The state land board yesterday fined a Maui tour boat operator $542,950.49 for damaging coral reef.

The Board of Land and Natural Resources found that Makena Boat Partners killed, damaged or dislodged 538 individual coral colonies when its Kai Kanani catamaran dropped anchor off the coast of the Maui Prince Hotel last year.

A lawyer for Sidney Akiona, a Makena Boat Partners principal, immediately appealed the decision by requesting a contested case hearing. His legal team may instead challenge the case in federal court.

The company picks up tourists at Makena Beach and takes them on sailing and snorkeling tours in waters off South Maui. It operates one 49-passenger boat and has a permit to moor one vessel in waters fronting the Maui Prince.

Dan Polhemus, Division of Aquatic Resources administrator, told the board the alleged infraction occurred when Makena Boat Partners' Kai Kanani dropped anchor on a coral reef in July 2007 to make room for a second boat, the Kai Kanani II, at the permitted mooring.

Akiona said he had the second boat brought over from the Caribbean and planned to donate the first boat to the Polynesian Voyaging Society. In the meantime, he said he needed a place to keep the catamaran.

State biologists testified most of the damage was inflicted not by the Kai Kanani's anchor itself but by the metal chain connecting the boat and the anchor. Underwater photos from a July 26, 2007, investigation by department staff showed a heavy chain resting on top of coral.

When the boat moved, "this chain dragged along the bottom and effectively scoured and knocked over all of that vertical coral reef on the hard bottom," said Russell Sparks, education specialist for the state Department of Land and Natural Resources.

He said the coral provided a habitat to fish and turtles, which made the area popular with fishermen and snorkelers.

The department said the damage could have been halved if Makena Boat Partners had removed its vessel upon receiving an Aug. 1, 2007, notice from the Division of Conservation and Resources Enforcement.

But the company only moved the boat Aug. 24, three days after the Division of Aquatic Resources delivered a second notice. State investigators found the damaged area roughly doubled between the first notice and when the boat was finally removed.

The $542,950.49 fine includes $1,000 for each of the 538 specimens of coral damaged, as well as $3,950.49 in administrative costs paid by the state to assess the coral damage.

The seven members of the board unanimously approved the fine by voice vote at one of their regular twice-monthly meetings. Laura H. Thielen, the board chair, said Akiona would have an opportunity to present his defense at the contested case hearing.

Earlier, Akiona told the board he objected to the state's research methods and how it estimated the extent of the damage.

He also disputed the state's contention that the coral was valuable, saying he's worked in the area for 23 years and the seabed is often covered in sand.

Akiona further charged the first notice he received didn't say he had to remove the Kai Kanani quickly.

Akiona's lawyer, Ronald Kim, told the board the state was attempting to penalize Makena Boat Partners twice for the same crime — something that's not allowed under the Constitution.

In November 2007, Makena Boat Partners paid criminal penalties of $200 for damage to stony coral and $200 for damage to live rock in a case prosecuted in District Court on Maui.

Dennis Niles, another Akiona lawyer, said the half-million dollar fine was egregious.

"This is a challenging time for people in the visitor industry. And we are quite taken aback by the magnitude of the proposed fine," Niles said. "It's ironic a Republican administration would try to impose a fine of this enormity on a small business."

Niles said Makena Boat Partners would decide within the next 10 days to either continue to pursue a contested case hearing or file a federal lawsuit against the state.

Jerry Edlao, a board member from Maui, said it was ironic and unfortunate the case had come up during the "International Year of the Reef" — a campaign to raise awareness about the value and importance of coral reefs.

Edlao also questioned Akiona's desire, as declared to the board, to preserve the environment his business operates in.

"You can say you want to protect it. But when you do something to damage it, it doesn't sit well with me, and I think with a lot of people throughout the state," Edlao said.