPED for administrative purposes.

A facilitator for permit applications could have a very favorable impact, and
would be consistent with the complementary roles of the Department of Land and
Natural Resources and the DPED. At present, the Board of Land and Natural
Resources has regulatory responsibilities by virtue of the designation of offshore waters
as a Conservation Distrct. It is wise to continue the separation of functions so that
the DPED carries out ocean planning and the DLNR carries out ocean regulation. First
of all, it is easier for planners and industry representatives to exchange ideas and
develop opportunities if the planners do not issue the permits. In that case, neither
party will mistake any representations as being commitments regarding government or
industry action during the permit process. Second, by separating the planning and
regulatory functions, the regulatory agency may be able to view applications with more
objectivity than could those who have been heavily involved in the planning and
development stages. This concept of the separation of development and regulatory
functions is found at the federal level. For example, OTEC is to be developed by the
U.S. Department of Energy, but regulated by the U. S. Department of Commerce.

Is ocean leasing legislation timely? Commercial-scale mariculture and OTEC
activities are many years away. On the other hand, a clear legal regime is essential
to commercialization because it describes the parameters in which industry must
operate. Even more important, once a legal regime is clearly established, industry can
apply for and obtain leases, which they must have in order to raise the necessary funds
from the private financial community.

Based on the study, ocean leasing legislation should follow two preliminay steps.
First, the State might investigate the possibility of strengthening the Submerged Lands
Act to make it clear that the State has the authority to issue leases for the water
column. Second, the State should produce an ocean resources functional plan to meet

Stanton and Clay
November 13, 1980
Page Three

the public trust doctrine requirements. Then, when legislation is introduced, it will be
grounded in explicit statutory authority and will incorporate the community input
received during the planning process. The legislation should thus be able to withstand
legal attack.

Is legislation needed at all? Obviously, permits are now being issued by a number
of County, State, and Federal agencies for ocean and ocean-related projects. Is
anything further needed? I believe that the major contribution of the study is that it
answers that question. The answer is yes. Legislation will indeed be needed to
establish the State's authority to issue leases and collect revenues under the public
trust doctrine, to consolidate the State's efforts in ocean management, and to
facilitate the licensing system to accelerate development where the public deems it
advantageous. Until we draw closer to commercial-scale mariculture and OTEC
activities, however, the time may be best spent conducting studies such this one,
receiving community input on our preferred future for ocean uses, and securing a clear
basis in federal law to exercise the jurisdiction necessary for successful ocean
development.

Again, my congratulations on a job well done.

Very truly yours,

Kent M. Keith, Coordinator
Office of the Director

KMK/lyk

DAMON, KEY, CHAR a, BOCKEN
ATTORNEYS AT LAW - A LAW CORPORATION DUDLEY C. LEWIS
IOH FLOORCITY BANK BUILDING HENRY H. SHIGEKANE
C. F DAMON, JR. OF COUNSEL
CHARLES W KEY
VERNON F. L.CHAR
CLINTON K. L CHING
R. CHARLES SOCKEN HONOLULU. HAWAII 96813 CABLE ADDRESS
DENIS C H. LEONG "ADVOCATES"
KENNETH R. KUPCHAK TELEPHONE (808) 531'8031
CHARLES H. HURD
STEVEN H. LEVINSON
DIANE D. HASTERT
CARL TOM November 21, 1980
RONALD R. SAKAMOTO
MICHAEL K. KAWAHARA
BARBARA G. BECK
RALPH D. SLACK
MICHAEL A. YOSHIDA

Gerald S. Clay, Esq.
1655 Pioneer Plaza
900 Fort Street Mall
Honolulu, Hawaii 96813

Re: Ocean Leasing Study

Dear Mr. Clay:

A review of your legislative proposals raised
several questions which are referenced below for your con-
sideration. Your attention is also drawn to my previous
letter on your initial draft, for many of those comments
remain applicable. The present draft appears to be the
result of a very professional approach.

Initial comments include:

1) Section 1 appears designed to cover multiple
uses and is not limited to OTEC and Mariculture uses. More
importantly, the second sentence of the first full paragraph
after subsection 3 indicates the State wishes to permit
activities which do not significantly interfere with other
It it~~~~~'
"ocean uses . As previously discussed, this sentence should
be expanded so as to preclude significant interference with
the "environment" as well as "ocean uses". Subsection 2
reads "...these new ocean activities will require...". The
word "will" should read "may".

2) In Section 2(A), the definition of "adminis-
tration lease" appears too broad and lacks an environmental
tie. As the draft does not indicate the purpose of an
administrative lease, it is somewhat difficult to comment.
If the same findings need to be made with administrative
lease, this may solve some of the problem I foresee with its
potential use with the requirement of an environmental review.

3) Section 3(A) substantially shifts the burden
from that set forth in the previous draft which placed more
emphasis on preventing adverse environmental impacts. The
new language is too broad and subject to abuse.

DAMON, KEY. CHAR a BOCKEN
ATTORNEYS AT LAW - A LAW CORPORATION

Gerald S. Clay, Esq.
November 21, 1980
Page Two

4) Will an OTEC facility also be governed by the
Public Utilities Commission? If so, the lease should be
conditioned upon the Lessee complying with its PUC obligations.

5) Section 4(A)l(a) includes the word "defray".
Stronger language should be considered requiring that the
entire cost should be borne by the applicant.

6) Section 4(A)2 should be changed to permit the
Board to require the applicant to reveal proprietory infor-
mation where necessary. This may be necessary for the Board
to determine the impact of a contemplated process. The
applicant may be protected, however, by requiring that such
information be kept in camera.

7) As discussed at our recent meeting, competency
under paragraph 4(A)3 should be defined to include financial
ability as well as experience and expertise.

8) Paragraph 4(B)2 is overly general. It weakens
the earlier language with respect to environmental impacts.

9) Section 6 creates the spector of conflict of
interest by having a potential expeditor (6(A)2) within the
DLNR. Again it is suggested that this officer be located
within DPED, perhaps in the CZM program. See my prior letter
for further elaboration.

10) Section 7(B) may be too broad a granted discretion.

11) Sections 7(C)2(b) and 3(b) use the word
"indemnify"; perhaps the word "reimburse" would be more
appropriate.

12) Section 8(A)3(a) speaks in terms of "efficiently
use". You may wish to add the words "and protect the public
interest".

