GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

S	3 

SENATE BILL 100*
Agriculture, Marine Resources, and Wildlife Committee Substitute Adopted 2/24/93
House Committee Substitute Favorable 5/7/93

Short Title:  Shellfish Lease Authority.	(Public)
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Sponsors:
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Referred to:  
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February 9, 1993

A BILL TO BE ENTITLED
AN ACT TO VEST AUTHORITY IN THE SECRETARY OF ENVIRONMENT, HEALTH, AND NATURAL RESOURCES TO GRANT SHELLFISH CULTIVATION LEASES AND TO MAKE CHANGES TO CHAPTER 113 OF THE NORTH CAROLINA GENERAL STATUTES.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 113-202 reads as rewritten:
"§ 113-202. New and renewal leases for shellfish cultivation; termination of leases issued prior to January 1, 1966.
(a)	To increase the use of suitable areas underlying coastal fishing waters for the production of shellfish, the Secretary may grant shellfish cultivation leases to persons who reside in North Carolina under the terms of this section when the Secretary determines, in accordance with his duty to conserve the marine and estuarine resources of the State, that the public interest will benefit from issuance of the lease. Suitable areas for the production of shellfish shall meet the following minimum standards:
(1)	The area leased must be suitable for the cultivation and harvesting of shellfish in commercial quantities.
(2)	The area leased must not contain a natural shellfish bed.
(3)	Cultivation of shellfish in the leased area will be compatible with lawful utilization by the public of other marine and estuarine resources. Other public uses which may be considered include, but are not limited to, navigation, fishing and recreation.
(4)	Cultivation of shellfish in the leased area will not impinge upon the rights of riparian owners.
(5)	The area leased must not include an area designated for inclusion in the Department's Shellfish Management Program.
(6)	The area leased must not include an area which the State Health Director has recommended be closed to shellfish harvest by reason of pollution.
(b)	The Secretary may delete any part of an area proposed for lease or may condition a lease to protect the public interest with respect to the factors enumerated in subsection (a) of this section. The Secretary may not grant a new lease in an area heavily used for recreational purposes.
(c)	No person, including a corporate entity, or single family unit may acquire and hold by lease, lease renewal, or purchase more than 50 acres of public bottoms under shellfish cultivation leases.
(d)	Any person desiring to apply for a lease must make written application to the Secretary on forms prepared by the Department containing such information as deemed necessary to determine the desirability of granting or not granting the lease requested. Except in the case of renewal leases, the application must be accompanied by a map or diagram made at the expense of the applicant, showing the area proposed to be leased.
The map or diagram must conform to standards prescribed by the Secretary concerning accuracy of map or diagram and the amount of detail that must be shown. If on the basis of the application information and map or diagram the Secretary deems that granting the lease would benefit the shellfish culture of North Carolina, the Secretary, in the case of initial lease applications, must order an investigation of the bottom proposed to be leased. The investigation is to be made by the Secretary or his authorized agent to determine whether the area proposed to be leased is consistent with the standards in subsection (a)	and any other applicable standards under this Article and the rules of the Marine Fisheries Commission. In the event the Secretary finds the application inconsistent with the applicable standards, the Secretary shall recommend that the application be denied or that a conditional lease be issued which is consistent with the applicable standards. In the event the Secretary authorizes amendment of the application, the applicant must furnish a new map or diagram meeting requisite standards showing the area proposed to be leased under the amended application. At the time of making application for an initial lease, the applicant must pay a filing fee of one hundred dollars ($100.00).
(e)	The area of bottom applied for in the case of an initial lease or amended initial lease must be as compact as possible, taking into consideration the shape of the body of water, the consistency of the bottom, and the desirability of separating the boundaries of a leasehold by a sufficient distance from any known natural shellfish bed to prevent the likelihood of disputes arising between the leaseholder and members of the public taking shellfish from the natural bed.
