Judge Halts Work at `Aina Le`a and Orders Supplemental EIS

posted in: March 2013 | 0

All further “development” of the troubled project known as the Villages of `Aina Le`a has been halted as a result of an order of Judge Elizabeth Strance of the 3rd Circuit Court. Last month, Strance ruled that the County of Hawai`i Planning Department erred in accepting a final environmental impact statement for the South Kohala project and granted the county’s request that it be allowed to require the developer to prepare a supplemental EIS.

As clear as the judge’s words seemed to be – “All development on the project is tolled” – parties involved in the case interpreted them differently.

Randy Vitousek, the attorney for the Mauna Lani Resort Association, which brought the challenge to the EIS, said the judge’s ruling stops all work at the site. (Vitousek was instructed by the judge to prepare the court order.)

Jerel Yamamoto, the attorney for the developer, told West Hawai`i Today reporter Erin Miller, “We intend to continue to develop the project and provide residential housing.”

Bobby Jean Leithead-Todd, the county planning director who accepted the EIS in October 2010, told Miller that the judge’s decision only halted work on a wastewater treatment plant (one of the two triggers requiring preparation of an EIS).

William Brilhante, attorney for defendants Hawai`i County and Leithead-Todd, was more guarded than his client. “We are awaiting the court’s order,” he told Environment Hawai`i. “Until we see the order, the county should not be making any representations regarding the disposition of the project.”

Strance’s decision brought to a close the lawsuit that the Mauna Lani Resort Association had brought against the county, its planning director, and the two companies most involved in the development itself, DW `Aina Le`a Development and RELCO Corp., a Nevada company that is the managing member of DW `Aina Le`a (DWAL).

The County’s Evolving Stand

Throughout most of the court proceedings over the last two years, there had been little air between the position staked out by Brilhante of the Corporation Counsel’s office and that taken by DWAL and RELCO, represented by Yamamoto.

By the February hearing, however, it was apparent that the county had come around to the position of the plaintiff.

At issue before Strance were competing motions — one for summary judgment, filed by the MLRA, and a motion for remand, filed by the county. The plaintiff’s motion sought to have the EIS process begin anew. The county’s motion asked the court to give the county another shot at reviewing the EIS, allowing it to then determine whether it should ask the developer to prepare a new EIS, a supplemental EIS, or nothing more at all.

But in the two months since the county’s motion for remand judgment had been filed, the county’s position had evolved further – to the point, Brilhante said, that “the Planning Department will be requesting from the applicant that a supplemental environmental impact statement be submitted.” The supplemental EIS will have to look at plans for developing the 3,000 acres that were identified in the EIS preparation notice (EISPN) of 2007, and not just the 1,000 or so acres in the Urban land use district that DWAL has agreed to purchase and develop from landowner Bridge `Aina Le`a. (Bridge had published the original EISPN, but the EIS itself had been prepared by DWAL, a fact that was one of the points of contention in the lawsuit.) As provided for in state rules, the new document will be subject to the same public notice and comment period that any EIS must undergo.

Prompting the change in the county’s position was the disclosure of a Joint Development Agreement between DWAL and Bridge `Aina Le`a. The existence of the JDA had been referenced in a document – a purchase and sale agreement between DWAL and Bridge – that had been appended to the EIS. However, the JDA itself was omitted from the EIS and was not even provided to the county until December 2012. According to Brilhante, the omission was intentional and it was an “oversight” on the part of the county not to request this before it accepted the final EIS.

“I’d be the first to state that the joint development agreement should have been looked at,” Brilhante told the court at last month’s hearing. “That’s what raised my concern, and it was the impetus … for filing the motion for remand.”


In late January, Environment Hawai`i received the JDA from Brilhante through a formal Uniform Information Practices Act request. That agreement took effect on December 11, 2009, well before release of the draft EIS in May 2010. It clearly states that the “Villages at `Aina Le`a is a master planned community … to be developed on lands totaling approximately 3,000 acres” – and not merely the 1,000 that were the subject of the EIS.

The agreement obligates DW `Aina Le`a to design the sewage treatment plant to accommodate “the anticipated uses of the Agricultural land.” The water system is also to be developed to serve developments in both the Urban and Agricultural lands.

