WAILUKU, Maui — A Maui charter boat company is facing state penalties totaling $542,950 for killing and damaging hundreds of live coral colonies in Makena Bay.

Makena Boat Partners is the third operation in the past two years that the state Department of Land and Natural Resources has sought to punish with large fines in connection with coral damage off South Maui.

DLNR chairwoman Laura H. Thielen said the latest case is another example of how the agency "is making it a priority" to protect Hawai'i's reefs.

The Makena incident occurred from July through August 2007, when the company's 46-foot Kai Kanani catamaran dropped anchor on a coral reef in Makena Bay, according to a report by DLNR's Division of Aquatic Resources.

The anchor and chain damaged a 910-square-meter area and killed or injured at least 538 stony coral colonies, the report said.

Attorney Dennis Niles, representing Makena Boat Partners and its general partners, Kai Kanani Inc. and Maalaea Boat Sales and Charters Inc., said yesterday, "We're very disappointed in the amount of the proposed sanction."

"(The owner) thought the matter had been resolved to the state's satisfaction" when the company paid a $200 fine in October 2007 after pleading no contest to a criminal violation in connection with the same incident.

He said there are "a host of issues" surrounding the administrative case against the charter boat company, including whether an administrative agency can impose such substantial penalties without allowing the accused party a jury trial and other legal rights.

The Board of Land and Natural Resources is scheduled to consider the case at its 9 a.m. meeting Friday in Honolulu.

The Kai Kanani has a permitted mooring in Makena Bay, off the Maui Prince Hotel, and is allowed to come ashore to pick up passengers. Sometime before July 22, 2007, the company moored its 64-foot Kai Kanani II at the permitted mooring and moved its smaller boat southeast of the mooring site, dropping anchor to secure the vessel to the ocean bottom, the report said.

After receiving a complaint about possible coral damage, divers from the DLNR Division of Aquatic Resources went to look and found a swath of broken coral where the Kai Kanani's anchor and chain had dragged along the bottom, according to the report.

On Aug. 1, 2007, Makena Boat Partners was issued a citation and told to move the Kai Kanani from its anchor site. The boat stayed in place for more than three weeks, causing additional damage, the report said.

One of the boat owners told investigators he was aware the vessel needed to be moved but was waiting for drydock space at Ma'alaea Harbor, which wasn't expected to be available until September 2007, according to the report.

The Division of Aquatic Resources said it will take years for the coral habitat to recover. Stony corals include a variety of invertebrate species native to Hawai'i that belong to the scientific order Scleractinia. They are characterized by having a hard, calcareous skeleton, and include cauliflower, plate and rice corals.

"The complete scouring action of the Kai Kanani's anchor chain has opened up a lot of new substratum for rapid-growing turf algae. Dense growths of turf algae of the type we have observed in the damaged area affect the ability of new corals to recruit into the habitat and will, therefore, slow down future coral reef recovery," the report said.

In seeking the hefty fines, the Division of Aquatic Resources stated that "MBP had an opportunity to minimize the amount of damage done to the coral but did not do so. ... Had MBP acted immediately, a substantial percentage of the habitat damage could have been avoided," the report said.

Between the time the company was first cited and when it moved the Kai Kanani, the damaged coral area more than doubled in size, the report said.

The division noted Makena Boat Partner's "blatant disregard" for the initial citation and recommended administrative fines of $1,000 for violating rules prohibiting the killing and injuring of stony corals, plus $538,000, or $1,000 for each damaged specimen.

The agency also is seeking $3,950 to cover its costs to assess the damage and for staff time.

Thielen said there have long been laws and rules in effect to protect coral reefs, "but historically these laws have been underutilized by the department."

"As reefs are under increasing stresses from a variety of sources, including land-based pollutants, invasive species and direct trauma from vessels, such as in the case of the Kai Kanani, the department is making it a priority to protect this important but vulnerable natural resource," Thielen said in an e-mail to The Advertiser.

Two other notable coral-damage cases were recently resolved. In June 2007, Crystal Seahorse Ltd., operator of the Shangri-La snorkel tour boat, agreed to a $7,300 settlement with the board for illegally entering the 'Ahihi-Kina'u Natural Area Reserve and damaging stony coral heads with an anchor in August 2005.

Last month, Maui Snorkel Charters Inc., which does business as Maui Dive Shop, agreed to pay nearly $397,000 for damaging coral within the Molokini Shoal Marine Life Conservation District as a result of the sinking of one of its snorkeling vessels in September 2006.