BOARD TALK

No Permit for Kaloko Irrigation

This article has been corrected. The published version had stated that the East Kaua`i irrigation system was run by the Agribusiness Development Corporation. Although that system was poised to be transferred to the ADC in 2005, it was still administered by the state Department of Land and Natural Resources at the time the article ran. The DLNR issued a permit in 2002 to the East Kaua`i Water Users Cooperative to run the system.

On September 28, farmers who have for years relied on north Kaua`i’s Kaloko reservoir to feed their crops suffered a potentially devastating blow. That’s when the state Board of Land and Natural Resources voted to revoke Kilauea Irrigation Co., Inc.’s permit to divert water from Pu`u Ka Ele stream into the Kaloko Ditch because the company had failed to secure liability insurance.

For more than 20 years, KIC provided water to area farmers via the Kaloko irrigation system, which includes a ditch that runs across state lands, and a reservoir owned by the Mary Lucas Trust. But a disastrous breach of the reservoir in March 2006, which released a mass of raging water that killed seven people, has made it all but impossible for KIC owner Tom Hitch to renew his liability insurance policy, which expired December 31, 2006.

Following the breach, KIC became enmeshed in various lawsuits – that are still ongoing – involving the victims’ families and the system’s various landowners. KIC fell behind on its rent later that year (although it eventually paid it off) and in February 2007, Hitch informed the DLNR that he was also having trouble getting a new liability insurance policy, a standard requirement of DLNR revocable permits and leases.

By March, Hitch had found a potential carrier, AIG, but “the minimum annual premium would amount to $25,000 more than KIC’s annual gross revenues from its water operations,” a September 28 report by the DLNR’s Land Division states.

What’s more, on August 24, 2007, attorney William McCorriston, representing Pflueger Properties (a company owned and operated by Lucas Trust beneficiary James Pflueger), wrote the state a letter demanding that the state cease and desist diverting water into the ditches that feed the reservoir “to prevent and/or mitigate conditions which could lead to the breach of the Reservoir…”

Whether or not McCorriston’s demand carries any weight is unclear, since Pflueger is only one of many beneficiaries of the Mary Lucas Trust, which continues to have a Water Rights Agreement with KIC that allows the company to use the reservoir. In any case, Hitch did not appear interested in operating the ditch any longer or in securing the liability insurance required to maintain a permit.

At the Land Board’s September 28 meeting, Land Division administrator Russell Tsuji noted that it would likely take three to six months to obtain the Conservation District and Stream Channel Alteration permits that might be needed to physically stop the diversions. He recommended that the permit’s actual termination date be delayed until KIC obtained those permits and was ready to start shutting the system down.

Acting Land Board chair Laura Thielen explained that while the department was proposing to terminate KIC’s permit, she planned to work with state Department of Agriculture director Sandy Kunimoto on the possibility of transferring the diversion rights to the farmers.

“Because it will take some time, we brought this request to the board to begin the process,” Thielen said, adding that one option could be to transfer the rights to a farmer co-op.

In Kekaha, on the west side of Kaua`i, and in East Kaua`i, farmer co-ops using water from systems owned by the state contribute to maintenance costs. In the case of the Kaloko system, Land Board member Tim Johns questioned whether a co-op was insurable and Tsuji noted, “Even if they could get a permit from us, they would still have to make a deal with the property owner.”

David Watmore, president of the Kilauea Farmers Association and a farmer who has used the Kaloko system for more than 20 years, dismissed the idea of a co-op.

“I spoke with Jerry Ornellas [an East Kaua`i irrigation system user] and he said how long it took to organize a cooperative….We really have no interest in forming [one],” Watmore told the board.

While Watmore asked that the Land Board defer voting on the matter, Thielen said that with the winter months coming, “we need to have something happen…The present situation, without any liability insurance cannot continue.”

Philip Davies, another Kilauea farmer, also asked the board to defer termination, testifiying that the Kaloko system produces one million servings of produce a year. Because county water rates are three times as high as water from the ditch, he was eager to help keep the water flowing.

“Give us some time to get the insurance,” he said, admitting that “there have been a lot of missteps and missed steps on our part.”

In the end, the board approved its staff’s recommendation. “It gives time for the community to get together and come up with a solution,” Kaua`i Land Board member Ron Agor said.