13) You may wish to consider having each lease
require the lessee to: (i) conduct initial base line studies
to determine the scientific parameters of the location; and
(ii) monitor such parameters throughout the lease.

DAMON, KEY, CHAR g BOCKEN
ATTORNEYS AT LAW - A LAW CORPORATION

Gerald S. Clay, Esq.
November 21, 1980
Page Three

14) Section 8(A)4(b) causes some concern in that
the bond appears conditioned on active pursuit of the use
and not upon protection of the environment. Some further
analysis of this section might be in order. The forfeiture
for nonperformance might be 'expanded to include malperformance
or matters beyond the lessee's control, such as an escape of
exotic plants or animals or of toxic substances.

15) Section 8(A)1O(b) also is limited to plants or
animals found outside the leased area. It is conceivable
that toxic substances or other harmful materials may also
escape the area which may endanger the environment. The
lessee should also be responsible for any damage caused
thereby or for the cleanup thereof.

16) Sections 8(A)7(b) and 12(b) speak in terms of
adverse effects being produced or causing immediate danger.
These sections should be expanded to include threatened
effects or threatened danger.

17) Further examination of the suggested penalties
appears in order; some appear manini compared to the poten-
tial danger caused by a breach. The fines might be treated
as a cost of business.

Hopefully I will have an opportunity to review the
proposal in greater depth and provide you with more subsequent
comments. Mahalo for your consideration.

Very truly

Kennet upchak

KRK:kyn

Dee_~ember 23, 1980

The Honorable Hawaii State Legislature
Hawaii State Capitol
Honolulu, Hawaii

Re. Proposals for Legislation for Ocean Leasing.

Honorable members of the Hawaii State Legislature:

The Mariculture Leasing Study, headed by Honolulu attorney Gerald
S Clay, is a significant step towards the development and commer-
cialization of our ocean resources. Mr. Clay and his associates
deserve to be commended for their efforts and their final product.
They have considered a great deal of technical information in
conjunction with their study on the legal aspects of ocean leasing.
This study was further enhanced by the thoughtful contributions
of the members of the Advisory Review Committee on Mariculture
leasing. It was my pleasure to serve with such a distinguished
group of perceptive and concerned people. The net result of the
above said efforts is a statement on the state of the art of ocean
resource development, a comprehensive review of the policy consi-
derations of ocean commercialization and the proposals for legis-
lation for ocean leasing.

This is in response to the final product of that study and the
significant considerations treated therein. It is intended to
emphasize the need for the use of extreme caution in proceeding
towards the commercialization of Mariculture and Ocean Thermal
Conversion (henceforth referred to as OTEC). There are increasing
indications that we can no longer afford to ignore the potential
benefits of commercial ocean resource development. Hawaii can
and should be a leader in this field. However, such leadership
requires a responsible attitude towards the preservation of the
cultural, social and economical uses of the ocean for our future
generations. Such a leadership goal can only be achieved through
complete and exhaustive ocean leasing legislation. Some may
argue that the proposed legislation is over-inclusive and technically
cumbersome. Admittedly, there may be some need to streamline such
legislation wherever such action is prudent. However, prudence
requires that we view the benefits of streamlining public interest
provisions therein with a jaundice eye. Notwithstanding the ap-
parent difficulties which accompany exhaustive ocean leasing
regulation we must proceed with all due caution. The essence of
ocean development policy is the net improvement of our standard
of living The task of regulating such development includes the
enormous responsibility of protecting and preserving the delicate
balance of our oceanic environment. If we must err, then let us
err in favor of caution , even at the risk of over-regulation.

It would be misleading to suggest that exhaustive legislation
would not present problems of its own. The ability of Hawaii's
Mariculture leasing program to attract large domestic and foreign
investors may suffer temporary impediment. However, prudence
demands that any benefit gained through legislative streamlining
clearly outweigh the potential detriment to our ocean environment.

SMALLER MARICULTURE OPERATIONS

one potential advantage to a conservative approach to Hawaii's
initial ocean leasing legislation is related to the future of
smaller mariculture operations. Perhaps a more gradual approach
from shoreline activities towards marginal and open ocean activities
encourage smaller-local based entrepreneurs to venture into the
Hawaii State Mariculture Leasing Program. An Ocean Resources
Liason Officer, as suggested in Section 6 of the Proposals for
Legislation for Ocean Leasing, would be instrumental in educating
and assisting such smaller operations. Such a head-start would
better prepare these smaller-local based investors to cope with
the requirements of commercial mariculture operations. These
early operations would also provide future legislators with
invaluable information relevant to the protection of such smaller
operations. For it is clear that the smaller operations must
eventually face the strenuous competition that the larger con-
glomerations would present.

Members of the Department of Land and Natural Resources earnestly
contend that many of the procedural requirements of the proposed
legislation are unnecessary and cumbersome. They argue that present
DLNR provisions sufficiently satisfy all concerns surrounding
Mariculture and OTEC leasing. That proposition may not be totally
accurate and deserves close scrutiny. While many of the present
DLNR rules and regulations may be applicable to ocean leasing
situations, such regulations are not designed to address the unique
qualities of our ocean environment. Whereas applicable DLNR
regulations and policies may be incorporated into the ocean leasing
regulations, that existing body of rules need not be ignored.
However, it would behoove all concerned parties to have cohesive
and comprehensive source of ocean leasing legislation.

To rely on the present DLNR leasing scheme is to ignore one glaring
fact; the land and the ocean are not the same! Issues of juris-
diction, public trust, property rights, common usage and environ-
mental rights in relation to the ocean must be approached with a
clear recognition of the unique properties and characteristics
of our ocean resources. The fact that present technology has yet
to establish an accurate means of measuring the environmental
impact of certain ocean activities illuminates the need for a
separate and comprehensive body of laws governing ocean leasing.

The inherent difference between land-bound resources and our ocean
resources reveal basic legal problems. The power of the State to
grant ocean leases and to regulate ocean activities is not clearly
established. For years now, the Federal Government has exercised
jurisdiction over the marginal and open ocean waters surrounding
the Hawaiian Islands. The Federal Government has maintained their
jurisdiction over such waters on the basis that they have exclusive
jurisdiction over interstate commerce and thoroughfares thereof.
They also rely on the national security requirements involved in
controlling open ocean channels.

