Hi`ilawe and Hakalaoa falls, the legendary pair of nosebleed-high cascades in Waipi`o Valley, should be restored to full glory by the end of July, thanks to a sudden turnabout by Kamehameha Schools that caught the state Water Commission off guard. Representatives of Kamehameha Schools, the largest private landowner in the state, announced their intention to abandon a diversion and restore the flow to the three redirected streams above Waipi`o Valley.
At the same February meeting where the Water Commission approved Kamehameha Schools’ request to abandon a system that diverted water into the Lalakea reservoir and ditch system, the commission also approved a request by the state Department of Agriculture that it be allowed more time to complete work on a tunnel at the back of Waipi`o Valley. As soon as the work on the tunnel is completed, the way will be clear for Kamehameha Schools to remove the concrete diversion from Lalakea and Hakalaoa streams and an unnamed tributary of Lalakea, and for Kamehameha Schools and the Department of Agriculture to remove an illegal diversion that was put in place about 1989 and which shut off flows to Hakalaoa Falls.
– Manabu Tagomori, Kamehameha Schools
Once that occurs, the Waipi`o twin falls will be restored to their full glory. And, as Marjorie Ziegler, natural resource analyst with Earthjustice Legal Defense Fund, pointed out to the commission, “We are all participating in something that’s really exciting – the first full restoration of streams under the state Water Code.”
Kicking and Screaming
Far from celebrating their good fortune to be faced with what amounted to an application for stream restoration by the owner of a legal diversion, the six members of the Commission on Water Resource Management seemed dumbstruck as Manabu Tagomori, water resources manager for Kamehameha Schools, read testimony announcing the about-face in the schools’ position. Tagomori himself appeared shaken by the reversal, disclosed at the commission’s meeting of February 27 in Honoka`a, just a few miles from the valley on the windward side of the Big Island.
Just two weeks earlier, Tagomori, longtime defender of diversions both public and private, had written to the commission, affirming that Kamehameha Schools “had no intention of abandoning the Lalakea Reservoir System due to its strategic location and opportunities the system provides.” The Lalakea Reservoir is fed by the Lakalea Ditch, which carries water diverted from the three streams
On February 27, however, Tagomori found himself in the awkward position of publicly eating his words as he struggled to explain Kamehameha Schools’ final word on the subject. “We have before you today,” Tagomori said, “testimony that É departs from all our actions that we have done up to date.”
In the one-page, unsigned statement, Kamehameha Schools asked that a fine of $453,000 proposed by commission staff be waived, in light of KS’ cooperation in providing water from the Lalakea system to the Lower Hamakua Ditch. Flows to the Lower Hamakua Ditch have been interrupted since a state contractor began work to repair the tunnel. KS also installed a standpipe in the upper Hamakua area for use by the general public in times of drought, according to the unsigned testimony.
Then came the shocker: “Kamehameha Schools will abandon its use of the Lalakea Ditch diversions immediately. KS will file an application for ‘Stream Diversion Works Abandonment’ permit after consultation with the Commission staff on filing procedures.”
The statement concluded by saying the decision was based “upon Kamehameha Schools new vision, mission, guiding principles, goals and priorities of Kamehameha Schools Strategic Plan, 2000-2015. Among several goals and priorities, the Plan clearly emphasizes the practice of ethical, prudent and culturally appropriate stewardship of lands and resources. Based on this new direction, Kamehameha Schools has re-evaluated its programmatic direction of the Lalakea Ditch System and concluded that from the economic, education, cultural, environmental, and community perspective, the closure of the Lalakea Ditch System best serves the long-term interest of Kamehameha Schools.”
Old Dogs, New Tricks
Meredith Ching, the commission’s newest member, immediately began grilling Tagomori over Kamehameha Schools’ U-turn. “Mr. Tagomori, if you were to abandon the Lakalea Ditch System now, what happens to the users you had previously identified – aquaculture, Department of Agriculture, the [county] Board of Water Supply?”
Tagomori explained that KS would work with the aquaculture farmer, Lawrence Balberde, to find a suitable alternative location. As to other users, Tagomori said, “we still need to resolve issues with them, [but] we will address their concerns.” The Department of Agriculture use should end once the repair on the tunnel is complete. As to the county Board of Water Supply, sources there told Environment Hawai`i that if water from the Lalakea system was ever used in their pipes, no one now working at the BWS could remember when. Federal regulations for municipal systems make the use of such surface water sources extremely costly, so it is unlikely that the BWS would eye the Lakalea system as a future water source in any event.