Four years after receiving approval of a ten-year management plan for Pu`u Wa`awa`a and Pu`u Anahulu in West Hawai`i, the state Division of Forestry and Wildlife is struggling but getting better at bringing in the millions of dollars needed to implement it, according to a September 28 status report to the Land Board by DOFAW’s Mike Donoho.

The management plan, approved by the Land Board in July 2003, includes 62 activities that were estimated to require roughly $20 million to implement. In November 2001, the Land Board had narrowly voted down a proposal by the non-profit group Ka Ahahui O Pu`u Wa`awa`a a me Pu`u Anahulu to manage the area as an ahupua`a. While the group had ample start-up funding and public support, objections from DOFAW staff and the lack of a long-term financial plan led some board members to reject the project. In the years following, Land Board member Tim Johns voiced concerns that the DLNR might never have sufficient funds to care for the area.

“The attraction of the other plan was that they had other people’s money,” he said at a Land Board meeting in 2002. On September 28, Johns again expressed his disappointment after hearing from Donoho that over the past two years, DOFAW has managed to acquire about $1 million a year – in cash, grants, and in-kind donations — for management of Pu`u Wa`awa`a and the makai lands of Pu`u Anahulu. For the coming year, Donoho said he expects to receive $500,000 more.

“[Funding has] always been my concern, when the decision was made to go down this road,” Johns said. “One million dollars a year is not very much.”

Donoho agreed, but assured Johns that he expects more funding in the future. And despite the meager funding, Donoho’s report suggests that a lot of work is being done at Pu`u Wa`awa`a.

He said that an environmental assessment is being prepared for the management program and that the DLNR plans to establish a three-person field crew at Pu`u Wa`awa`a using Department of Interior and state watershed grants. He added that the crew may grow to three more, including an Americorps intern and two others from partner organizations.

While DOFAW maintains control of the area, Donoho said that five non-profit groups help with management and that there is a strong agency partnership with the Army at Pohakuloa, the Fish and Wildife Service, and the U.S. Forest Service, which has included P`uu Wa`awa`a as part of its experimental forest.

His written report also states that four of the 12 conservation units identified in the management plan have been constructed, including the 3,806-acre forest bird sanctuary, from which 300 feral ungulates have been removed; several individual rare species, including halapepe (Pleomele hawaiiensis) and `aiea (Nothocestrum breviflorum), have been fenced in with help from the Sierra Club; and volunteers have helped outplant some 30,000 seedlings of common and rare plants.

“Sixty-five thousand acres. You’ve really increased your kuleana,” Land Board member Tim Johns told Paul Conry, administrator for the DLNR’s Division of Forestry and Wildlife, at the board’s September 28 meeting.

At that meeting, the Land Board unanimously approved the addition of 1,371 acres to the Ka`u forest reserve, 1,500 acres to the Hilo forest reserve, 37,901 acres to the new Pu`u Wa`awa`a forest reserve, and 25,856 acres to the new Wao Kele o Puna forest reserve, all of which will be managed by DOFAW. According to acting Land Board chair Laura Thielen, however, the DLNR is working towards partnering with the Office of Hawaiian Affairs on management of these areas.

State forester Mike Constantinides told the board, “That’s not just true of Wao Kele o Puna [where OHA holds title to the land and has entered into a 10-year management agreement with the DLNR], but of all. We’re working on closer partnership with OHA in the future.”

At the public hearing on the proposed additions held last July, comments about native Hawaiian rights and access were common. Many testifiers worried that activities allowed under forest reserve rules (including public recreation, ecotourism, and “other appropriate forestry uses”) would degrade biological and cultural resources in these areas. Also, “a concern was stated that with improved public access and increased public recreation, non-native gatherers would deplete natural resources and reduce the ability of Hawaiians to exercise their cultural gathering rights,” a DOFAW report states.

Regarding Wao Kele o Puna, some testifiers asked that OHA rescind its offer to have DOFAW manage the area and instead have the Pele Defense Fund (which was instrumental in returning the area the state) or a group called the Kanaka Council manage the land.

DOFAW responded that nothing in the Memorandum of Understanding between OHA and the DLNR prevents OHA from working with others on determining management actions at Wao Kele o Puna.