The JDA also binds both parties to cooperate in the “coordinated development of the project,” including the “location, planning, development, construction, operation, administration, maintenance, repair, and use” of improvements that will benefit both the Urban and Agricultural lands, such as potable and non-potable water supplies, sewage treatment, electric and other utilities, roadways, and access to the property.

The terms of the agreement cast an unfavorable light on many of the claims made by DWAL and the county itself in earlier motions to the court and in DWAL’s response to the resort association’s comments on the draft EIS – a fact that Vitousek took pains to point out to Strance.

In its July 2010 comment letter on the draft EIS, Vitousek noted, the resort association had asserted that the project “is a portion of a larger project, the project that was the subject of the EIS preparation notice.”

“DW’s response to that was the first of several misrepresentations by DW as to the scope of the project and the content of the joint development agreement,” he continued. “ ‘It’s not part of a larger project… the draft EIS is not intended to support any permits or approvals that may be required for the development of the Ag lot.’ They made an affirmative representation that what is considered in the draft EIS will not provide infrastructure for the remainder of the Ag land. That is a direct misrepresentation of the content of the Joint Development Agreement….”

“The applicant, DW `Aina Le`a, has consistently misrepresented to the county and to the court the actual content of the JDA and even after it was pointed out to the county … that this JDA existed, they refused to produce it until only very recently, and they continued to argue it was irrelevant and unnecessary…

“When the county actually got a copy of it, the county is trying to do the responsible thing, and it’s trying to acknowledge it accepted DW’s misrepresentations… and [now] says, in so many words, that the JDA clearly brings into question the continued or ongoing relationship between DW and Bridge.

“So the county has admitted that the scope of the EIS as represented to it by DW was not accurate, that the JDA shows DW and Bridge were cooperating in designing the infrastructure.”

“What has happened here,” Vitousek concluded in his statement to the court, “they changed the scope of the project. They’re not being entirely honest with the court. We’ve proved that now, and the county has accepted it.”

‘Less than Candid?’

Strance then asked DWAL’s attorney, Yamamoto, whether “DW [had] been less than candid with the county by failing to disclose it has joint development responsibilities or obligations to Bridge.”

“I don’t believe so,” Yamamoto answered. “In terms of the JDA, it was never attached to the EIS, and I don’t think it was ever an issue until now.”

He denied that the agreement was tantamount to a partnership between Bridge and his client. “What I believe the JDA says is, if Bridge wants access to the infrastructure that goes through `Aina Le`a’s properties … they need to provide the capital to work with us and help us size it, et cetera. And at this point, there’s nothing. I don’t believe we are misrepresenting anything. … Bridge has not made a commitment at all.”

Strance appeared skeptical. “If you have the obligation to provide access to a sewage treatment plant for their development, and you don’t communicate that to the county, how does the county evaluate the cumulative impacts? … Isn’t that required to be communicated to the county?”

Yamamoto agreed: “I would submit that we would probably have a duty to disclose that to the county.”

“Was it disclosed?” Strance asked.

“I cannot say,” Yamamoto replied. “I don’t know. I don’t know.”

Despite Yamamoto’s admission of a possible failure to communicate with the county, Brilhante stood up for DWAL, even though it involved acknowledging an oversight on the part of his client.

“The county should have at an earlier stage requested a copy of the JDA,” Brilhante told Strance. “It was hard to get. DW, as the record reflects, has been cooperative with the county… Bridge for whatever reason does not want to be engaged in this process. That’s the problem we’ve had, both parties have had.”

No Hard Look

When Strance announced her decision, she prefaced it with an acknowledgement of the difficult position Brilhante was in. “Mr. Brilhante,” she said, “I can’t imagine that as a corporation counsel it is an easy thing to come back into the court and say we didn’t get it just right and we want to make it right. In the end, the county is well served by having attorneys that are willing to look at work that has been done by colleagues and people they have ongoing relationships with … and say to the court ‘We need to stop; we want to take another look at that.’”

The judge granted the resort association’s motion for summary judgment “on the limited grounds that the county did not fully evaluate the relationship of Bridge and DW in the Joint Development Agreement and thereby was unable to give a hard look at either whether the project was part of a larger segment, or that it prevented the county from fully evaluating the cumulative impacts.”