It is not expected that the State would oppose a scheme of
cooperations for the sake of national security. However, the
issue of jurisdiction over marginal and open ocean leases and
activities must be resolved in favor of the State in order to
guarantee the State's ability to maintain a posture of "home-rule"
over ocean activities in Hawaiian waters. It is inconceivable
that the Hawaii State Legislature would welcome a situation where
the decisions affecting the ocean activities in our State would
be subject to the whims of political powers in Washington D.C..

The State of Hawaii seems to have a legally potent basis for
obtaining an exception to the Federal interstate commerce argu-
ment mentioned above. Hawaii is one contiguous archipelagic
state. State jurisdiction over the waters surrounding and sep-
arating each island of the archipelago is essential to the
maintenance of the coherent status of the contiguous State of
Hawaii. Therefore all commercial ocean activities in the
archipelago are rightfully within the jurisdiction of the State.
Furthermore, State jurisdiction over the marginal and open ocean/
commercial activities is necessary to safeguard the health and
the welfare of Hawaii's citizens. That necessity entitles the
State of Hawaii to an exception to the interstate commerce
powers or the Federal Government.

One approach to supporting the State's position on the ocean-
jurisdictional issues is to specifically provide, within the ocean
leasing legislation, language which clearly establishes that tile
effects of commercial ocean activities upon the health and welfare
of Hawaii's citizens is the paramount concern of our State Legis-
lature. Such concern should be clearly reflected in the findings,
the definitions and the statement of purpose that will set the
tenor for subsequent provisions of the State of Hawaii Ocean
Leasing Laws. The proposed legislation contains many provisions
based on various Public Trust Doctrines. The adoption of these
provisions are essential to providing adequate support for the
State's legal position on ocean-jurisdiction.

Notwithstanding the uncertainties of jurisdiction over ocean
resources relevant to large scale ocean activities, smaller
shoreline activities can and should commence immediately.
Assuming that the State is successful in maintaining its juris-
dictional power over commercial ocean activities, the task of
regulating such activities involves many diverse concerns. The
challenge facing the legislature is to deal with all such concerns
in a scheme which best promotes the public interest.

PUBLIC ACCESS

The proposed scheme of ocean and commercial leasing provides
for the exclusive use of designated areas by approved lessees.
Certainly, such exclusive use of designated areas is a necessary
element for attracting the kind of large investors that some of
the more complex ocean activities require. However, we must
recognize that such exclusive use will present a constant threat

to public access. The restrictions upon public access increases
as the designated area of exclusive use increases.

Section 4 of the Proposals for Legislation for Ocean Leasing
provides for License Application and Guidelines for License
Approval. The protection of existing private ocean activity,
public activity and public access is highly dependent on Section 4.
Section 4 (B) of the proposed legislation is more specifically
related to establishing guidelines for license approval. Under
that section the governing Board must consider the extent to which
the proposed activity shall have a significant adverse effect upon
any existing private industry or public activity, or shall inter-
fere with the use of marine waters for the purposes of navigation,
fishing and public recreation.

Section 8(3) of the proposed legislation pertains to the Maximum
Size of Area to be Leased. That section allows adjacent area
increases of existing commercial leases. Thus it would be pos-
sible for a commercial lease of 100 acres of ocean surface to
expand to adjacent areas of the same size thereby creating an
additional encumbrance upon the rights to public access. One
direct result of such lease area increases would be the obstruc-
tion of traditional passages now available to professional and
recreational fishermen. The net effect of such obstruction may
not be discoverable for several years. But t-'ie expected effect
would be an increase in the operational costs to local fishing
fleets. The effect that fishfarming cages and OTEC facilities
will have on the migrational patterns of wild fishlife is still
an uncertainty. That uncertainty is a considerable threat to
our existing, fishing industry. Unless the right to public access
through proposed lease areas are protected we run the risk of
unjustifiably creating a new class of criminal from what is now
a respectable class of professional and recreational fishermen.

Inasmuch as public access is an important aspect of ocean leasing,
Section 9(11) of the proposed legislation regarding Lease Pro-
visions and Rights of the Public must be preserved both in letter
and in spirit. The effectiveness of Section-9(11) is contingent
on the ability of the State to police and enforces any leases granted
by the Board. The policing and enforcement duties of the respon-
sible agency would be greatly enhanced if the legislature were
to establish some cognitive standards regarding the provisions of
Section 9(11). For example, the phrase "reasonable means of public
ingress and egress to and from leased areas"' should be further
defined to ensure sufficient compliance therewith. Such clarifica-
tion would also provide prospective investors with a more definite
assessment of the responsibilities involved in ocean leasing
within Hawaiian waters.

NATIVE HAWAIIAN RIGHTS

The ocean has been a traditional source of spiritual power,
nutrition, recreation and cultural solidarity for the Native
Hawaiian. In recognition of the age-old relationship between the
Native Hawaiian community and our Hawaiian waters this legislature
cannot afford to neglect the concerns of that community regarding
the preservation of their ancestoral birthrights. Presently, we
are fortunate to have an Office of Hawaiian Affairs with a Board
of Trustees, elected by people of Native Hawaiian Ancestry. Thus
our legislature has a tremendous opportunity to solicit the valua-
ble input of a significant body of Native Hawaiian Representatives.
This is not to suggest that other Native Hawaiian Groups should
be excluded from contributing their mana'o (feelings) for all con-
cerned Native Hawaiian Groups are entitled to be heard. Notwith-
standing that fact, the Office of Hawaiian Affairs can be instrumental
in providing our legislature valuable information and insight per-
taining to the Native Hawaiian concerns regarding the proposed ocean
leasing legislation.

Section 11 of the Proposals for Ocean Leasing Legislation
provides for the preservation of KONOHIKI FISHING RIGHTS. While
the provisions therein seem to protect the Konohiki fishing rights
as recognized by HRS 188-4 and 188-5, there is no substantial
mention of other Native Hawaiian rights that will be effected by open
ocean resource development and leasing. As a matter of common
couirtesy to the Native Hawaiian people, such concerns must be pro-
tected in the body of our ocean leasing legislation.

