Ocean Tourism Coalition

To All Hawaiʻi Tour Boat Operators,

            The Ocean Tourism Coalition (“OTC”) would like to provide a statement regarding bill HB1090 and recent social media statements that portray OTC as the driving force behind HB1090 with the desire to put small operators out of business.  First, OTC has spent over three decades fighting for all ocean operators of all sizes. 

In recent years, there has been growing conflict between recreational ocean users, political groups, and commercial operators.  In fact, numerous lawsuits have been filed against the Division of Boating and Ocean Recreation (“DOBOR”) to reduce commercial operations across the State.  OTC has spent significant sums to fight these lawsuits to ensure commercial operators do not lose their commercial use permits.  

One of the main issues raised by those seeking to reduce commercial operations is the fact that DOBOR has issued more permits than allowed by the Hawaiʻi Administrative Rules in certain locations across the State.  To address these concerns, DOBOR has proposed numerous bills over the course of the last decade that would give them the ability to reduce permits by creating an auction system, including issuing permits to the highest bidder on a yearly basis.  OTC has vehemently opposed such bills and successfully prevented their passage by arguing the massive costs to operators, the uncertainty of operating year to year, and the inability of smaller companies to outbid larger companies that may have access to mainland funds. 

However, DOBOR has stated that the growing outcry by various community groups has pushed them to take drastic measures to reduce the number of commercial permits down to what is allowed under the current administrative rules.  This includes the cancelling of all permits anywhere the number of permits allowed by law has been exceeded, and then reissuing permits by random lottery.  In response to OTC’s strong objections to a lottery system, DOBOR proposed HB1090 to create a seniority-based system.  After much thought and discussion, OTC believed that a seniority-based system that is reflective of the current waitlist system, would be less harmful than issuing permits by lottery.  As a result, OTC did not speak out against HB1090 as it had done with the companion bill SB1388.  HB1090 is now heading to the Governor’s desk for signature or veto.

Any operator that disagrees with the passage of HB1090 should reach out to their local legislators and the Governor and voice their concerns. 

To be clear, HB1090 is not an “OTC Bill” as has been portrayed by some.  In reality, HB1090 is the State’s attempt to solve a problem of their own creation.  OTC did the best it could under difficult circumstances.  HB1090 is just one of the many challenges facing the tour boat industry, with many more challenges to come in the years ahead.  OTC will continue to do all it can to protect tour boat operators and the marine resources we all depend on, but we cannot succeed without industry support.  As the saying goes, “We must all hang together, or, most assuredly, we shall all hang separately.”

What is that 5th quarter billing that OTC sends out once a year? It is a voluntary bill asking for you to strongly consider a donation equal to one quarter’s dues for the Ocean Tourism Coalition Political Action Committee.

As you know, OTC is extremely active at the Legislature fighting on your behalf. As such, we interface with a lot of legislators. We are basically asking for their help. Business and industry groups have a particularly hard time doing that since we do not vote. Yes, our members do and our employees do but most legislators know that members of those groups don’t normally vote in blocks so you’re really not of much help to a legislator to get re-elected. There is a way however that we can be of help and that is to make a donation to their campaign. This is not bribe money; it usually is money that is spent on brochures or postage or even meals for their campaign workers. Frankly, we don’t care what they use it for as long as it helps them and they feel that it helps them and that they know that it came from us.

We cannot use your dues automatically for these kinds of expenditures. It must come from voluntarily donated money. The best way we could think of to calculate that is to use one quarter dues and ask that you pay into it once a year. Most of our members do pay into that fund and we can tell you that it certainly makes a difference.

Why OTC? Why YOU should be in OTC.
Americans have demonstrated since day one that there is more power in an organized group rather than in the actions
of a few.

OTC has taken on the battles for the Ocean Tourism Industry. All have received a benefit, members and non-members.
Every battle costs time and time is money. So who paid for these battles?…the members.

