The owner of a 197-foot luxury yacht that dropped anchor nearly two years ago in Kailua Bay, damaging hundreds of square feet of coral and live rock, will pay $100,000 in a settlement meted with the state.
The Board of Land and Natural Resources voted 6-1 Friday to approve the settlement agreement with the owners of the foreign-flagged vessel, Formosa. Voting “aye” were Chairperson Suzanne Case and members Chris Yuen, Sam Ohu Gon III, Kaiwi Yoon, Tommy Oi and Vernon Char. Voting “no” was James A. Gomes.
The money will go into a trust fund to be used for coral management and restoration in the West Hawaii region.
“It’s a significant fine and I don’t think it’s letting them off lightly. I am alarmed at the amount of damage done, but it is a significant fine, and I like the fact that we’re going to be able to earmark the settlement money for the region impacted,” said Yuen before voting.
The settlement agreement stems from an Oct. 2, 2018, incident in which the Formosa anchored within Kailua Bay, damaging stony coral and live rock within the Kona Coast Fisheries Management Area.
According to a Department of Land and Natural Resources Division of Aquatic Resources (DAR) submittal, the vessel violated Hawaii Administrative Rules 13-95-70 and 71 by breaking and damaging approximately 431 specimens of stony coral and approximately 14 square meters of live rock. Damaged corals included Genus Montipora, Porites lobata, Porites compressa, Porites evermanni and Porties rus.
“Photos and video taken while the Formosa was anchored show the ship’s anchor and chain lying on coral. The surrounding area was marked by bright white exposed coral skeleton, suggesting that the anchor chain had dragged across the reef as it rotated around the anchor,” the submittal reads. “Approximately, 1,050 square meters of submerged lands were impacted during this event, including fully protected stony coral and live rock.”
The vessel had dropped anchor at 7 a.m. Oct. 2, 2018, at which time video was captured by employees of Big Island Water Sports; at 2:30 p.m., DAR was made aware of the incident by Atlantis Submarines, which had witnessed and documented the damage.
“Later that afternoon, the Formosa was observed by DAR staff moving to re-anchor in deeper water. DAR confirmed the new anchorage was in sand and secure. The Formosa’s crew was cooperative with DAR in this effort,” the submittal reads.
DAR subsequently surveyed the damage site, and “repositioned damaged coral colonies into an upright and stable position with live coral tissue facing upwards to mitigate the damage. A follow-up dive was conducted to cement coral fragments in place,” the submital reads.
Yuen questioned the extent of the damage to the P. lobata and P. compressa colonies.
Nikki Smith, a DAR biologist in Kona, said most of the P. lobata colonies within the damage area were about a meter tall and a meter wide.
“Some were slightly larger than that and some were smaller as well, so decent-sized colonies for sure,” she said.
Damage to the P. compressa bed was “quite extensive,” she said, noting that a lot of the damage occured from the anchor‘s chain “swinging through the bed.”
“That toppled some lobata colonies but also caused a lot of damage to the compressa. That area, I would estimate to be 100 square feet, if not more,” Smith said.
DAR Program Manager David Sakoda said based on the number and size of the colonies damaged, staff estimated a proposed fine of $153,400, plus $5,123 for the cost of the follow-up investigation.
“We’ve tried to work out a settlement with the yacht owner Formosa Wealth Management, and we’ve agreed to do a settlement. They’ve agreed to a proposed settlement of $100,000,” he said. “We recommend that the board accept this settlement just considering the difficulty in pursuing this violation against a foreign vessel.”
Gomes, who would cast the lone “no” vote, questioned why the department was not pursuing the maximum fine.
“Why aren’t we going after the maximum fine of $153,400 plus admins fee, what brought that up? I’m thinking why is it $100,000 — we’re short $58,000 why are we not fining the total as submitted on this table?” he asked.
Sakoda said it would be “challenging to prosecute or go after them for the full amount.”
“And, so to save staff time and just everything that it would take with their contested case hearing, if we went to that, we’re recommending, we feel like $100,000 is a significant amount and Formosa Wealth Management recognizes the damage they caused and is willing to settle for that amount so we felt comfortable in recommending that — it’s not insignificant,” he explained.
Gomes still didn’t agree.
“So, it’s like a slap on the wrist,” he said. “Thinking about it, I’ve seen pictures of this ship or boat, whatever you call it, and looking at what Inga (Gibson of For the Fishes) put in as far as the testimony, I need to kind of side with her because it makes so much sense. That’s the reason I asked that question.”
Contacted after the hearing, Gibson said “DAR’s past refusals to charge aquarium collectors for anchor damage, coupled with today’s paltry fines reached in a back-room settlement with the mega-yachts unnamed owner, shows the Department’s continued failure to take the destruction of our natural resources seriously.
“There is no reason the owner of the mega-vessel, that currently charters for upwards of $470,000 per week, couldn’t pay the full fine of $431,000 — for the irreparable damage it caused to 431 separate corals from our fragile reef” Gibson continued.
Formosa Wealth Management’s representative, attorney Normand R. Lezy, said his client was appreciative of the department’s willingness to negotiate the matter.
When questioned, he said the boat had come to Hawaii at least once before, but not to Kailua-Kona. The Formosa spends most of its time in Asia, and hasn’t been in Hawaii since the 2018 incident.
The board then moved to go into executive session to discuss the “legal issues” in pursuing a claim against the vessel or its owners. Less than 15 minutes later, the panel resumed in open forum at which time Yuen said the substantive discussion should be held before the public.
Deputy Attorney General Linda Chow outlined several of the issues of pursuing a claim against the Formosa. Among them was that under maritime law, there are issues as to when damage is caused by a foreign vessel with whom responsibility lies; the pilot in the case is not a Hawaii citizen and was not familiar with the area and the Pacific Islands Pilot booklet indicates only that the bottom of Kailua Bay sand, making no mention of coral, only that it can anchoring can be unsafe during certain winds.
Further, documentation could be another problem.
“Some of our assessments of the damage, we don’t have maybe the best information or documentation on it. We’ve been very frank with the Formosa people and they do understand how we calculate our fines,” she said. “There is some potential that we may not be able to substantiate all of the findings.”
When questioned by Yuen about acquiring jurisdiction over the vessel, Chow said, “Frankly, I don’t know because nobody in our division is very well-versed in maritime law.
“That would be just another thing we have to figure out,” she said.
The vessel is also about to be sold.
“I’m not sure who the next owner will be or if we could after them for damage,” she said.
Yuen stated that this isn’t the first and won’t be the last time this kind of an incident will happen in the state.
“With 2020 hindsight, maybe that’s the kind of thing we need to be prepared to do so that we can not be in position where we have to feel like because of a legal technicality, we should compromise,” he said.