(f)	Within a reasonable time after receipt of an application that complies with subsection (d), the Secretary shall notify the applicant whether he recommends approval, disapproval, or modification of the lease application. In the event the Secretary recommends approval or a modification to which the applicant agrees, the Secretary shall conduct a public hearing in the county where the proposed leasehold lies. The Secretary must publish at least two notices of the intention to lease in a newspaper of general circulation in the county in which the proposed leasehold lies. The first publication must precede the public hearing by more than 20 days; the second publication must follow the first by seven to 11 days. The notice of intention to lease must contain a sufficient description of the area of the proposed leasehold that its boundaries may be established with reasonable ease and certainty and must also contain the date, hour and place of the hearing. The Secretary's recommendation of disapproval shall become the final agency decision on the application unless the applicant initiates a contested case by filing a petition under G.S. 150B-23 within 20 days of notice of such action.
(g)	After consideration of the public comment received and any additional investigations he orders to evaluate the comments, the Secretary shall notify the applicant in person or by certified or registered mail of his decision on the lease application. The Secretary shall also notify persons who submitted comments at the public hearing and requested notice of the lease decision.  An applicant who is dissatisfied with the Secretary's decision may commence a contested case by filing a petition under G.S. 150B-23 within 20 days after receiving the Secretary's notice of his decision, as may other persons meeting the requirements of G.S. 150B-23. In the event the Secretary's decision is a modification to which the applicant agrees, the lease applicant must furnish an amended map or diagram before the lease can be issued by the Secretary. The Secretary's decision disapproving an application shall become the final agency decision on the application unless the applicant initiates a contested case by filing a petition under G.S. 150B-23 within 20 days of notice of such action.
(h)	
(i)	After a lease application is approved by the Secretary, the applicant shall submit to the Secretary a survey of the area approved for leasing and define the bounds of the area approved for leasing with markers in accordance with the rules of the Commission. The survey shall conform to standards prescribed by the Secretary concerning accuracy of survey and the amount of detail to be shown. When an acceptable survey is submitted, the boundaries are marked and all fees and rents due in advance are paid, the Secretary shall execute the lease on forms approved by the Attorney General. The Secretary is authorized, with the approval of the lessee, to amend an existing lease by reducing the area under lease or by combining contiguous leases without increasing the total area leased.
(j)	Initial leases begin upon the issuance of the lease by the Secretary and expire at noon on the first day of April following the tenth anniversary of the granting of the lease. Renewal leases are issued for a period of 10 years effective from the time of expiration of the previous lease. At the time of making application for renewal of a lease, the applicant must pay a filing fee of fifty dollars ($50.00). The rental for initial leases is one dollar ($1.00) per acre for all leases entered into before July 1, 1965, and for all other leases until noon on the first day of April following the first anniversary of the lease. Thereafter, for initial leases entered into after July 1, 1965, and from the beginning for renewals of leases entered into after said date, the rental is five dollars ($5.00) per acre per year. Rental must be paid annually in advance prior to the first day of April each year. Upon initial granting of a lease, the pro rata amount for the portion of the year left until the first day of April must be paid in advance at the rate of one dollar ($1.00) per acre per year; then, on or before the first day of April next, the lessee must pay the rental for the next full year.
(k)	Except as restricted by this Subchapter, leaseholds granted under this section are to be treated as if they were real property and are subject to all laws relating to taxation, sale, devise, inheritance, gift, seizure and sale under execution or other legal process, and the like. Leases properly acknowledged and probated are eligible for recordation in the same manner as instruments conveying an estate in real property. Within 30 days after transfer of beneficial ownership of all or any portion of or interest in a leasehold to another, the new owner must notify the Secretary of such fact. Such transfer is not valid until notice is furnished the Secretary. In the event such transferee is a nonresident, the Secretary must initiate proceedings to terminate the lease.
(l)	Upon receipt of notice by the Secretary of any of the following occurrences, he must commence action to terminate the leasehold:
(1)	Failure to pay the annual rent in advance.
(2)	Failure to file information required by the Secretary upon annual remittance of rental or filing false information on the form required to accompany the annual remittance of rental.
(3)	Failure by new owner to report a transfer of beneficial ownership of all or any portion of or interest in the leasehold.