Isn’t it your turn to step up to the plate?
OTC Battles
OTC fought for and got the first day use of mooring pins despite environmental opposition saying we would damage the environment. We want to be known as the people who leave only bubbles.
OTC has been a prime proponent of the concept that berthing rights are essential to the continuation of the business and unless a permittee is in violation of laws, the renewal of the slip should be protected.
OTC got the first piece of legislation passed in 2008 that allows for certain interharbor use without the payment of additional fees.
OTC intervened in legislation that was in “inches” of passing to set fines of up to $10,000 per square meter of damaged stony coral.
OTC has consistently killed proposals to ban any commercial activity in Marine Life Conservation Districts on Maui, Kauai, Hawaii and Oahu.
OTC successfully stalled a bill to assess $5.00 per passenger on every commercial tour to Molokini.
OTC successfully stopped at the very last step in the legislative process, a 40% increase in commercial fees.
Amended salvage bills to provide the owner first shot at removing his own grounded vessel.
Provided successor language to the law for transfer of a commercial permit to benefit the current owner.
Got the auction and 20 year maximum permit provision for parasailing changed to a year to year permit like all others.
OTC killed a proposal for three (3) years in a row to allow the Kaho’olawe Island Reserve Commission the power to confiscate and sell your vessel for violation of any of their rules.
OTC has softened the impact of dozens of administrative rules on fines, penalties, the renewal process, damage reports, scuba diver regs and fee proposals to benefit ocean tourism owners.

AND, MORE!!! For the money you pay, OTC returns far more.

The legislative session starts in January every year and promises to hold surprises (mostly not good surprises) for our industry. Will you help us to help you? Will you be in the know or only read about it later and say “why didn’t someone tell me”?

Please consider making a 5th quarter donation to the OTC PAC.

Aloha Members:

Action is necessary opposing SB795, a new bill aimed to increase commercial use fees.  DLNR is proposing a change to commercial fees that will charge operators the greater of: 
(1) $3.00 per head; or (2) 3% of gross revenues.

If an operator currently offers a trip that “nets” less than $100 per ticket (after commission), then your fees are increasing under this bill.  For example, if you net $80 on a whale watch ticket, you currently pay $2.40 per ticket (3% of $80.00).    Under SB795, your fees would be increased to $3.00 per ticket because $3.00 is greater than $2.40.  Another example is child rates.  If your child net rates are $60 per ticket, you currently pay $1.80 per ticket (3% of $60).  Under SB795, your fees would be increased $3.00 per ticket.  SB795 is doubling your commercial fees for any net rates of $50 or less.   This increase is compounded by the current capacity limitations and travel restrictions. 

HERE IS DRAFT OTC TESTIMONY:

The $3 per passenger fee will be far greater than 3% of gross receipts for a large number of operators who are struggling to survive.

A $3 per passenger fee (Section 2, subsection (c)(5)(B)) is only reasonable if the average ticket price for an ocean-based tour (e.g., whale watches, snorkel sails, dinner cruises, etc.) is $100, as this would be the equivalent to 3% of gross receipts.  However, the average ticket price (particularly after commissions) for many operators is less than $100.  A major factor in this equation is that the ocean tourism industry is a family-oriented industry.  So while a quick internet search might show several tours over $100, a closer look would show that kids are often heavily discounted.  As a result, a $3 per passenger fee would lead to a huge increase in fees paid to the State, especially for many small operators and family-oriented businesses whose tours sell for under $100. 

This potential increase in fees is combined with the current COVID-19 economy and restrictions on local businesses.  The majority of boat operators are currently limited to 50% passenger capacity and are discounting their tours as a way to attract visitors.  As a result, operators are taking fewer passengers for far less money.  A $3 per passenger fee could have a significant financial impact that many operators cannot bear at this time.

In addition, there are many operators who offer deeply discounted trips as a way of doing charity and benefit events.  For example, a company may only charge $15 a ticket to get people to come help clean up the reef at a popular snorkel site.  A 3% fee is $.45, but a $3 fee is now 20% of the ticket price.  As a result, companies will face a major disincentive to helping their local communities.   

OTC is unsure of the State’s reasoning for the $3 per passenger fee or the problem it is attempting to solve.  A 3% gross receipts fee seems to be a fair rule (i.e., you make more, you pay more) that does not have the same adverse and disproportionate impact on smaller operators as the $3 per passenger fee will.

There is no recourse for harbor users to dispute the fees established by appraisal.

The Bill currently states that “all fees established by appraisal pursuant to this subsection shall be set at fair market value” (Section 2, subsection (c)(7)).  While fair market value sounds reasonable, that is simply not always the case.  Multiple appraisals often come back with very different numbers.  As a result, purchasers and lessors typically have a right to dispute an appraisal by hiring their own appraiser.  An example of this is found in HRS § 171-17(b)(2), whereby if the purchaser or lessor of public land does not agree with the appraisal price they may “appoint an appraiser who shall conduct an appraisal on behalf of the purchaser.”

