In late 2015, the Board of Land and Natural Resources did what it had been doing annually for years: approved four revocable permits that allowed Alexander & Baldwin and affiliated companies to withdraw up to 100 million gallons a day of water from East Maui streams. A system of ditches and tunnels carried the water to Central Maui, where it was used to irrigate first sugar and later diversified agricultural crops. A small fraction was diverted to the Maui County water agency, for treatment and distribution to Upcountry Maui users.
The RPs were controversial and the BLNR’s annual award of them finally resulted in a group representing East Maui residents – Na Moku Aupuni o Koʻolau Hui – to request a contested case hearing challenging the RPs. The Land Board denied the request, and so in early 2016, Na Moku sued the Land Board and the A&B companies. Also named in the lawsuit were Maui County’s Department of Water Supply, the Hawaiʻi Farm Bureau Federation, and Maui Tomorrow.
It took nine years for a final judgment in the case to arrive, but on January 2, Environmental Court Judge Jeffrey P. Crabtree made his ruling, finding that the BLNR:
- Improperly denied Na Moku Aupuni o Koʻolau Hui’s request for a contested case hearing;
- Failed to make findings;
- Breached its public trust duties;
- Failed to identify Native Hawaiian traditional and customary practices; and
- Violated the state’s Coastal Zone Management Act.
The final judgment confirming the ruling was issued January 22.
But exactly what effect the judgment will have is uncertain. In December, the BLNR approved a scheme that “sunsetted” the four existing RPS effective the end of the year and issued a new RP “into a single RP document” for water-use only, except for a pre-existing easement for use of the state land under the ditch system – awarded by the territorial government in 1938.
The new RP allows the Department of Land and Natural Resources’ Division of Forestry and Wildlife to take over management of the watershed lands surrounding the water transmission system. This, the staff report stated, will allow DOFAW “to implement their managed public access objectives” for the Koʻolau Forest Reserve without waiting for a long-term water license to be awarded.
In acknowledgement of the state Supreme Court in another case involving East Maui Streams – Carmichael v. Board of Land and Natural Resources – the staff report stated that the Land Board could issue revocable permits, but “a decision by the board to approve the subject revocable permit must demonstrate that such a decision is made in consideration of the ‘best interests of the state’.”
This particular RP, the staff report continued, by “making water available for diversified agriculture supports the long-term viability and security of local agricultural operations, and is both in the best interest of the state … It allows for the local production of food … [and] may also translate into lower prices for consumers.”
The changed terms of the revocable permit were generally well received, even by attorneys for the Sierra Club and the Native Hawaiian Legal Corporation, which represented Na Moku.
Ashley Obrey, attorney for NHLC, said her clients were “pretty happy with some of the proposed changes.” However, she went on to argue that the proposed exemption of the project from the need to comply with the Hawaiʻi Environmental Policy Act [HEPA], Chapter 343 of Hawaiʻi Revised Statutes, was “incorrect.” “The exemption determination relies on a final environmental impact statement,” she said, referring to an EIS accepted by the board two years earlier relating to East Maui stream diversions. It is fine for the Land Board to refer to that EIS in making its exemption determination, she said, but added that the board needed to undertake an analysis to justify that reliance.
David Frankel, representing the Sierra Club, said his clients “can live with the staff recommendation,” even if they were “not happy with it.” He informed the board that A&B was slow to comply with a requirement from the Commission on Water Resource Management to remove diversions from six streams in the Huelo area. “What that means is A&B is able to take all the water from these streams. … We don’t think it’s appropriate to increase the amount of water taken when there’s no work in the field to change these diversion structures.”
Following a lengthy discussion and two executive sessions, the board settled on a motion to accept the staff recommendation, with amendments. One amendment addressed the NHLC concern that there be some justification for exempting the RP from Chapter 343 requirements. The motion for approval included a finding that the 2021 final environmental impact statement “covers the action in the permit. … The anticipated cumulative effects” of the action subject to the RP “are the same as in the FEIS.”
The board rejected Frankel’s suggestion that it include a requirement to address the removal of structures required by CWRM, finding that it need not do this, since that lies within the jurisdiction of the Water Commission.
In the end, the board approved a total cap of 38.25 million gallons a day, to be averaged over the duration of the permit. The permittee is allowed 31.25 mgd for diversified agricultural use, while Maui County is to receive 6 mgd. The remaining 1 mgd is to go to the Kula Agricultural Park.