(4)	Failure to mark the boundaries in the leasehold and to keep them marked as required in the rules of the Marine Fisheries Commission.
(5)	Failure to utilize the leasehold on a continuing basis for the commercial production of shellfish.
(6)	Transfer of all or part of the beneficial ownership of a leasehold to a nonresident.
(7)	Substantial breach of compliance with the provisions of this Article or of rules of the Marine Fisheries Commission governing use of the leasehold.
The Marine Fisheries Commission is authorized to make rules defining commercial production of shellfish, based upon the productive potential of particular areas climatic or biological conditions at particular areas or particular times, availability of seed shellfish, availability for purchase by lessees of shells or other material to which oyster spat may attach, and the like. Commercial production may be defined in terms of planting effort made as well as in terms of quantities of shellfish harvested. Provided, however, that if a lessee has made a diligent effort to effectively and efficiently manage his lease according to accepted standards and practices in such management, and because of reasons beyond his control, such as acts of God, such lessee has not and cannot meet the requirements set out by the Marine Fisheries Commission under the provisions of this paragraph of this subsection, his leasehold shall not be terminated under subdivision (5)	of this subsection.
(m)	In the event the leaseholder takes steps within 30 days to remedy the situation upon which the notice of intention to terminate was based and the Secretary is satisfied that continuation of the lease is in the best interests of the shellfish culture of the State, the Secretary may discontinue termination procedures. Where there is no discontinuance of termination procedures, the leaseholder may initiate a contested case by filing a petition under G.S. 150B-23 within 30 days of receipt of notice of intention to terminate. The Secretary shall make the final agency decision of all lease terminations. Where the leaseholder does not initiate a contested case, or the Secretary's final decision upholds termination, the Secretary must send a final letter of termination to the leaseholder. The final letter of termination may not be mailed sooner than 30 days after receipt by the leaseholder of the Secretary's notice of intention to terminate, or of the Secretary's final agency decision, as appropriate. The lease is terminated effective at midnight on the day the final notice of termination is served on the leaseholder. The final notice of termination may not be issued pending hearing of a contested case initiated by the leaseholder.
Service of any notice required in this subsection may be accomplished by certified mail, return receipt requested; personal service by any law-enforcement officer; or upon the failure of these two methods, publication. Service by publication shall be accomplished by publishing such notices in a newspaper of general circulation within the county where the lease is located for at least once a week for three successive weeks. The format for notice by publication shall be approved by the Attorney General.
(n)	Upon final termination of any leasehold, the bottom in question is thrown open to the public for use in accordance with laws and rules governing use of public grounds generally.  Within 30 days of final termination of the leasehold, the former leaseholder shall remove all abandoned markers denominating the area of the leasehold as a private bottom. The State may, after 10 days' notice to the owner of the abandoned markers thereof, remove the abandoned structure and have the area cleaned up.  The cost of such removal and cleanup shall be payable by the owner of the abandoned markers and the State may bring suit to recover the costs thereof.
(o)	Every year between January 1 and February 15 the Secretary must mail to all leaseholders a notice of the annual rental due and include forms designed by him for determining the amount of shellfish or shells planted on the leasehold during the preceding calendar year, and the amount of harvest gathered. Such forms may contain other pertinent questions relating to the utilization of the leasehold in the best interests of the shellfish culture of the State, and must be executed and returned by the leaseholder with the payment of his rental. Any leaseholder or his agent executing such forms for him who knowingly makes a false statement on such forms is guilty of a misdemeanor punishable in the discretion of the court.
(p)	All leases and renewal leases granted after the effective date of this Article are made subject to this Article and to reasonable amendment of governing statutes, rules of the Marine Fisheries Commission, and requirements imposed by the Secretary or his agents in regulating the use of the leasehold or in processing applications of rentals. This includes such statutory increase in rentals as may be necessitated by changing conditions and refusal to renew lease after expiration, in the discretion of the Secretary. No increase in rentals, however, may be given retroactive effect.