This Bill assumes that “fair market value” is actually and always fair market value.  However, one bad or unjustifiably high appraisal can have devastating effects on both recreational and commercial harbor users with little recourse.  Accordingly, OTC believes that if rates were to be established by an appraiser, harbor users should have the right to counter any rates that they believe are not fair market value just like in HRS § 171-17(b)(2).  Otherwise, the department will have carte blanche to raise rates without any recourse for the users. 

Aloha, OTC Members:

We are already seeing bills to increase fees on the ocean tourism industry. The 2021 Legislative Session is in full swing and OTC is reviewing hundreds of bills that are moving quickly through the House and Senate. We will need as much support as possible.

As a first step, please set up your login and password on the Hawaii State Legislature Website so you can be ready to submit testimony. Click on this link:

https://www.capitol.hawaii.gov/login/register.aspx

Aloha Members, OTC is still working hard for our members.  Below is the recent letter OTC sent to U.S. Senator Mazie Hirono, U.S. Representative Ed Case and U.S. Representative Tulsi Gabbard as well as the Center for Disease Control.

We need immediate federal emergency economic assistance for all vessel operators. To keep the pressure on, we need your help immediately!  We ask each of you to send a letter to your Senators and Members of the House of Representatives immediately. Their emails and a template is below:

[email protected]; [email protected]; [email protected]

Dear Senator _____

Or Dear Representative _____

Please enact emergency economic relief immediately.  The continued existence of ____[name of your company] _____ depends on it.

[Name of your company] operates __[number]___ passenger vessels ___[where] ____.  We are a part of the American travel, tourism, and transportation industry. The U.S. passenger vessel industry carries approximately 200 million passengers each year. 

We should be operating now, but because of the coronavirus outbreak we are completely shut down and it looks like we will be for weeks or months to come.

• Without cash flow, the jobs of our [___number___] employees are in permanent jeopardy.    These workers are fellow Americans.

• Without cash flow, we will be unable to meet upcoming debt obligations.

• Without cash flow, we cannot make the usual purchases from our suppliers and vendors, many of which are Associate Members of PVA.  Like us, they too are suffering tremendous economic harm.

Some voices have questioned whether emergency economic aid should go to foreign-flagged cruise companies.   But we, like all members of the Passenger Vessel Association, are American companies, we hire U.S. crews and workers, sail vessels registered under the U.S. flag, and fully pay U.S. and state income taxes.  Please don’t inadvertently leave us out of an economic relief package.

[name of company] faces an existential threat as a result of Coronavirus.  We need your assistance immediately if we are to survive.

Sincerely,

(Your name here)

OTC fought for and got the first day use mooring permits despite environmental opposition saying we would damage the environment. We want to be known as the people who leave only bubbles.

OTC was a prime mover of legislation to create the Small Business Regulatory Review Board allowing for a Small Business Bill of Rights to be enacted and an appeals mechanism to protest burdensome and nonsensical regulations.

OTC modified proposals that would have eliminated the penalty waiver provision of the Small Business Regulatory Review Board for environmental violations.

OTC has been a prime proponent of the concept that berthing rights are essential to the continuation of the business and unless a permittee is in violation of laws, the renewal of the slip should be protected.

OTC fought for an increase in slip fees to head off efforts by some who think we should pay even more, like 10 – 15% of our gross revenue. This helped to lock in fees and generated income to DOBOR which in turn allowed them to receive $10 – $15 million a year of “free” federal money for harbors.

OTC got the first piece of legislation passed in 2008 that allows for interharbor use without the payment of additional fees.

OTC sponsored the resolution to encourage a haul-out facility for Maui and the Big Island.

OTC rewrote proposed salvage laws so the owner has first crack at getting his vessel off the reef his way instead of letting DLNR do it any old way.

OTC intervened in legislation to set fines of up to $10,000 per square meter of damaged stony coral in 2008. More to come in 2009.

OTC killed proposals to ban any commercial activity in Marine Life Conservation Districts on Maui, Kauai, Hawaii and Oahu.

Because OTC exists we often get a seat at the table and sometimes can request a veto of bad rules or laws before they get too far down the road.