CONCLUSION

Hawaii stands on the threshold of a new frontier. State
participation in ocean resource development stems from a recognition
of the great potential therein for contributing to the energy and pro-
tein self-sufficiency goals of the State of Hawaii. The successful
achievement of those goals will be a major challenge of the 1980's.
The success or failure of the State's ocean ventures depends upon
the responsible attitude of our legislators and administrators
towards the preservation of the cultural, social and economical uses
of the ocean for future generations. State power over the ocean is
held in public trust. Thus State decisions on ocean resource devel-
opment are subject to the fiduciary duty to protect the public
interest in terms of public access, health and welfare. Related to
that fiduciary duty are such considerations as conservation require-
ments and environmental rights. Hawaii also has a special duty to
preserve Native Hawaiian Rights whiich traditionally relate to ocean
use.

I trust that the members of the Hawaii State Legislature
will have the insight and the foresight to successfully shoulder
this enormous responsibility. The desire to attract large cor-
porate investors and the promise of a stronger state economy present
a tremendous temptation to favor administrative ease and legislative
carelessness. Such a temptation must be withstood in the public
interest. We must approach this new frontier with extreme caution.
We must focus on preserving the integrity and pride of our people,
our ocean resources and the birthrights of our future generations.

Very Truly Yours,

0 LINDSEY, J
Member of the Advisory Committee
for the Mariculture Leasing Study

26 November 1980

Mr. Gerald S. Clay, Esq.
Stanton and Clay
900 Fort St. Mail, Suite 1655
Pioneer Plaza Building
Honolulu, Hawaii 96813

Dear Mr. Clay,

Attached are my revised comments on the draft of the Ocean Leasing Report.
Conversations with you and with Ms. Sherry Brader, Esq., indicated that most
of my earlier comments dated 10 November 1980 are to be incorporated into
the final version of the report. As a consequence, Ms. Broder suggested that
my revised comments should highlight what I believe to be main issues or
problems. These comments are my own views and do not represent the opinions
of the U.S. Army Corps of Engineers, Pacific Ocean Division.

Exotic Species.

The issue of the environmental risks associated with the introduction of exotic
or nonindigenous species for mariculture purposes needs more equitable and
thorough discussion in the reports (se pp. 1-5, 11-46, 11-47, 111-15, I11-18
of the draft report). Probably more than any other single factor, the inadvertent
or intentional introduction of nonindigenous species has caused the endanger-
ment or extinction of many Hawaiian species. Certainly the controls over the
importation of exotic species have not been stringent enough in the case of some
recent introductions involving marine and mariculture species. For example,
careful scrutiny and public controversy revolving around the introduction of
Eucheuma to Hawaii did not prevent its "escape" outside of enclosures and
spread throughout Kaneohe Bay during the past several years. Despite controls
and precautions adopted during the processing of permits for use and study of
Eucheuma in Hawaii, wild populations of the seaweed have established, are
spreading, and nobody has expressed interest in the outbreak or responsibility
for its removal or control. This one incident underlines the need for greater
regulatory control, more careful supervision of research studies, and the
assumption of responsibility by sponsors of mariculture nonindigenous species
to eradicate or control such species if they escape. It may also point to the
need for more careful screening of research proposals involving exotic species
and intensified enforcement actions by those agencies charged with the respons-
ibility of exotic species control. In any case, the Ocean Leasing Report needs
to present this Issue in a more balanced and less biased manner.

Environmental Risks.

The discussion of environmental risks (pp 111-15) needs to be revised somewhat
to consider that some environmental risks are more serious than others and that
any consideration for "zero" or minimum risks should be dependent upon the
severity and Impact of the potential risk. For example, a temporary degradation
of water quality during erection of mariculture facilities may be tolerated to
a greater degree that the accidental escape of an exotic species, such as an eel,

Mr. John Corbin, Director
26 November 1980

which might deplete other native species and impact on native fisheries for an
indefinite or permanent time period. In summary, the issue of "zero environ-
mental risk" is too complicated to be generalized and considered as a simple
policy; risks and controls will need to be evaluated on a case-by-case basis.

Environmental Regulations.

Although some forms of environmental regulations appear unfair to Hawaii because
of comparison to continental U.S. standards (see pp 111-19), other environmental
regulations need to be strengthened because of Hawaii's small size and the
vulnerability of Its unique species and ecosystems. For example, Hawaii's
geographically Isolated position in the Pacific has led to more intense speciation
and more reduced selective pressures that characterized the evolution of con-
tinental U.S. plants and animals. As a consequence, Hawaii's blota at the time
of Captain Cook was comprised mostly of species found nowhere else on earth.
With the coming of western man, many exotic species were introduced to Hawaii
and gained immediate competitive advantage over native species. Other factors,
such as draining, dredging, or filling of wetlands, streams and other aquatic
habitats have also contributed to the demise of the endemic biota. As a
consequence, Hawaii has the dubious distinction of having more of its plants
and animals heading towards, or already achieving, extinction than any other
comparable place on earth. So while it is important to dismiss irrevelant
"continental U.S." regulations and standards when appropriate, it is also
equally important to develop otherregulations and standards commensurate with
the unique insular tropical and fragile environment that characterizes Hawaii.
In this regard, the example cited on page 111-19 is inappropriate.

Environmental Information Requirements.

The report gives the impression (see pp 111-19, 111-20, IV-9) that extensive
information will be required to satisfy environmental impact data needs; this
in turn leads to further assumptions that the "extensive" data will cost much
money to collect (see pp IV-15). These generalizations , of course, are over-
simplified. For example, it would be logical to assume that small "mom and
pop" mariculture operations would require proportionately less information
than large scale commercial operations. Another example would be that the
maricultural use of established native species will require less information
than the use of imported species which could introduce new diseases and other
threats to the native ecosystems. Also the need to acquire information for
strictly "~environmental"' needs should be distinguished from public health
requirements, the latter which may involve more extensive and costly data.
Thus, it Is not possible to generalize regarding the extent and cost of environ-
mental data needs; such needs have to be evaluated on a case-by-case basis.

Submerged Lands Act Interpretation.

From my marine biological perspective, the argument that the SLA definition of
natural resources was intended to be broad and include virtually all living
resources on or beneath the ocean floor or within the water column is open to
opposing interpretation. First of all the definition refers to specific
organisms which reside exclusively on the ocean floor (e.g. sponges, oysters,
clams) and other organisms which commonly reside on the ocean floor. However,

Mr. John Corbin, Director
26 November 1980

the list did not Include organisms which reside exclusively In the water column
(e.g. squid, zooplankton, phytoplankton, jellyfish). Consequently, another
interpretation Is that the draftors of the SLA definition were intending to
focus on bottom dwelling or benthic life. If this interpretation is correct,
it may have some bearing on the use of the act to establish an ocean leasing
policy or law in Hawaii.