The General Assembly declares it to be contrary to public policy to the oyster and clam bottoms which were leased prior to January 1, 1966, and which are not being used to produce oysters and clams in commercial quantities to continue to be held by private individuals, thus depriving the public of a resource which belongs to all the people of the State. Therefore, when the Secretary determines, after due notice to the lessee, and after opportunity for the lessee to be heard, that oysters or clams are not being produced in commercial quantities, due to the lessee's failure to make diligent effort to produce oysters and clams in commercial quantities, the Secretary may decline to renew, at the end of the current term, any oyster or clam bottom lease which was executed prior to January 1, 1966. The lessee may appeal the denial of the Secretary to renew the lease by initiating a contested case pursuant to G.S. 150B-23. In such contested cases, the burden of proof, by the greater weight of the evidence, shall be on the lessee. 
(q)	Repealed by Session Laws 1983, c. 621, s. 16, effective July 1, 1983."
Sec. 2.  G.S. 113-202.1 reads as rewritten:
"§ 113-202.1.  Water column leases for aquaculture.
(a)	To increase the productivity of leases for shellfish culture issued under G.S. 113-202, the Secretary may amend shellfish cultivation leases to authorize use of the water column superjacent to the leased bottom under the terms of this section when he determines the public interest will benefit from amendment of the leases.  Leases with water column amendments must produce shellfish in commercial quantities at four times the minimum production rate of leases issued under G.S. 113-202, or any higher quantity required by the Marine Fisheries Commission through duly adopted rules.
(b)	Suitable areas for the authorization of water column use shall meet the following minimum standards:
(1)	Aquaculture use of the leased area must not significantly impair navigation;
(2)	The leased area must not be within a navigation channel marked or maintained by a state or federal agency;
(3)	The leased area must not be within an area traditionally used and available for fishing or hunting activities incompatible with the activities proposed by the leaseholder, such as trawling or seining;
(4)	Aquaculture use of the leased area must not significantly interfere with the exercise of riparian rights by adjacent property owners including access to navigation channels from piers or other means of access; and
(5)	Any additional standards, established by the Commission in duly adopted rules, to protect the public interest in coastal fishing waters.
(c)	The Secretary shall not amend shellfish cultivation leases to authorize use of the water column unless:
(1)	The leaseholder submits an application, accompanied by a nonrefundable application fee of one hundred dollars ($100.00), which conforms to the standards for lease applications in G.S. 113-202(d) and the duly adopted rules of the Commission;
(2)	The proposed amendment has been noticed consistent with G.S. 113-202(f);
(3)	Public hearings have been conducted consistent with G.S. 113-202(g);
(4)	The aspects of the proposals which require use and dedication of the water column have been documented and are recognized by the Secretary as commercially feasible forms of aquaculture which will enhance shellfish production on the leased area;
(5)	It is not feasible to undertake the aquaculture activity outside of coastal fishing waters; and
(6)	The authorized water column use has the least disruptive effect on other public trust uses of the waters of any available technology to produce the shellfish identified in the proposal.
(d)	Amendments of shellfish cultivation leases to authorize use of the water column are issued for a period of five years or the remainder of the term of the lease, whichever is shorter.  The annual rental for water column amendments is five hundred dollars ($500.00) per acre, prorated.  The rental is in addition to that required in G.S. 113-202.
(e)	Amendments of shellfish cultivation leases to authorize use of the water column are subject to termination in accordance with the procedures established in G.S. 113-202 for the termination of shellfish cultivation leases.  Additionally, such amendments may be terminated for unauthorized or unlawful interference with the exercise of public trust rights by the leaseholder, agents and employees of the leaseholder.
(f)	Amendments of shellfish cultivation leases to authorize use of the water column are not transferrable except when the Secretary approves the transfer after public notice and hearing consistent with subsection (c) of this section.
(g)	After public notice and hearing consistent with subsection (c) of this section, the Secretary may renew an amendment, in whole or in part, when the leaseholder has produced commercial quantities of shellfish and has otherwise complied with the rules of the Commission.  Renewals may be denied or reduced in scope when the public interest so requires.  Appeal of renewal decisions shall be conducted in accordance with G.S. 113-202(p).  Renewals are subject to the lease terms and rates established in subsection (d) of this section.