“The existing diversions are very valuable,” Tagomori acknowledged, but, he continued, “looking at it in the overall, in totalizing the value, the benefits and expense, it just didn’t pencil out for us. So, admittedly, we have made an eleventh-hour hour change in our position, but we feel that it’s a good decision from our point of view.”
Commissioner Brian Nishida asked when Kamehameha Schools adopted the Strategic Plan referred to in the statement read by Tagomori. Robert Lindsey, asset manager for Kamehameha Schools on the Big Island, informed him that the plan had been in place since at least December 2000, prompting Nishida to ask why that document had not guided the schools’ statements to the commission throughout 2001 and as recently as February 12 of this year.
“Mr. Nishida, we are in a time of transition,” Lindsey responded. “We are trying to adjustÉ I will say I work for the endowment side of our organization, and when it comes to land, managing real estate, growing wealth from that real estate, our view for a long, long time was purely economic. The land was thereto be used to generate income to support our educational mission. Now there are four other filters that, as land people, we need to consider in decision-making. It’s not only economic anymore, it’s community, it’s environmental, it’s educational, and it’s culturalÉ. It’s been difficult for people like me – an old dog trying to learn new lessons.
Nishida pressed the point: “I can appreciate changing plans, and can appreciate any entity’s right to change its mind, but I have some trouble trying to reconcile the February 12 letter to the commission, where KS is saying from the outset KS has no intention of abandoning the Lalakea Reservoir system due to strategic location and opportunities the system provides, with the February 27 decisionÉ This commission and the staff have been quite understanding over the last two years, nearly two years, of trying to develop a win-win-win situation all the way around, so if you humor me a bit, how does it end up being that, within the course of 15 days or less, such a major decision, change in direction, comes about?”
Tagomori confessed, “Several of our people here have been caught by surprise by the change in position. We have been working with the community to preserve that ditch.” But, he continued, it’s a “plus and minus situation. Yes, a facility like that is highly valuableÉYou cannot build any infrastructure like that today, and the rules of managing allows for continued use, so long as there’s reasonable-beneficial use identified.” But then, he continued, “we looked at the negative side of it, in terms of the wasting of water, the cultural aspect. We treasure the falls. We looked at that, coupled with the economic analysis of how much revenue stream we’re going to generate and the expenses – it’ll take maybe upwards of 3-5 million dollars to upgrade the system to last another 20, 40 years. That’s a big expense. And the revenue stream for the kind of use we could put that area into does not allow that at all. And that came into the picture with the heavy environmental and cultural benefits. Quickly we could see that we did not want to begin something on the track of what we were leading to – spending big money and not being able to generate revenue.”
A Fine Thing
Implementation of the Strategic Plan and long-term negative economic impact were the ostensible reasons for Kamehameha Schools’ decision. But who really made the decision? And why?
At one point, Tagomori suggested that after “penciling out” the project, he and others “brought this up internally to our higher authorities and got their blessings to make that switch” in position – a statement that would seem to fly in the face of his earlier (and probably more honest) comment that he had been taken by surprise by the February 27 testimony.
Neil Hannahs, asset manager for Kamehameha Schools, put a slightly different spin on the subject. “Basically,” he told Environment Hawai`i, “the commission created a need for us to make this decision.” When the commission staff recommendation came out with the proposal for $453,000 in fines, that “got my attention, yes!” said Hannahs.
“That created the necessity of an analysis” of the Lakalea system, he continued. “Prior to that, with an organization this big, involved in so many things,” the diversion had not been analyzed in the new light of the strategic plan, he said. “You create a mandate, such as we have with the strategic plan, and it takes time to apply that plan to every single thing you do. It’s easy to look at [the plan] in terms of new initiatives, but [with respect to existing activities], unless something creates an event or you set aside the time to look at it, not much happens.”
And when the goals and values of the new strategic plan were applied to the Lakalea system, it was found to fall short. “We go back to our strategic plan, and the values inherent in the plan and the goals it set forth. One goal is to malama i ka `aina [husband the earth]. This came from our stakeholders. What it means to them, and to us, is we need to target seeking a balance of return – involving environmental, cultural, economic and community considerations – that goes beyond the point of one-dimensional analysis, or what gets us the most money. We are to the point now where we’re trying to optimize each category,” Hannahs said.
