UPDATED 9/4/11 4:45 p.m.

Two environmental organizations are suing the federal government for issuing a permit to to deploy a large fish cage in deep ocean waters off the coast of the Big Island.

Honolulu-based and Washington D.C.-based claim that the National Marine Fisheries Service violated federal conservation acts and a procedural statute by issuing the company a permit.

The lawsuit filed Wednesday marks another stumbling block not only for Kona Blue Water Farms, but Hawaii鈥檚 open ocean fishing industry, which has struggled since its launch a decade ago.

The industry employs large cages 鈥 on the order of dozens of acres 鈥 that raise thousands of fish in open ocean waters. The fish are initially spawned and hatched in land-based tanks.

The practice has raised concerns about environmental impacts on the ocean鈥檚 ecosystem and has been criticized for interfering with Native Hawaiian customs.

The lawsuit comes on the heels of , signed into law last month by Gov. Neil Abercrombie, which allows state leases for fish farms to be extended from 35 years to 65 years. While the law could impact a broad swath of the state鈥檚 approximately 70 aquaculture operations, controversy has centered on the open ocean fish farms, according to Sam Lemmo, the administrator for the Department of Land and Natural Resource鈥檚 Office of Conservation Lands and Natural Resources.

Abercrombie had initially signaled his opposition to the legislation, which is expected to help fishing operations more easily obtain federal financing. His subsequent support has enflamed opponents of open ocean fish farming.

Groups including KAHEA and Food and Water Watch submitted testimony vigorously opposing the legislation.

Concerns have gravitated around potential disease transfer from farmed fish to wild fish; the impacts on whales, dolphins, sharks and sea turtles; and pollution generated by large quantities of fecal matter.

Members of Hawaii鈥檚 aquaculture industry have argued that open ocean fishing operations could help solve global depletions of fisheries at at time when the world鈥檚 population and demand for seafood is increasing. And they argue that it could revitalize Hawaii鈥檚 aquaculture industry, bringing in capital and local jobs.

Only two companies have deployed operations. Cates International received approval in 2001 for a fish farm two miles offshore of Ewa on Oahu, and was the first company in the country to conduct open ocean fishing. Kona Blue Water Farms was formed by two local marine biologists and Kona residents in 2001. Its Big Island fish operation was approved in 2003.

Both companies have faced challenges. Kona Blue Water Farms has had four lawsuits filed against it by former employees alleging that the company violated safety standards. Three of the lawsuits have been dismissed, while one other is ongoing, according to court filings. The company鈥檚 fish have also suffered from skin flukes, parasitic flatworms that can cause tissue damage and lesions. Large fluke infestations can be lethal to fish.

Kona Blue Water Farms did not return a call for comment.

Cates International initially had approval for four submerged fish cages. In 2010, the once profitable company, now known as Hukilau Foods, filed for bankruptcy. Founded by commercial fisherman Randy Cates, AOL-founder Steve Case subsequently acquired a majority share in the company in 2007. Cates is currently suing Case alleging financial misdealing. The company was also hit with tragedy earlier this year when a Kaneohe resident, Jeffrey Barbieto, died during a dive operation.

The company鈥檚 current cages are out of operation and out of compliance with state regulations, according to Lemmo, who said the company deployed ballast structures that were approved by the Board, but never received final DLNR approval.

鈥淚 need to deal with that, but it is relatively minor, provided that everything checks out,鈥 said Lemmo by email.

Another local company, Hawaii Oceanic Technology, also hopes to begin operations in 2014 off the Big Island鈥檚 Kohala Coast. The planned 247-acre site would host 12 cages and produce 6,000 tons of fish a year.1

Bill Spencer, the company鈥檚 CEO, said that despite criticism that the operations pose environmental hazards, the permitting process is rigorous.

鈥淭he state has held us up to the highest possible standards to get the right to do this business,鈥 said Spencer. 鈥淪o when the detractors try to claim that this lease extension is a bad thing, they have no clue how diligent and thorough the process is. It鈥檚 not for the faint of heart.鈥

After four years, more than $1 million, and wading through 24 separate steps and 10 state agencies, he said the company had finally received all its needed state permits. The company is still awaiting finalization of permits from the Army Corps of Engineering and Environmental Protection Agency.

But the difficult and expensive permitting process on the state and federal levels has not appeased critics.

鈥淲e intend to continue to fight,鈥 said Zack Corrigan, senior staff attorney for Food and Water Watch. 鈥淥ur overall position on factory fish farming is that we鈥檙e against it until serious questions can be answered. Hawaii is a great example of how many of these companies, including Kona, claim to being doing it sustainably. When you pull back the covers, it reveals that鈥檚 a lot of flowery language with not great results for state sustainability.鈥

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