Is mariculture a fishery?

On page V-133 of the draft report, I strongly disagree with the commentors
interpretation that "...Mariculture...undoubtedly will be considered a fishery."
Other than the fact that both activities may involve fish, they have very little
elese in common. Fishing in the traditional sense involves the capture of wild
species living within largely uncontrolled habitat or space while mariculture
involves the controlled growth of domesticated or cultered species in a confined
specific space. Mariculture is no more like fishing than agriculture/animal
husbandry is like hunting.

Additional Federal controls over importing of fish and wildlife.

In the August 25, 1980 version of the Federal Register, the U.S. Fish and Wildlife
Service states that persons engaged in business as an Importer or exporter of
fish or wildlife and their parts or products, are now required to be licensed
by the Service. This may have some Implications for future mariculture ventures
involving the importation and use of nonindigenous species.

Rights of fishermen, harvesters, and collectors near mariculture facilities.

Some consistent and fair policy will need to be established regarding the rights
of fishermen and others to catch or collect species attracted to OTEC or
mariculture facilities. Unless properly handled, this issue itself could lead
to public controversy. For example, if mariculture or OTEC operations prevent
access of fishermen up to the sides or underneath facilities, mariculturalists
may be accused of causing depletion of available fish stocks from adjacent public
areas. The situation would be even more aggravated If OTEC or mariculture
operators and staff retain unfair advantage over fishermen to catch attracted
species. In a sense, the structures may serve as "fish attractants". To avoid
controversy, either the operators must allow unrestricted access of fishermen
up to the sides or boundaries of pens and enclosures or must not allow any
fishing - even by mariculture workers - within a buffer zone surrounding the
facility, if one needs to be established to provide security. There are draw-
backs to either option: the second alternative would be unpopular to fishermen
while the first would increase the chance of poaching and vandalism of OTEC/
mariculture products and facilities.

Technical description of OTEC.

The Ocean Leasing Report has failed to discuss some of the recent serious
technical problems involving the deployment of OTEC-I off the north Kona coast
of Hawaii island. Certainly this needs to be updated and added to the report.

Mr. John Corbin, Director
26 November 1980

Also the figure cited for 3.68 billion gallons per day of discharge waters for
a single 50 MW plant seems to be In error. This flow would be roughly equivalent
to half of the combined discharge of all of the natural stream flow in the
Hawaiian Islands. Flow of this magnitude doesn't seem possible from a single
plant. The calculations should be carefully rechecked because of the significant
implications for mariculture potential and environmental impacts.

Thank you again for the opportunity to serve as a member of the ocean leasing
Ad Hoc Advisory Group and I hope that my comments have been useful. I look
forward to receipt of the final report.

Sncerely,

MSE. MARAO
ieEnvironmental Resources Section

CF:
Ms. Sherry Broder, Esq

GEORGE R ARIYOSHI M2 YII IGASHIONNA P' DDRT
GOVERNOR ,,,�*-'4,N DIRECTOR'S OFFICK ',RSCTOR

~ m~~ �~ CEPUTY D RECTORS
NO V 2 U. I;Al I JACK K SUWVA
J JUMESH CARRAS
JAN ES B McCORMICK
OFHAWIE ONAT AN K SHIMADA Ph D
DEPARTMENT OF TRANSPORTATION IN REPI Y REFER TO
869 PUNCHBOWL STREE T
HONOLUJLU HAWAII 96813

November 17, 1980 HAR-PM 1960

MEMORANDUM

TO: The Honorable Hideto Kono, Director
Department of Planning & Economic Development

FROM: Deputy Director, Department of Transportation

SUBJECT: OCEAN LEASING STUDY - FINAL DRAFT

We have reviewed the subject draft and can offer no
constructive comments.

However, since the offshore activities will be conducted
in waters under the jurisdiction of the Department of Land
and Natural Resources, said Department should be afforded the
opportunity to review this study.

James B. McCormick

(4 Hawaiian Drediging & Construction Company

November 14, 1980

Mr. Jerry Clay
Stanton & Clay
Suite 1655 Pioneer Plaza
900 Fort Street
Honolulu, Hawaii 96813

Re: Ocean Leasing Study

Dear Jerry:

Thank you for the opportunity to review the draft of your project
report. Under separate cover, I previously forwarded some suggested
changes to the OTEC Technical Section. Then, I would offer the
following observations:

1. I feel it is important that the financial "facts of life"
for an OTEC plant be widely understood. The first cost or
investment in an OTEC plant is very high by comparison to
traditional oil or coal fired power plants. On the other
hand, OTEC plants use no fossil fuels; this means that OTEC's
operating costs are very low. The result is that OTEC
electricity can be priced at or near the same level as
electricity from oil fired plants.

Put another way, all the investment in an OTEC plant has
to take place before electricity is generated; but with
the high first cost and the lack of a proven track record,
it will be very difficult to obtain the investment funds
needed to build the first commercial OTEC plant, and
obtain the non-polluting, non-oil-dependent electrical
power that we all seek. Yet, as the cost of oil continues
to rise, Hawaii's needs will become more pressing.

For the development of OTEC and in fact every source of
alternate energy, it is of great importance that our State
do everything possible to encourage alternate energy
development and carefully avoid any regulatory action
that potential energy developers could interpret as an
added burden or a barrier to development. If we are to
obtain this energy, the State will have to continue, and
increase, its support; licensing and permitting will have
to be facilitated , and licenses will need to have long fixed
terms.

A DILLINGHAM COMPANY
BOX 3468 HONOLULU HAWAII 96801 CABLE: BARDREOGE TELEX RCA (723) 8795 TELEPHONE (808) 735-3211i

Page 2

Hawaiian Dredging AL Construction Company

There should be no thought of obtaining State revenue by
the plant licensing process; indeed State support via
tax forgiveness or other subsidy will likely be needed.
The alternative is continued dependence on imported oil.

2. One barrier that must be avoided is any suggestion of a
State royalty or fee on OTEC electricity. As you know,
the payment of royalties to a resource owner is common
where a depletable resource is being mined or extracted
as in a quarry, or an oil well. Clearly, t~ie sun's energy
cannot be depleted by man, and there should be no royalty
charge imposed on OTEC.