“There’s a dynamic tension within ourselves, when you’re trying to balance those levels of return and you have people on board who are more culturally or environmentally disposed – or more agriculturally disposed,” he continued, describing the decision-making process. “Our agriculturalists look at infrastructure like the Lalakea diversion, and they marvel. It’s a marvelous piece of work. You couldn’t do that today. They try to preserve inherent value in that.”
“But I’ll tell you, we looked at this with a straightforward analysis and asked what is the economic analysis? We would have to put a lot of money into maintaining the system, assuming we prevailed [in keeping it]. And for that investment, the return on a 10-acre aquaculture project is very minimal.
“Secondly, on an educational analysis, we see far more opportunities for education in the valley than on an aquaculture farm. So if we preserved the aquaculture farm, we would be doing so at the cost of what is going on in the valley, with Ku Kahakalau and others and their school. This, too, tips the balance toward the valley.
“And those are mythological falls. They’re very important in our culture. Our desire to see those falls running again, flowing again, is in keeping with our culture and the cultural practices that occur in the valley.
“And environmentally, we had to acknowledge that we’re talking about exotic species, catfish and trout. And while we’ve heard again and again by everybody who’s brought an invasive species to Hawai`i that they could control it, we have to look with some amount of honesty at the result. Time and time again, notwithstanding controls, exotic species have escaped into other parts of the environment where they became very invasive and destructive. Earthjustice was saying that. And we had to say, while we could put in netting, spillways, and so forth, the fact is, we’re at a high elevation, which creates an opportunity for fish to do damage to native streams if they should escape. At a lower elevation, we haven’t given up on catfish and trout. There’s a far lower level of risk, because of the presence of saltwater.
“Finally, there was the community issue. You can’t run an organization like this on the basis of popularity. But we don’t operate in a vacuum either. Frankly, the community – this is probably the most split issue for us. Many want the streams to flow. Others have reservations – maybe they’re agricultural users who are served by the ditch, or they’re Waipi`o users worried about higher volume of flow in the valley that could create flooding. The community issue is somewhat split, but the other issues weighed heavily toward making the decision we made.”
Does the Lalakea abandonment suggest Kamehameha Schools might yield on another matter before the Water Commission – a petition by Earthjustice, on behalf of Windward O`ahu parties, asking the commission to issue a declaratory order denying a water use permit application by Kamehameha Schools? In that case, Windward parties allege that KS’ application to use 4.2 million gallons a day of water from the trans-Ko`olau tunnel does not conform to the commission’s final decision in the Waiahole Ditch contesed case.
Hannahs gave no hint of Kamehameha Schools’ position on that matter. “It’s a much more complicated issue,” he said, “given fiduciary considerations about what the [Supreme] Court has recognizedÉ There are many more moving parts” to that dispute.
Still, he credited the Waiahole case with a significant role in the Lalakea outcome. More than a year ago, the commission ordered Kamehameha Schools to open up a dialogue with the Windward parties. “Even though we were given a finite period to conduct that dialogue, in fact, the dialogue has gone on. The door that was opened then has really helped us out in the Lalakea matter.”
The petition on the Waiahole dispute is scheduled to be heard at the commission’s meeting this month.
Unwitting Instrument of Change
At the conclusion of the discussion of the Lalakea system, the Water Commission seemed resigned to accept that it was beyond the commission’s power to force Kamehameha Schools to keep the diversion in place. After an executive session, the commission voted unanimously to require KS to apply for an abandonment permit. The $453,000 in fines proposed by staff was not waived, but the commission decided to require this to be paid out in studies of stream ecology or other issues, as determined in cooperation with commission staff.
But what caused the proposed fine to be so high that, as Hannahs said, it captured the attention of the schools’ highest-level managers?
In a nutshell, when Hamakua Sugar Company went bankrupt, the Lalakea Reservoir, fed by the diversions on three streams, was no longer being used to irrigate fields. Kamehameha Schools/Bishop Estate purchased the assets of Hamakua Sugar in 1994, thereby acquiring the Lalakea System and other properties. In 1995, Chris Rathbun, a resident of Waipi`o Valley, filed a formal complaint with the commission alleging waste of water diverted into the Lalakea Reservoir. After the closure of the Hamakua Sugar Company, much, if not most, of the water diverted into the Lakalea Reservoir has been allowed to overflow into a dry gulch, prompting Rathbun’s complaint.
