DATE: January 19, 2021
SUBJECT:
Title
ORDINANCE AMENDING ARTICLE 4, SECTION 4.37 - REGULATION OF SIX PAC CHARTER VESSELS, TO SECTION 4.37 - REGULATION OF CHARTER VESSEL OPERATIONS IN SAN DIEGO BAY AND DISTRICT TIDELANDS
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EXECUTIVE SUMMARY:
Currently, there are both legal and unregulated charter vessel operations occurring in San Diego Bay and on San Diego Unified Port District (District) tidelands. While the District has regulated Six Pac charter vessel operations via ordinance since 2001, the current regulations do not apply to numerous other types of charter vessel operations. The proposed amendments to existing San Diego Unified Port District (UPD) Code Section 4.37 are intended to address all charter vessel operations with the goals of ensuring public safety, protecting consumers, and creating an even playing field for all charter vessel businesses, which include District tenants, subtenants and those charter vessel operators wishing to use District facilities. Charter vessel operators are broadly defined to include whale-watching boats, party boats, special event charters and sportfishing, among many others.
Since March 2018, the District has held or attended over twenty-five community outreach meetings with key stakeholders and members of the public and completed one benchmark study in order to better understand the nature and extent of charter vessel operations on the west coast and in San Diego Bay.
In September 2019, staff released a draft of proposed amendments to UPD Code Section 4.37 for review by the public and stakeholders and held a public meeting in October 2019. The District accepted comments on the proposed amendments through February 2020. Staff received approximately 64 comments concerning the proposed ordinance through that outreach effort, considered them all, and made appropriate changes to the draft. Additional targeted outreach with various District tenant groups was conducted throughout 2020, additional comments were received and considered, and incorporated into to the draft where appropriate.
As a result of the benchmarking study, the extensive public and stakeholder outreach, and working with staff from the United States Coast Guard, staff is presenting proposed amendments to UPD Code Section 4.37 (Attachment A) for the Board’s consideration and recommends approval. The proposed amendments, to be effective on June 1, 2021, will enable consistent enforcement of all applicable federal, state and local ordinances and regulations pertaining to charter vessel operations for those conducting charter vessel businesses from a marina, sportfishing landing, and those charter vessel operators picking up and/or dropping off passengers for hire utilizing District facilities such as the Shelter Island guest dock, Pepper Park boat launching facility, Chula Vista boat launching facility and potential other sites to be determined.
The proposed amendments to UPD Code Section 4.37 will require every charter vessel operation to obtain a Charter Vessel Operations Permit (Permit), at a cost to be determined, and pay the District for use of District property through a sublease or wharfage agreement with a marina or sportfishing landing. Charter vessel operators not conducting business from a District marina or sportfishing landing will be required to enter into a license agreement with the District which will provide for the payment of a fee for the use of District property. Permit fees and license agreement fees are not set by the proposed ordinance but will be determined in the future in accordance with any applicable law. The Permit provisions will include terms requiring compliance with all federal, state and local laws and regulations, including Coast Guard regulations, procuring and maintaining certain insurance, seaworthiness, drug testing of captain and crew where required, the maintenance of passenger and revenue logs, and other requirements.
Should the Board approve the proposed amendments, staff recommends that the District begin issuing Permits via a charter operations manager to be selected through a Request for Proposals (RFP) that would be issued following Board approval of the ordinance.
RECOMMENDATION:
Recommendation
Approve Ordinance Amending Article 4, Section 4.37 - Regulation of Six Pac Charter Vessels to Section 4.37 - Regulation of Charter Vessel Operations in San Diego Bay and District Tidelands
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FISCAL IMPACT:
The approval of the proposed amendments to UPD Code Section 4.37 should have no negative fiscal impact. It is expected that permit fees will recover the cost of the permit program, and that licensee agreement fees will be based on the value of the use of District property.
Compass Strategic Goals:
This agenda item supports the following Strategic Goal(s).
• A Port that the public understands and trusts.
• A vibrant waterfront destination where residents and visitors converge.
• A Port with a healthy and sustainable bay and its environment.
• A Port that is a safe place to visit, work and play.
DISCUSSION:
Background
Charter vessel operations are very complex, involving federal law, United States Coast Guard regulations which have the force of law, California state law, and local laws, currently including San Diego County health orders due to Covid-19. Commencing in 2018, the District formed an interdepartmental team, comprised of representatives from the Office of General Counsel, the Port Auditor, Harbor Police, Real Estate, Planning, Maritime, Environmental, Marketing, Risk, and Finance. Through community and stakeholder meetings, a benchmark study, a tenant survey, many individual conversations and on-going enforcement of current laws, several notable issues have emerged.