Of course, if the State encourages OTEC and a plant is
built, the State will see considerable benefits from the
cascade effect of the construction investment, added
employment in Hawaii, and increased tax revenues. Following
the economic framework discussed at the beginning of this
letter, the millions of dollars annually flowing to foreign
oil producers will be spent largely in Hawaii on constructing
the OTEC plant.

3. In the legal section of your report, I suggest you add
reference to the laws and regulations which govern
submarine cables, since such cables may well be a part
of an OTEC plant. There is an existing United States law,
the Submarine Cable Act, 47 USC 21-33 which sets penalties
for injuring undersea cables. There is also an International
Convention for the Protection of Submarine Cables, although
at the present time I would not expect that an OTEC plant
for Hawaii would be located in international waters.

4. The concept of a one-stop Permitting office in the State
Government is to be endorsed. It is particularly recommended
that any new regulations contain language that will cause
State agencies to move closer to the recent practice of the
Army Corps of Engineers. The Corps, in its permitting
responsibilities, has begun declaring that certain categories
of activities, individually examined in the past, have
"excluded category" status and so are not required to follow
the whole rigorous EA/EIS application process. Thus, the
aspects of an OTEC plant that have already been investigated,
for example the cold water plume, would not need to be
re-addressed in a new plant permit application. The experience
we gained from the Mini-OTEC project should be preserved
and used to help us to energy self-sufficiency.

Page 3

Hawaiian Dredging & Construction Company

We appreciate this opportunity to comment on your report and would
welcome participation in future examinations of this subject.