The commission ignored Rathbun’s complaint – indeed, it wasn’t even mentioned in the staff’s chronology submitted to the commission. In 1998, Earthjustice filed a water-wasting complaint on behalf of Rathbun and the Waipi`o Valley Community Association covering not only the Lalakea system, but also the Lower Hamakua Ditch system. Kamehameha Schools attempted to identify users for the water diverted into the Lalakea system, while the Department of Agriculture moved forward with plans to restore the Lower Hamakua Ditch system to full use. Two years later, Earthjustice filed a petition asking the commission to order Kamehameha Schools to immediately cease wasting water diverted by the Lakalea system.
In response, Kamehameha Schools claimed the water was going to be used for Balberde’s aquaculture operation and for a downstream wetland taro farm run. But the Water Commission was frustrated at the slow pace of progress toward implementing these projects. On August 23, 2000, the commission approved a series of conditions that Kamehameha Schools would have to meet by December 1, 2000, in order to avoid being required to shut down the Lalakea diversion. Among other things, KS was to provide evidence of a long-term commitment to the aquacultural use of the reservoir, such as a lease, and detailed estimates of the water that would be required for such a project. Kamehameha Schools was also to put a meter on Lalakea Ditch, provide monthly water use reports to the commission, and obtain in writing evidence that the state Division of Aquatic Resources had no objection to the proposed aquaculture project.
– Chris Rathbun, Waipi`o taro farmer
If the conditions were not met and Kamehameha Schools did not submit the application for abandonment by the deadline, then “maximum daily fines” would be assessed. As calculated by commission staff, those fines, running from the time the deadline passed to the date of the February 27 meeting, amounted to $453,000.
Between the commission’s August 2000 order and the February 2002 meeting, Kamehameha Schools had been in regular communication with the commission. In that time, it met just one of the four conditions but did not apply for the permit to abandon the diversion. Neither did it file for an extension to complete work on the unfulfilled conditions.
Consequently, when the commission took up at its February meeting the matter of the request for a declaratory order by Earthjustice, the staff had little choice but to recommend imposing the full fine of $453,000 and order Kamehameha Schools to apply for a permit to abandon the Lalakea system.
End Game
Will the diversions really be removed in July?
That depends on how quickly the commission staff is able to process the application for an abandonment permit. No mention of possible delays was made at the commission’s February meeting. However, according to Ed Sakoda of the commission staff, the usual routine in processing a permit application is to route it through other agencies that might have regulatory concerns. For example, the Department of Land and Natural Resources’ Division of Aquatic Resources would be asked to comment if the proposed work would affect native stream animals. The DLNR’s Land Division would review the application to see if it pulled any triggers for a Conservation District permit – something that might then require an environmental assessment. The U.S. Army Corps of Engineers receives copies of permit applications involving work in streams, while the state Department of Health also becomes involved, since it certifies that projects will not have a negative effect on coastal water quality whenever a Corps permit is issued. The U.S. Fish and Wildlife Service and the University of Hawai`i’s Environmental Center are also among those agencies asked to comment routinely on permit applications before the commission.
Would this delay removal of the diversion? “I guess if there are other [agency] requirements, that may be true,” Sakoda responded. “We’re not sure whether they need these other permits. If they don’t, our process could be fairly short.” The application by KS for a permit to abandon a diversion will be the first ever processed by the Water Commission, Sakoda said.
Rathbun was delighted by the turn of events. “I’m really, really ecstatic about the decision of Kamehemaha Schools,” he said. “I’m a little disappointed in the commission, which wasn’t exactly enthusiastic about living up to its duty to protect the streams of Hawai`i.”
Rathbun is quick to share credit with others. “I had a lot of help and know that without that help it would’ve gone nowhere. Legal Aid and Earthjustice deserve more credit than I do, to tell the truth.” Legal Aid of Hawai`i represented Rathbun in an earlier stage of his complaint.
Ziegler, the analyst with Earthjustice who has worked for years on Waipi`o Valley issues, was just as effusive in her praise for Kamehameha Schools. “I don’t know if all of you understand how historic this is,” she said in remarks to the commission. “These three streams [diverted by the Lalakea Ditch] would be free flowing if not for the Lalakea system.”
— Patricia Tummons
Volume 12, Number 10 April 2002
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