(h)	The procedures and requirements of G.S. 113-202 shall apply to proposed amendments or amendments of shellfish cultivation leases considered under this section except more specific provisions of this section control conflicts between the two sections.
(i)	To the extent required by demonstration or research aquaculture development projects, the Secretary may amend existing leases and issue leases that authorize use of the bottom and the water column.  Demonstration or research aquaculture development projects may be authorized for two years with no more than one renewal and when the project is proposed or formally sponsored by an educational institution which conducts research or demonstration of aquaculture.  Production of shellfish with a sales value in excess of one thousand dollars ($1,000) per acre per year shall constitute commercial production.  Demonstration or research aquaculture development projects shall be exempt for the rental rate in subsection (d) of this section unless commercial production occurs as a result of the project."
Sec. 3.  G.S. 113-202.2 reads as rewritten:
"§ 113-202.2.  Water column leases for aquaculture for perpetual franchises.
(a)	To increase the productivity of shellfish grants and perpetual franchises for shellfish culture recognized under G.S. 113-206, the Secretary may lease the water column superjacent to such grants or perpetual franchises (hereinafter 'perpetual franchises') under the terms of this section when it determines the public interest will benefit from the lease.  Perpetual franchises with water column leases must produce shellfish in commercial quantities at four times the minimum production rate of leases issued under G.S. 113-202, or any higher quantity required by the Marine Fisheries Commission by rule.
(b)	Suitable areas for the authorization of water column use shall meet the following minimum standards:
(1)	Aquaculture use of the leased water column area must not significantly impair navigation;
(2)	The leased water column area must not be within a navigation channel marked or maintained by a State or federal agency;
(3)	The leased water column area must not be within an area traditionally used and available for fishing or hunting activities incompatible with the activities proposed by the perpetual franchise holder, such as trawling or seining;
(4)	Aquaculture use of the leased water column area must not significantly interfere with the exercise of riparian rights by adjacent property owners including access to navigation channels from piers or other means of access;
(5)	The leased water column area may not exceed 10 acres for grants or perpetual franchises recognized pursuant to G.S. 113-206;
(6)	The leased water column area must not extend more than one-third of the distance across any body of water or into the channel third of any body of water for grants or perpetual franchises recognized pursuant to G.S. 113-206; and
(7)	Any additional rules to protect the public interest in coastal fishing waters adopted by the Commission.
(c)	The Secretary shall not lease the water column superjacent to oyster or other shellfish grants or perpetual franchises unless:
(1)	The perpetual franchise holder submits an application, accompanied by a nonrefundable application fee of one hundred dollars ($100.00), which conforms to the standards for lease applications in G.S. 113-202(d) and rules adopted by the Commission;
(2)	Notice of the proposed lease has been given consistent with G.S. 113-202(f);
(3)	Public hearings have been conducted consistent with G.S. 113-202(g);
(4)	The aspects of the proposals which require use and dedication of the water column have been documented and are recognized by the Secretary as commercially feasible forms of aquaculture which will enhance shellfish production;
(5)	It is not feasible to undertake the aquaculture activity outside of coastal fishing waters; and
(6)	The authorized water column use has the least disruptive effect on other public trust uses of the waters of any available technology to produce the shellfish identified in the proposal.
(d)	Water column leases to perpetual franchises shall be issued for a period of five years and may be renewed pursuant to subsection (g) of this section.  The annual rental for water column leases shall be five hundred dollars ($500.00) per acre, prorated, or the then current renewal rate, whichever is greater.
(e)	Water column leases to perpetual franchises may be terminated for unauthorized or unlawful interference with the exercise of public trust rights by the leaseholder or his agents or employees.
(f)	Water column leases to perpetual franchises are not transferrable except when the Secretary approves the transfer after public notice and hearing consistent with G.S. 113-202(f) and (g).
(g)	After public notice and hearing consistent with G.S. 113-202(f) and (g), the Secretary may renew a water column lease, in whole or in part, if the leaseholder has produced commercial quantities of shellfish and has otherwise complied with this section and the rules of the Commission.  Renewals may be denied or reduced in scope when the public interest so requires.  Appeal of renewal decisions shall be conducted in accordance with G.S. 113-202(p).  Renewals are subject to the lease terms and rates set out in subsection (d) of this section.