In a letter to the Land Board, OHA administrator Clyde Namu`o suggested that the DLNR make more of an effort to consult native Hawaiians on its management decisions and make sure Hawaiians have access to these areas to conduct traditional and customary practices. “This is especially true for fenced areas,” Namu`o wrote.

On August 24, singer and actress Bette Midler was fined $6,500 by the Land Board for three Conservation District violations that occurred on her property in Ha`ena, Kaua`i in late 2006.

In her report to the Land Board, Office of Conservation and Coastal Lands planner Dawn Hegger states that on October 17, 2006, OCCL staff noticed that Midler’s entire 58,536-square-foot parcel was in the process of being cleared of native and non-native trees and that a dirt road had been constructed. Later that month, the Department of Land and Natural Resources issued an order to Max Graham, Midler’s attorney, to cease activities on the property.

Hegger’s report states that, according to a survey provided by Graham, 120 Java plum trees (Syzgium cumini), 100 octopus trees (Schefflera actinopylla), and approximately 10 to 20 Madagascar olive trees (Noronhia emarginata) had been removed, as well as a 10-by-50 meter strip of hau, a Polynesian introduction. Hegger recommended that the Land Board fine Midler a total of $6,500, $2,000 for each violation of cutting of non-native trees, cutting of native trees, and road grading, plus $500 for administrative costs.

At the board’s August 24 meeting, Graham conveyed Midler’s apologies and explained that the clearing was part of her effort to make the property more consistent with the botanical species of Limahuli Valley.

“She made a mistake, but takes responsibility for what happened,” he said.

He said the parcel was overgrown with the invasive Java plum and octopus trees (Madagascar olive trees are also invasive), and that Midler had planned to restore the property with native plants. Graham added that Midler did not grade a road, but said a path was made by vehicles moving around the property.

“To make it factually accurate, call it landscaping,” he asked.

Graham said Midler has retained botanists with the National Tropical Botanical Garden to assist in the restoration, and that her work is consistent with the garden’s plans to restore the integrity of the valley.

Before voting to fine Midler, Land Board member Tim Johns asked OCCL administrator Sam Lemmo how the tree-cutting fines were calculated, noting that, in the past, the board has issued fines based on the number of trees cut.

Lemmo explained that for native trees, his office has almost always fined violators for every tree cut. “For non-native trees, we look at is as clearing, one type of violation,” he said.

On August 24, construction of Haseko Inc.’s master-planned community Ocean Pointe hit another snag. That day, Haseko requested Land Board approval of amendments to a Conservation District Use Permit covering the marina segment of its `Ewa development. Allegations of permit violations raised by the Native Hawaiian Legal Corporation, however, led the board to defer deciding on the matter and order its staff to launch an investigation.

On January 20, 2006, contractors for Haseko bulldozed two Hawaiian archaeological features that were supposed to have been protected under a 1992 Memorandum of Agreement with the developer, the state Historic Preservation Officer, the Office of Hawaiian Affairs, the Advisory Council on Historic Preservation, and the Army Corps of Engineers.

While violating the MOA wasn’t against state law at the time, NHLC attorneys David Kimo Frankel and Moses Haia have suggested that the site destruction was a violation of Haseko’s Conservation District Use Permit, which includes conditions requiring Haseko to comply with the MOA.

Because Hawai`i administrative rules prohibit the Department of Land and Natural Resources from processing permit applications before pending violations are resolved, Frankel, in an August 17 letter to Land Board interim chairperson Laura Thielen, argued that the board needed to take action on the alleged violation before deciding on Haseko’s permit amendment request.

At the Land Board’s August meeting, Haseko attorney Yvonne Izu explained the company’s proposed amendments: It wants to reduce the size of the marina from 70 acres to about 53.76 acres to provide more land for necessary public facilities and change a CDUP condition that requires the company to record the permit as part of the marina deed. Izu said that because Haseko is unsure what the final TMK number will be for the marina, as it anticipates future subdivisions of the area, the company is proposing to hold off on recording the CDUP until construction plans for the marina’s channel are closer to being finalized.

Finally, Izu said, Haseko wants to change a condition regarding the submission of its flood drainage system plans to reflect the fact that the company no longer plans to direct stormwater through the marina.