The court was also granting the county’s motion to remand, she said, although at the same time she suggested that it should have early on taken a broader look at the whole project.

“In granting the motion for summary judgment,” Strance said, “the court is not finding that the county erred in allowing the applicant to change during the course of the environmental review or even allowing the scope of the project to change … but the facts reveal in this case, in light of the purchase and sale agreement and reference to the joint development agreement in that, part of the hard look the county was required to undertake was to look at these agreements and ensure itself it was evaluating the project in its proper scope – and that simply didn’t happen.”

“As part of the grant for summary judgment and the grant of the motion to remand, all development on the project is tolled,” she concluded.

* * *

State Files Appeals in LUC Case

Judge Strance issued her ruling on February 12. Coincidentally, before the week was out, the state appealed an earlier ruling she had made involving the `Aina Le`a development to the Hawai`i appellate courts and appealed a separate federal court ruling to the 9th U.S. Circuit Court of Appeals.

The first of these two appeals involves Strance’s finding of December 2011 that the state Land Use Commission injured landowner Bridge `Aina Le`a and DW `Aina Le`a Development when, in March 2011, it ordered that the 1,060 acres (the same land covered in the `Aina Le`a EIS) be reverted to the Agricultural District from the Urban District.

In an appeal of the LUC order brought before Strance in April 2011, Strance had found that the LUC violated the state land use law, Chapter 205 of Hawai`i Revised Statutes, in several different respects and went on to find it violated Chapter 91, relating to contested case proceedings.

What’s more, she went on to find that Bridge’s due process and equal protection rights under the state and federal constitutions were breached by the LUC’s action. “The LUC’s conduct … constitutes a denial of procedural and substantive due process of law under Article 1, Sections 5 and 20 of the Hawaii Constitution and the Fifth and Fourteenth Amendments to the United States Constitution,” she wrote in her decision. Bridge’s and DW `Aina Le`a’s rights to equal protection under the law were violated inasmuch as the LUC treated them differently than other developers on whom similar stringent conditions were not imposed, she found. “Bridge and DW have shown that the LUC treated them in a materially, adversely different manner than other similarly situated developers, and that the LUC did so intentionally and without any rational basis for the differential treatment,” she wrote.

Almost immediately, the state appealed the decision to the Intermediate Court of Appeals. The ICA determined that Strance’s decision was not appealable, since it did not dispose of all claims. Strance had to amend her order twice in order for the state to finally have an order it could appeal. On February 8, Strance filed her second amended final judgment; six days later, the state filed its notice of appeal with the Intermediate Court of Appeals.

The Federal Appeal

Separate from the case heard by Strance, in June 2011 Bridge `Aina Le`a filed a complaint in 1st Circuit Court in Honolulu against the LUC and nine commissioners. Bridge alleged that its constitutional rights had been violated and that it was owed not less than $35.7 million in damages, which it sought against not only the state, but seven of the nine commissioners as well. (Commissioners Charles Jencks and Duane Kanuha, who voted against the reversion, were sued “as nominal defendants, based upon their prior official positions as commissioners,” but no monetary damages were sought against them.)

Given the nature of Bridge’s claims, the lawsuit was transferred to U.S. District Court in Honolulu by the end of the month. Last March, after the state indicated it would be appealing Judge’s Strance’s ruling, U.S. District Judge Susan Oki Mollway ruled that all action in the federal case – including a decision on the state’s motion to dismiss claims against individual commissioners – would be stayed while the state’s appeal of Strance’s ruling ran its course.

The state then appealed Mollway’s order of a stay to the 9th Circuit Court of Appeals. In a brief on the appeal filed just last month, state deputy attorney general William Wynhoff noted that the lower court’s decision to stay all action on the case consigned “the commissioners to years with the shadow of this lawsuit hanging over their heads,” Wynhoff wrote in his appeal.

“The district court should have ruled … that individual commissioners are immune from personal liability and entitled to dismissal of all claims against them personally.”

Bridge `Aina Le`a also appealed Mollway’s order; its brief to the appeals court is due later this month.

Patricia Tummons

Volume 23, Number 9 — March 2013