Very truly your

nk A. McHale
Project Manager

FAM:jfk

GEORGE R. ARIYOSHI
~~~~~~~~~~~~~~****- ~~~~~~~~~~~~~~~~~~~C overnor
DEPARTMENT OF PLANNING Drco
____'AND ECONOMIC DEVELOPMENT DeuyDrecto
Kamamalu Building, 250 South King St., Honolulu, Hawaii 0 Mailing Address: P.O. Box 2359, Honolulu, Hawaii 96804

November 12, 1980

Ref. No. 2364

Mr. Gerald Clay
Stanton and Clay
A Law Corporation
Pioneer Plaza, Suite 1655
900 Fort Street
Honolulu, Hawaii 96813

Dear Mr. Clay:

Subject: Review of Project Draft of the Ocean Leasing Study

We have reviewed the subject draft report and wish to make the
following general comments for your review and consideration:
1) As noted in numerous sections of the report, the importance
of a properly coordinated Ocean Area Resource Management
Plan is apparent in the establishment of an ocean space
leasing program within the State of Hawaii. This plan
would include, among other essential elements, a clear
definition on State goals, objectives, policies and priority
directions involving the use of Hawaii's unique coastal and
ocean resources.

In this regard, you should be aware that the Hawaii Coastal
Zone Management (CZM) Program has begun work on the develop-
ment of such a plan. In our preliminary project scoping, we
have become aware of the unique planning challenge to identify,
classify, and interpret the numerous interrelationships among
a wide range of ocean activities which operate in Hawaii's
dynamic, three-dimensional ocean space. Moreover, there are
several proposed activities which may directly impact the ocean
leasing program, including the designation of restrictive mili-
tary training areas, the Humpback Whale Sanctuary proposal,
and the designation of a Critical Habitat in the Leeward Islands
for the endangered Hawaiian Monk Seal.

2) We note that the draft report and proposed legislation do not
specifically identify the need to develop an effective "moni-
toring program"? which will ensure that proposed commercial
marine activities are in keeping with identified resource
management principles. An appropriate agency should be charged

mr. Gerald Clay
Page 2
November 12, 1980

with this responsibility and be given appropriate funds to
collect needed baseline data while continuously surveying com-
mercial activities so as to enhance positive attributes while
mitigating those activities or conditions which may appear
detrimental.

3) The draft report makes no mention of the interrelationship of
the report with the recently prepared area functional plans
promulgated through the Hawaii State Plan. Section 9 of the
proposed Ocean Leasing Act, for example, identifies that "the
Board (BLNR) is empowered to develop, on behalf of the State
or County in partnership with others, State marine waters as
ocean parks for commercial, administrative, experimental and
scientific and educational purposes." No such proposal has been
included, or even preliminarily discussed, within the Conservation
Lands Functional Plan. Nor does the State Agricultural Func-
tional Plan identify that the Department of Agriculture "shall
negotiate with appropriate private insurance companies to provide
a comprehensive insurance plan for mariculturists. .." (Section
is (1)).

In this regard, and in keeping with the Hawaii State Plan,
Statewide Planning System (see Hawaii State Plan, Part II Planning
Coordination and Implementation), we recommend that an effort be
made to coordinate those recommendations proposed by the draft
Ocean Leasing Act with the appropriate State functional plans.

Thank you very much for the opportunity to comment on this most
interesting study. If we can be of any further assistance, please feel free
to contact u~s at any time.

Sincerely,

Richard G. Poirier, Chief
Long Range Planning Branch

Systemculture Seafood Plantations

November 19, 1980

Mr. Gerald S. Clay
Stanton and Clay
Attorneys at Law
Pioneer Plaza, Suite 1655
900 Fort Street
Honolulu, Hawaii 96813

Dear Jerry,

I have read the final draft of the Ocean Leasing Study undertaken
by your office. I find it to be a fully satisfactory result within the
scope of your assignment. I was especially impressed by the balance
you achieved between protecting public rights while still encouraging
entreprenual use of an abundant natural resource; i *e., the space and
waters of the coastal zone.

I endorse most of the proposals for legislation for ocean leasing.
I do have reservations about a few, especially from the point of view of
anyone financing or insuring an offshore aquafarm. For example, what
would the cost to a lessee be if -required to eradicate a species of
plant or animal found outside the leased area? Without some reasonable
limit on this demand, who would be willing to accept an open ended risk?

Any such criticism, however, is minor compared to the relative
importance of establishing such an overall structure for effective leasing.
Your historical perspective and your specific recommendations will surely
encourage more commercial development at a time when the aquaculture
industry is gaining strength for expansion. Hopefully other island
nations will also be able to utilize this structure as their model.

Finally, I should add that only I wish certain other key aspects of
marine commercial development could be encouraged with such energy and
professionalism.

Thank you for your important contribution.

Sincerely,

Taylor A.Pro

TAP /fg

828 FORT STREET MALL - SUITE 610 - HONOLULU - HAWAII 96813 -TELEPHONE: (808) 524-6165

THE OCEANIC INSTITUTE

December 5, 1980

Gerald S. Clay
Stanton and Clay
Attorneys at Law
Suite 1655, Pioneer Plaza
900 Fort Street
Honolulu, Hawaii 96813

Dear Jerry:

SUBJECT: Review of Ocean Leasing Study

Thank you for the opportunity to comment on project drafts of this
outstanding piece of research. I believe you have fairly presented the
various (sometimes opposing) viewpoints and concerns which bear upon
the development of a rational ocean leasing law and practice.

I should like to make a few brief comments on the 15 October, 1980,
final project draft, Chapter VII, "Proposals for Legislation for Ocean Leasing."

"Section 4 A 3. The Board shall not approve a Conservation
District Use Permit (CDUP) for private use of ocean space
unless it finds the applicant is competent to perform the
activities for which the CDUP is being sought."1

Comment: In case of a negative finding, the applicant should be so
notified and allowed to request that the Board obtain an independent review
of the applicant's competency.

"Section 4 B lb. The Board shall consider in its evaluation
of each application... whether the proposed activity shall
have an adverse or permanent effect upon the wildlife or
ecology of the immediate and surrounding area.

Comment: We are all aware of the extreme sensitivity of environmental
issues in the matter of private use of ocean resources. The above wording
should be retained in the proposed legislation, and the Board should be conscious
that it may have to develop new technical and political measures of the public
good, in which loss of the pristine quality of leased areas will be judged
acceptable in return for significant economic gains for the State. A further
consideration here is that changes in the environment during or after cessation
of farming operations in particular will not necessarily be bad. For instance,
fishing success in the vicinity of a farm will certainly improve.

MAKAPUU POINT - WAIMANALO * HAWAII 96795 - PHONE eO08) 259-7951 - TELEX OCEANINSI

Gerald S. Clay
December 5, 1980
Page two

"Section 7 B. Leases... may be assigned by competitive bid,
at the discretion of the Board. "

Comment: Some provision should be made here for the willingness of
the initial applicant to submit to a competitive bidding process, e. g. , by
a priori announcement by the Board that competitive applications either will
or will not be entertained for parcels within a given area. It would certainly
be unjust to inform an applicant after his application is submitted that
competition will be allowed, because in this case "legitimate compensation"
could probably not be established without litigation.

"Section 8 A 2 b. . .. Failure of the lessee to pay such rent
within 30 days of such date shall constitute ground for cancellation..

Comment: Provision should be made for relief from this requirement
in case of conditions beyond the lessee's control such as weather delays.

"Section 8 A 11. ... the lessee shall provide reasonable means
of public ingress and egress to and from the leased area."1

Comment- This paragraph is clearly an attempt to deal with the prior
existence of public rights to the use of the ocean for navigation, recreation,
etc. Though avoidance of conflict with existing laws is admirable, allowing
anyone to sail back and forth through one's farm is totally inconsistent with
safety, economy, or security in farm management. Some way will have to be
found to provide the private use of his leasehold that the farmer is paying for.

"Section 8 A 12a. Termination of lease for reasons of public
purpose."

Comment: Specific wording is required here to provide for just
compensation to the lessee.

"Section 8 A 14. Public Compensation."

Comment: Specific wording is required here that the burden of proving
the monetary value of the lost public resource rests with the State.

Again, thank you for the opportunity to submit comments. I look forward
to the early passage of this legislation.

rely,

Senior Engineer

6085 Manukapu Place
Honolulu, Hawaii 96821

November 18, 1980

Mr. Gerald S. Clay
Stanton and Clay
A Law Corporation
Suite 1655, Pioneer Plaza
900 Fort Street
Honolulu, Hawaii 96813

Dear Gerald:

I found the Ocean Leasing Study report to be a very thorough
treatment of a fascinating subject. The report is futuristic in its outlook.
I also found several sections of the report to be provocative since visions of
the future must be presumptive. We each have our own kind of crystal ball
shaping our visions of the future. With the passage of time some of our visions
turn out to be right on target while others are shown to be nothing more than
fantasies. So at the risk of exposing my fantasies let me start with those
sections of the report which I found to be somewhat presumptuous.

It has apparently been decided that ... "Fish aggregation buoys, unless
part of a true mariculture system, do not meet the legal tests which justify
restriction of public access. It is therefore recommended that fish aggregation