In response to NHLC’s claims, Izu argued that there is no pending violation, since the state Historic Preservation Division administrator Melanie Chinen had determined that no state law had been broken and stated in another contested case hearing that her division did not plan to pursue the matter.

Izu also rejected NHLC’s claims that a separate contested case regarding a related drainage project should be resolved before the Land Board acts on Haseko’s proposed permit amendments.

“This proposal is totally separate from the drainage issue [that is the subject of an active contested case],” Izu told the Land Board on August 24.

Despite her arguments, Thielen seemed concerned about the allegations, noting the CDUP condition requiring Haseko to follow all of the MOA’s conditions.

“The question I have is for the staff of the OCCL [Office of Conservation and Coastal Lands, which administers most CDUPs]. It’s one thing if SHPD has taken action…What would OCCL’s response be?” she asked OCCL administrator Sam Lemmo.

Lemmo responded that all of the DLNR divisions try to work together and that whenever a condition is tied to the rules of a division outside the OCCL, his office usually takes its direction from that division. In this case, Lemmo said, he hadn’t had any conversations with the SHPD and would not know what kind of action to take beyond what SHPD had already done.

At-large board member Tim Johns said he didn’t believe there was a connection between the proposed amendments and the alleged violations.

“Do you have a problem with making the marina smaller? That’s what’s before us….[The alleged violation] has really nothing to do with the amendments,” he told NHLC’s Haia.

Haia disagreed, pointing out that, in a previous agenda item, the board fined Bette Midler several thousand dollars for violating Conservation District rules.

“At the very least, there has to be a statement by the BLNR. What you have is an admission by Haseko in a January 30, 2006, letter that two features were destroyed….Technically, you can argue that [there is no connection to the proposed amendments], but when the board places conditions on a permit to protect sites and the applicant agrees…I see it directly related,” he said.

Mary Serrao and Alicia Maluafiti, both members of Hawaiian civic clubs and of the Hoakalei Cultural Foundation that will ultimately oversee the protection of the archaeological sites, testified in support of the project. Maluafiti said that Haseko’s intentions are good and that it’s providing the community an opportunity to highlight the Hawaiian culture.

With regard to the destroyed sites, she added, “Let me suggest to you, you can cut off a taro leaf and still make taro. We see the forest, not just one tree.”

After the board held an executive session to discuss legal matters, the board voted to defer the item and directed OCCL staff to investigate the possible violation of the MOA and report back to the board as soon as possible.

On October 26, the OCCL came back with a recommendation to fine Haseko $4,000 for violating two conditions of its CDUP that require the company to comply with all provisions of the MOA and all conditions of Haseko’s Army Corps of Engineers Permit (of which the MOA is a part). The OCCL also sought $500 in administrative costs. The Land Board had not decided on the matter by press time.

In September, KAHEA: The Hawaiian-Environmental Alliance applied to Land Board chair Laura Thielen to participate in the contested case hearing regarding coral disease researcher Greta Aeby, who was fined $1,000 by the Land Board last July for violating her permit to conduct research in the state Northwestern Hawaiian Islands Marine Refuge. Aeby had allowed live coral from French Frigate Shoals to be transported to Gardner Pinnacles and back to FFS in an open-flow tank. It was the board’s first violation case since the refuge was established in 2005. If the violation stands, Aeby may never be able to study in the refuge again, and she has requested a contested case hearing on the matter.

A September 4 letter by attorney Colin Yost, representing KAHEA in this case, states that Aeby and the DLNR should not be the only parties to the case, since Aeby contends she did not violate her permit, and the DLNR’s Division of Aquatic Resources, in KAHEA’s eyes, has not done its duty. Yost’s letter suggests that KAHEA wants to ferret out why the DLNR has not pursued a second alleged violation regarding the transport of live bacteria cultures within the NWHI. That allegation was raised in January, when the DLNR first brought the violation case to the board. Yost adds that in comparing the different DLNR staff reports presented to the Land Board in January and in July, “significant doubts” are raised about the adequacy of the penalty, the necessity to address outstanding violations, and the culpability of others mentioned in those reports.

“As a longstanding and independent advocate for the proper protection of Hawai`i’s public trust resources in the NWHI, KAHEA is the proper party to raise these distinct issues,” Yost wrote.

— Teresa Dawson

Volume 18, Number 5 — November 2007