(h)	The procedures and requirements of G.S. 113-202 shall apply to proposed water column leases or water column leases to perpetual franchises considered under this section except that more specific provisions of this section control conflicts between the two sections.
(i)	Demonstration or research aquaculture development projects may be authorized for two years with no more than one renewal and when the project is proposed or formally sponsored by an educational institution which conducts aquaculture research or demonstration projects.  Production of shellfish with a sales value in excess of one thousand dollars ($1,000) per acre per year shall constitute commercial production.  Demonstration or research aquaculture development projects shall be exempt from the rental rate in subsection (d) of this section unless commercial production occurs as a result of the project."
Sec. 4.  G.S. 143B-289.4(2) reads as rewritten:
"(2)	The Marine Fisheries Commission shall have the power and duty to establish standards and adopt rules:
(a)	Implementing the provisions of Subchapter IV of Chapter 113 as provided in G.S. 113-134 of the General Statutes of the State of North Carolina;
(b)	For the disposition of confiscated property as set forth in G.S. 113-137;
(c)	Governing all license requirements and taxes prescribed in Chapter 113, Article 14;
(d)	Governing the importation and exportation of fish, and equipment that may be used in taking or processing fish, as necessary to enhance the conservation of marine and estuarine resources of North Carolina as provided in G.S. 113-160;
(e)	Governing the possession, transportation and disposition of seafood, as provided in G.S. 113-164;
(f)	Regarding the disposition of the young of edible fish, as provided by G.S. 113-185;
	(h)	Governing utilization of private fisheries, as provided in G.S. 113-205;
(i)	Imposing further restrictions upon the throwing of fish offal in any coastal fishing waters, as provided in G.S. 113-265;
(j)	Governing the location and utilization of artificial reefs in coastal waters; and
(k)	Regulating the placement of nets and other sports or commercial fishing apparatus in coastal fishing waters with regard to navigational or recreational safety as well as from a conservation standpoint."
Sec. 5.  G.S. 113-154 reads as rewritten:
"§ 113-154. Shellfish and crab licenses.
(a)	It is unlawful for an individual to take shellfish or crabs from the public or private grounds of North Carolina by mechanical means or for commercial use by any means without having  first procured an individual shellfish and crab license.
(b)	It is unlawful for any individual to take shellfish or crabs for commercial use from the public or private grounds of North Carolina without having ready at hand for inspection a current and valid shellfish and crab license issued to him personally and bearing his correct name and address. It is unlawful for any such individual taking or possessing freshly taken shellfish or crabs to refuse to exhibit his license upon the request of an officer authorized to enforce the fishing laws.
(c)	Shellfish and crab licenses are issued annually on a fiscal year basis upon payment of a fee of fifteen dollars ($15.00) upon proof that the license applicant is a resident of North Carolina: Provided, that persons under 16 years of age are exempt from the license requirements of this section if they are accompanied by their  parent or guardian who is in compliance with the requirements of this section or if they have in their possession their parent's or guardian's shellfish and crab license.  Notwithstanding G.S. 113-130, for purposes of this subsection, a North Carolina resident means a person that has resided in North Carolina for six months immediately preceding the application for the shellfish and crab license.
(d)	In the event an individual possessing a shellfish and crab license changes his name or address or receives one erroneous in this respect, he must within 30 days surrender the license for one bearing the correct name and address. An individual prosecuted for failure to possess a valid license is exonerated if he can show that the invalidity consisted solely of an incorrect name or address appearing in a license to which he was lawfully entitled and that the erroneous condition had not existed for longer than 30 days.
(e)	It is unlawful for an individual issued a shellfish and crab license to transfer or offer to transfer his license, either temporarily or permanently, to another. It is unlawful for an individual to secure or attempt to secure a shellfish and crab license from a source not authorized by the Marine Fisheries Commission."
Sec. 6.  This act is effective upon ratification.