The Carmichael Case
The state Supreme Court decision in Carmichael, referenced in the staff report, was remanded back to 1st Circuit Court, where it continues to be litigated. (For more on the Supreme Court opinion, see “Hawaiʻi Supreme Court Rulings: Wind Farm, East Maui Permits,” in the April 2022 edition of Environment Hawaiʻi.)
That case challenged the Land Board’s arguments that the year-to-year RPs were exempt from Chapter 343 compliance because they fell under the Environmental Council’s administrative rule that defined “action.” That rule – Hawaiʻi Administrative Rule § 11-200-8 – allowed for actions to be exempted from Chapter 343 review under certain circumstances. However, it included a caveat: “[a]ll exemptions … are inapplicable when the cumulative impact of planned successive actions in the same place, over time, is significant, or when an action that is normally insignificant in its impact on the environment may be significant in a particularly sensitive environment.”
The Supreme Court remanded the case to the lower court, instructing it to determine whether the “action” of stream diversion was allowed under one of the exemptions in the rule or whether it had cumulative impacts that rendered the exemption inapplicable. “If the circuit court finds that either [the exemption] does not apply or an exemption is inapplicable … the circuit court should determine how best to apply HEPA’s [environmental assessment] requirement to the revocable permits, taking into consideration relevant actions already taken by defendants toward issuance of the long-term lease, including A&B’s publication of a DEIS.”
The DLNR argued that the case was now moot, in light of the environmental impact statement that the Land Board accepted in 2021.
The court disagreed. In December, it granted the plaintiffs’ second motion for partial summary judgment, finding that Chapter 343 did indeed apply to the revocable permits.
In addition, it allowed the Native Hawaiian Legal Corporation to file a second amended complaint, alleging that the BLNR’s and A&B’s non-compliance with Chapter 343 and ongoing year-to-year award of revocable permits resulted in “unjust enrichment” of A&B.
According to that amended complaint, in December 2018, A&B “entered into a Purchase and Sale Agreement … with Mahi Pono Holdings, LLC (Mahi Pono). Under the agreement, A&B agreed to sell approximately 41,000 acres of agricultural land located on the island of Maui and 50 percent of its ownership interest in EMI, which includes 15,000 acres of conservation and agricultural land. Mahi Pono agreed to pay approximately $267 million, less customary closing costs and fees, to A&B, subject to certain rebates, which may amount to up to $62 million.
“The sales agreement provides that the land is worth $62 million more with the availability of 30 mgd of water from the revocable permit area than it is without that water.
“The sales agreement puts a value on the authorization to take more than 30 mgd of water from East Maui streams over the course of eight years.
“The benefit BLNR conferred on A&B and EMI (the purported authorization to take millions of gallons of water from East Maui streams) unjustly enriched A&B and EMI.
“A&B and EMI were unjustly enriched at the expense of plaintiffs by taking water from East Maui streams without proper legal authorization between January 1, 2015, and June 30, 2022. …
“A&B’s and EMI’s unjust enrichment should be disgorged and awarded to plaintiffs.”
Adding insult to injury to the BLNR and A&B, on January 29, the court awarded to the plaintiffs attorneys’ fees of $53,542 and costs of $1,189 related to the litigation up to the filing of the second amended complaint.
The BLNR argued forcefully against the award of fees, stating that this was appropriate only following a final judgment (not yet reached in this case) and, furthermore, the only basis for attorney’s fees “is under the private attorney general doctrine, which does not apply here because plaintiffs’ efforts in the circuit court did not vindicate a public interest.”
Judge Crabtree wasn’t swayed by the BLNR brief or a similar brief filed by A&B.
“[I]t has been conclusively established in this case that Hawaiʻi Revised Statutes Chapter 343 was violated and therefore the revocable permits at issue are invalid because they were renewed without an environmental assessment,” Crabtree stated in his decision.
“Further,” he went on to state, “it is clear that public policy has been vindicated, that private enforcement was needed, and that the general public has benefited” from the litigation.
Payment of the attorneys’ fees is apparently to be shared equally by the BLNR and A&B/EMI. “The court awards the fees jointly and severally as to A&B and BLNR, as the court finds they worked ‘hand in hand,’ each echoing the other,” Crabtree wrote. “The court is not aware of any significant disagreement between A&B’s and BLNR’s legal positions and arguments in this case.”
The court has scheduled a hearing February 16 on the motions from the defendants to dismiss the complaint.
— Patricia Tummons
Lenley Lewis
Great reporting on this long overdue decision