In recent years, members of the commercial boating community have raised concerns about alleged illegal charter vessel operations that are non-compliant with relevant laws and regulations applicable to charter vessel operations and an inconsistent application of permitting requirements. Concerns have included claims of non-compliance with Coast Guard licensing and regulations, lack of adequate insurance, unsafe conditions or operations, lack of an appropriate agreement or any contractual relationship with a marina or sportfishing landing, and avoidance of rent payments to the District for conducting charter vessel operations. Businesses that do not comply with well-established existing laws and regulations can jeopardize public safety and have an unfair competitive advantage over legitimate charter operators.
The original UPD Code Section 4.37 is twenty years old and only addresses six-person maximum-capacity charter sportfishing vessels, also known as Six Pac charters, which fall on the less regulated side of charter vessel businesses that now flourish in San Diego Bay. The universe of charter vessel operations include whale watching and party boats, jet skis, kayaks, private events (weddings, burial at sea ceremonies), charters and fishing vessels. Marinas may choose or not choose to lease space to these businesses, in compliance with master lease requirements for sublessees. Additionally, the marinas can charge a range of fees to the vessel charter operators, subject to a percentage of revenue paid to the District in accordance with a marina’s lease agreement with the District. The current form of UPD Code Section 4.37 also does not address business relationships with charter vessel operators that do not, or cannot, operate out of a marina or sportfishing landing.
Purpose of Proposed Amendments
The narrow focus of the current UPD Code Section 4.37 on regulating only Six Pac charters and solely relying upon a contractual relationship between a marina or sportfishing landing and the charter vessel operation does not serve the entire charter vessel community, creating two issues: 1) the inability of qualified charter vessel operators to acquire a space to conduct their business (i.e., embark and disembark passengers for hire); and, 2) a disparate fee structure to conduct business should a charter vessel operator be able to lease space within a marina or sport fishing landing. This forces some otherwise qualified charter vessel operators wishing to conduct business legitimately to operate “under the radar” and find ways around current regulations or lease agreements and provides incentive to some charter vessel operator to conduct business with no regulation or oversight.
Under these conditions, qualified charter vessel operators that cannot be accommodated at a marina or sports fishing landing cannot easily become legitimate, so many operate illicitly. Unregulated charter vessel operations, whether or not they are qualified pursuant to applicable federal and state laws governing charter vessel operations, result in undercutting legitimate charter vessel operations conducting business via a sublease or wharfage agreement through a marina or sport fishing landing. This leads to unfair competition as no fees for use of District property or private facilities used surreptitiously are generated, while legitimate charter vessel operators are paying fees to a marina or sport fishing landing as well as to the District.
By providing an option for charter vessel operators to conduct business from District facilities, such as the Shelter Island Transient Dock (also known as the Shelter Island Guest Dock), Pepper Park and Chula Vista docks and boat launch ramps, qualified charter vessel operators can be accommodated. Staff anticipates further public facilities may be used in the future; however, the Shelter Island Boat Launch Facility cannot be used, due to grant restrictions, and this prohibition has been codified in the proposed amendments to UPD Code Section 4.37.
Summary of Proposed Amendments to UPD Code Section 4.37
The proposed amendments to UPD Code Section 4.37 will require all charter vessels to obtain a Permit to operate on San Diego Bay and tidelands. Additionally, all charter vessel operations must also have a valid business agreement in the form of a sublease or wharfage agreement for those charter vessels operating out of a marina, a master lease that complies with the requirements of UPD Code Section 4.37 for those charter vessels operating from sport fishing landings, and a license agreement for those charter vessel operations utilizing District facilities.
The complete requirements for obtaining and maintaining a Permit are set forth in the draft amendments to UPD Code Section 4.37 (Attachment A), and are summarized as follows (the specific requirements will depend on the specific type of charter vessel operation):
1) Operate with a United States Coast Guard licensed captain aboard;
2) Maintain general liability and vessel pollution liability insurance with the District named as an additional insured and proof thereof to be carried on the charter vessel;
3) Maintain a valid Certificate of Inspection;
4) Provide valid vessel documentation and registration;
5) Provide for an employee drug testing program, as legally required;
6) Agree to defend, indemnify and hold the District harmless for liability, claims, suits and other losses arising directly or indirectly from the issuance of a Permit, all charter vessel operations conducted pursuant to a Permit, and the use of District facilities, except for claims and litigation arising out of the gross negligence or willful misconduct of the District;
7) Provide a current business license from the city in which the charter vessel business is located;
8) Maintain vessel seaworthiness.
In addition to the requirements summarized above to obtain and maintain a Permit, the amendments to UPD Code Section 4.37 include record keeping requirements regarding passenger logs, charter vessel operation revenue collected, and compliance boarding by police and the United States Coast Guard, which are similar to, if not exactly the same, as those set forth in the original UPD Code Section 4.37 (Attachment B - redline of proposed amendments to original UPD Code Section 4.37).