devices be excluded from ocean leasing legislation at this time" (1-2). I
disagree. I see no compelling reasons for singling out fish aggregating devices
as not being "true mariculture operations" (111-4). There are serious
consequences in making fish aggregating devices illegitimate. Investors would
find it very difficult, if not impossible, to secure loans, research grants, and
ocean leases. Let's not automatically label fish aggregating devices the
illegitimate children of old King Neptune.

The argument is made (111-4) that ... "a declaration of exclusive
property rights to fish which gather in a neighborhood of a passive aggregation
buoy would be legally questionable". It is implied that since "fish attracted
to fish aggregation devices ... do not enhance fish stocks through active
husbandry techniques", property rights to attracted fish are not justifiable. The
distinction between active and passive has a certain arbitrariness about it. It
is probably not a valid reason for legal discrimination. I do not believe that
it is appropriate to legally define what "true" mariculture is and what it is
not in a report to the Executive and to the Legislature. Mariculture should be
defined, as it will be, through the legislative process itself.

In further trying to draw a distinction between "true" mariculture and
fish aggregation devices, the report concludes (111-3-4):

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"Cultured species are introduced into leased marine waters;
they do not exist in commercially exploitable quantities
beforehand. Therefore, the mariculturist in establishing a
new resource in the leased area. He is not removing significant
quantities of pre-existing common seafood resources from public
access. "Mar iculture is a form of breeding, not fishing, and
once the activity is established, it is not competing with other
fishermnen.",7" (Emphasis supplied)

All of these definitional criteria are in themselves directly
applicable to fish aggregation buoys (FABs). It is the FABs that are
responsible for concentrating or "introducing" fish where they did not exist
beforehand. While the attracted fish "pre-existed" somewhere else in the ocean
prior to the deployment of the buoys, it is the aggregating power of the buoys
that in effect establishes new resources in the ocean area around the buoys.
The resources would not be there in the same abundance were it not for the
buoys. Breeding should not be the sole criteria for defining "true"
mariculture. There are many examples of aquaculture and mariculture ventures
that use juveniles captured from the wilds in their "grow-out" operations. No
one calls these operations illegitimate.

I do not believe that it is necessary to come up with a legal
distinction between fish attraction and fish cultivation. The report hints that
ocean ranching for salmon may be within the proper definition of mariculture
because "the fish specifically cultured could be considered animus revertendi
(having the intention of returning), and a recognition of private rights could
be made (111-4). Does the biochemical mechanism behind salmon migration possess
any more legal validity than the mechanism that drives aku migrations? Again a
certain arbitrariness in definition is apparent. Surmising the intent of fish
is best left to animal behaviorists and not to legal scholars.

All mariculture operations, be they oyster culturing or salmon farming,
have a certain publicness about them. Oysters and clams "graze" on the
nutrients brought to them by the tides and currents. Artificially hatched
salmon forage on common property prey resources. Ranchers pay a fee to govern-
ment for the privilege of fattening their cattle on National Forest lands. The
cattle are nevertheless private property and anyone caught poaching them would
go to jail. The same type of thinking can be extended to include fish
concentrated around fish aggregation devices. Why should the exclusion principle
apply to fenced in animals to protect the private property of whoever invested
in the fence, while fish attracted to a man-made buoy would not be accorded the
same treatment? Does the fence have to be visible to be legally valid? We must
not be shortsighted by fences in our minds.

I am fully aware of what the staff is trying to do: prevent fat cat
sport and commercial fishermen and from appropriating large areas of ocean space
for their own exclusive use simply because they invested in fish aggregating
devices. But the potential problem of protecting the public trust from such
abuses can be dealt with in a much more rational manner than by labeling all
fish aggregating devices as not being true mariculture. There are 648,000
square miles of ocean surrounding the Hawaiian Archipelago. Only a very small

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fraction of this vast area is actually fished by the Hawaii public. What if I
wanted to invest in a series of fish aggregating buoys for commercial fishing
(mariculture?) purposes? The buoys would be located far away from areas of
public fishing, say in the waters of the Northwest Hawaiian Islands. Under the
thinking of this report, I would not be able to secure a lease or a mariculture
license from the State. Protecting the public trust should not be done at the
expense of precluding certain kinds of mariculture possibilities from happening.
That would be discriminatory legislation that could, perhaps, be challenged in
the courts.

To quote the report (111-4): "In a true mariculture operation, 'the
mariculturist is not preventing the fishermen from exploiting an ocean resource;
he is only preventing them from using a small area and causing incidental
consequences of resource-area concentration. The consequences produced by fish
aggregation devices, however, are not incidental to public fishing."' Again,
such reasoning is applicable to fish aggregating buoys. An investor in fish
aggregating devices, if he were able to secure a lease, would only be preventing
fishermen from exploiting the fish in the proximity of the buoys. He would only
be preventing fishermen from using an extremely minute area relative to the
total amount of fishable ocean space, and the consequences produced by fish
aggregation devices would produce no effects or, at worst, only incidental
effects to public fishing. The amount of aku "trapped" by the attracting power
of the buoys would be infinitesimally small compared to the amount of transient
aku found in the ocean.

Other than disagreeing with the report on the '"maricultureness" of fish
aggregating device, I found the report delightful and very complete in its
inclusion of relevant legal arguments, case laws, and statutory references. I
whole-heartedly agree that Hawaii could use an Ocean Leasing Act.

Only two years ago, the Constitution of the State of Hawaii was silent
on the issues of mariculture uses of submerged lands and ocean waters. Public
lands are defined in the Hawaii Revised Statutes as including submerged lands
within the territorial limits of the Sate. The Statutes, however, do not
contain any explicit policies for leasing submerged lands for mariculture purposes
that are owned and controlled by the State, nor do they provide any guidance to
the Executive Branch of State Government for establishing procedures to
accommodate mariculture in the public waters overlying the submerged lands.

The State Constitution now expressly provides for the right to
establish mariculture operations within the boundaries of the State, including
the archipelagic waters of the State. Elected delegates to the 1978 Hawaii
Constitutional Convention chose to adopt an amendment to the Constitution
establishing a right of opportunity for mariculturists to use submerged lands
and ocean waters. The voters of Hawaii, by their strong endorsement of this
amendment, have presented a clear challenge to the Legislature to drape the
bare bones of this constitutional provision with a cloth of substance.

The State Legislature must now provide guidelines for the protection
of the public's traditional and reserved right to use and enjoy the reefs and
coastal waters while accommodating aquaculture uses. Long established public

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rights of access to and use of coastal waters should be balanced by the
recognition of the needs of State-licensed mariculturists for protecting their
investments. The constitutional right to freely fish, swim, and navigate in
the shore and seawaters of the State need not mean or imply that mariculture is
inconsistent with this aspect of the public trust. The State has long reserved
to itself the right to regulate public uses of coastal waters. Flexibility in
policy formulation is needed if the growth potentials of seawater aquaculture
are to be realized. This constitutional amendment, in my mind, not only
recognizes the potential growth significance of saltwater aquaculture in Hawaii,
but also provides a catalyst to encourage innovation in open water mariculture.
Fish aggregation buoys would be vital to these exciting scientific endeavors.

An Ocean Leasing Act should provide for continued public interest
protections while not precluding certain private capital ocean development
projects from happening. Hawaii would benefit if the Legislature chose to enact
an ocean leasing program. it seems that law is normally several steps behind
technology. We should try to act non-conventional for a change by putting the
law before technology.

I was a bit puzzled by certain provisions of the Ocean Leasing
legislative proposal as drafted by the authors. Section 6 (Ocean Resources
Liaison Offices) is a premature suggestion since the entire subject of ocean
utilization needs to be assessed in detail before recommending the initial
makings of institutional reorganization and placement within a lead department.
Consolidation and not fragmentation of roles is needed. Section 9 (Ocean Parks)
is also premature. Section 15 (Mariculture Insurance Program) is much too
premature; it should be deleted at this time. Section 16 is a invitation for
bureaucratic haggling. It should stay in the draft legislation to test the
political waters. Which agency is worthy of the lead role in planning for ocean
affairs remains to be seen.

Congratulations on an excellent study. It has been a pleasure serving
on the Ocean Leasing Study Advisory Review Committee.

Sincerely, 4

utin Rutka