The proposed amendments also provide for an appeal process, similar to other permits issued by the District, which provide for an appeal where the District refuses to issue a Permit to an applicant, or in the case where a Permit is suspended or revoked for non-compliance with any provision of the Permit or UPD Code Section 4.37.
The penalty section has been enhanced. In addition to administrative remedies such as a Permit suspension or revocation, there are also monetary penalties for any violation of UPD Code Section 4.37 - $500 for a first offense occurring in 12 consecutive months, $2,500 for a second offense occurring in 12 consecutive months, and $5,000 for each additional offense occurring in 12 consecutive months. The proposed amended UPD Code Section 4.37 also retains previously imposable penalties as set forth in Article 0, Section 0.11 (General Penalty), and Article 0, Section 0.13 (Permit Violations) which include criminal remedies such as arrest and prosecution as prescribed in Section 0.11 of the UPD Code.
Charter Vessel Operations Manager for Permits and District Facilities
If the proposed amendments to existing San Diego Unified Port District (UPD) Code Section 4.37 are approved by the Board, staff recommends that the District hire a qualified charter vessels operations manager to oversee the issuance of, and compliance with, the Permits on behalf of the District and collect Permit fees and fees pursuant to license agreements. The District is not currently staffed or organized to provide such services, which will also include ensuring compliance for charter vessel operators doing business on District facilities, such as appropriate embarking and debarking of passengers for hire, at various locations, days and times. The selected manager would also be responsible for compiling and maintaining a public list of all Permits issued, and such data would be used to populate a webpage on the District’s website to keep the public and stakeholders apprised of legal and legitimate charter vessel operators conducting business on San Diego Bay and District tidelands.
Staff has determined that a competitive process would be beneficial in selecting the most qualified manager to implement and oversee this new program, and intends to include management of the Shelter Island Guest Dock as part of the manager’s duties, since it will be partially utilized as a District facility for charter vessel operations embarking and debarking passengers for hire. The Shelter Island Guest Dock is currently managed by the Harbor Police Department, which staff has found is not the best use of District resources. As such, staff intends to issue the RFP once the amendments to UPD Code 4.37 are approved by the Board.
If approved by the Board on January 19, 2021, the amendments to UPD Code Section 4.37 would take effect on June 1, 2021. During this time, staff and Harbor Police will educate stakeholders and the public on the ordinance requirements and move forward with the RFP process. Staff will also prepare the Permit and Permit application documents, establish the Permit fee, and develop all information or data needed to establish the license agreement fee structure.
General Counsel’s Comments:
The Office of the General Counsel has been involved in this matter since concerns were first raised and has actively participated in all aspects of drafting the proposed amendments to UPD Code Section 4.37, as well as public and stakeholder outreach. The Office of the General Counsel also assisted in the drafting of this agenda sheet and approves it and the proposed amendments to UPD Code Section 4.37 as to form and legality.
Environmental Review:
The proposed Board action does not constitute a “project” under the definition set forth in CEQA Guidelines Section 15378 because it will not have a potential to result in a direct or indirect physical change in the environment and is, therefore, not subject to CEQA. The proposed amendments to UPD Code Section 4.37 provide charter vessel operators the ability to apply for a Permit to legally operate from public facilities. Charter operations currently occur throughout the bay and operations would not be intensified due to amending Article 4, Section 4.37 of the Port Code. No further action under CEQA is required.
The proposed Board action complies with Section 87 of the Port Act, which allows for the establishment, improvement, and conduct of a harbor, and for the construction, reconstruction, repair, maintenance, and operation of wharves, docks, piers, slips, quays, and all other works, buildings, facilities, utilities, structures, and appliances incidental, necessary, or convenient, for the promotion and accommodation of commerce and navigation. The Port Act was enacted by the California Legislature and is consistent with the Public Trust Doctrine. Consequently, the Board action is consistent with the Public Trust Doctrine.
Finally, the proposed Board action does not allow for “development,” as defined in Section 30106 of the California Coastal Act, or “new development,” pursuant to Section 1.a. of the District’s Coastal Development Permit Regulations. Therefore, issuance of a Coastal Development Permit or exclusion is not required.
Equal Opportunity Program:
Not applicable.
PREPARED BY:
Mark Stainbrook
Chief of Harbor Police, VP Public Safety
Annette Dahl
Department Manager, Real Estate
Ellen Gross
Assistant General Counsel, Office of the General Counsel
Attachment(s):
Attachment A: Proposed Amendments to UPD Code Section 4.37 - REGULATION OF CHARTER VESSEL OPERATIONS IN SAN DIEGO BAY AND DISTRICT TIDELANDS (Clean copy)
Attachment B: Redline of UPD Code Section 4.37