April 1997: After years of negotiation, the Fish and Wildlife Service and owners of the Kai Malino ranch, where the last dozen or so wild ‘alala (Hawaiian crow) were still to be found, finally signed an agreement. The Les Marks Trust, consisting of three sisters who inherited the ranch, would sell 5,300 acres in South Kona, Hawai’i, to the federal government. It, in turn, would manage the area as a wildlife refuge.
Cost of the deal to taxpayers: $7.78 million, or about $1,500 an acre for land that had been ranched and logged for a century or more. Still, officials with the Fish and Wildlife Service were excited about the acquisition. “This refuge unit is a keystone area for the recovery of the endangered ‘alala,” said Robert Smith, then head of the Pacific regional office of the FWS, in a statement announcing the November 1996 release of the draft environmental assessment for management of the area. “Productive partnerships among the service, the state, the landowners, and private conservation organizations have provided great hope for recovery of the ‘alala – one of the world’s most critically endangered birds.”
But six years later, the optimism has been replaced with frustration. Hardly had the government taken possession than escalating disputes – over a road easement to the landlocked parcel and compensation for moving expenses – exacerbated by delays in transferring payment for the land to the sellers, made it all but impossible for the service to carry out any of the physical improvements needed to make the land a refuge in more than name only.
The Fish and Wildlife Service took possession of the refuge in December 1997. Although the service claims that the purchase agreement requires the owners to donate easements over their private lands to the refuge and along the refuge’s northern boundary, the owners have refused to grant them. As a stopgap measure, the service worked out arrangements for alternative access with landowners Cynthia Marks Salley of McCandless Ranch to the south and her sister, Elizabeth Marks Stack of Kealia Ranch, to the north. (Their brother, Les Marks, died in 1989.)
But those arrangements expired in 2001. After that, anyone working at the refuge had to be flown in by helicopter, at a cost of $700 an hour. At that point, says former Kona unit manager Dave Ledig, “we were trying to manage a refuge without any access…. It’s a large expense, and logistically, very difficult due to the terrain, weather, and other circumstances.”
Finally, last June, the Fish and Wildlife Service closed its Kona unit office. Ledig moved to Oregon, where he became manager of Bandon Marsh National Wildlife Refuge. Biologist Jeff Burgett, who had already been spending much of his time working with the Ecological Services division of the service on invasive species issues and West Nile Virus, was transferred to Honolulu, where he now is an employee of Ecological Services.
“From the standpoint of refuge management,” says Ledig, “the Kona Forest unit is a diamond in the rough. There’s great potential for community involvement. The biological resources are magnificent. It will be a great asset to the island of Hawai’i and the nation when we’re able to do more with it.”
That day, if it comes, may be years off.
A Disputed Duty to Donate
How did the Fish and Wildlife Service come to spend $8 million for a piece of land with no access?
Officials with the service claim that terms of the sale do in fact secure for the government an easement for “permanent vehicular access” over the sellers’ land, from the state belt road to the Kona refuge.
The sellers dispute this. They note that the agreement commits them to donating the easement “as long as the donation will constitute a charitable donation for income tax purposes in the same calendar year that Sellers receive for the Property a majority of the compensation to which they are entitled.” Three-quarters of the purchase price was paid out in 1998, but the year ended without the government getting the easements. “It was the sellers’ option to donate the easements,” says Bill Rosehill, a friend of the sellers who has acted as their spokesman and advocate in dealings with the Fish and Wildlife Service since 1995.
Not so, says the Fish and Wildlife Service. Its position, spelled out in a letter from regional director Carolyn Bohan to the sellers, is that the sellers’ failure to live up to contractual obligations “is not excused when that party is responsible for the non-fulfillment of a condition.”
“Even though the calendar year in which LMT [Les Marks Trust] received a majority of the compensation has passed,” Bohan wrote, “we are aware of no reason justifying failure to donate the easement in that calendar year. Therefore, we believe that the LMT continues to have a duty to donate the easements.”
In addition, from the earliest days of government possession of the refuge land, the sellers and the government have disagreed over the alignment of access from the highway. The government thought it would receive access over an existing ranch road, with new construction consisting of about half a mile of road on the most seaward portion of the land, connecting to the state highway. The sellers deny that they ever agreed to this and want the government to build a new road all the way from the highway to the refuge.
In 2002, with the parties still at an impasse over the matter of access, representatives of the owners and staff from the office of U.S. Senator Daniel Inouye, from the Fish and Wildlife Service, and from the U.S. Department of Justice met to discuss possible solutions. That meeting was described in a letter to the owners in June 2002 from Catherine B. Sheppard, chief of the realty division in the Portland regional office of the Fish and Wildlife Service. “We agreed to appraise the property rights we needed and to make an offer to [landowners] to purchase these rights,” Sheppard wrote, summarizing action taken at the meeting. “We did that even though we continue to believe that Les Marks Trust agreed to donate access to us across the land it owns as part of our purchase agreement for the 5,300 acres… We agreed to seek additional payment for the access for two reasons: first, it is critical that we obtain access to our refuge land so we can manage it for the recovery of several endangered species. Secondly, we saw it as an opportunity to move forward with you. The impasse between us had lasted too long, and we hoped progress could be made…
“If you accept our offer, we will need to obtain approval from our Washington office and the Congressional Appropriations Committees to exceed our total appraised value of $7,780,000 that included access. Even though we will be seeking approval to pay twice for some of these rights, we believe we will be able to obtain the necessary approvals as a way to resolve this longstanding deadlock.”
The appraised value of the roadway came to $118,736. Sheppard forwarded to Nohea Santimer and Moani Zablan (the two sisters still involved in land ownership matters) an agreement to sell the land for that amount. More than a year later, the offer has yet to be accepted. Last month, Sheppard was asked about the status of efforts to acquire access. “I can’t respond to the question,” she said. “It’s a matter of active internal discussion.”
Holding Out
For more than two decades, the McCandless heirs, the Fish and Wildlife Service, and conservation groups have often been at loggerheads over the management of natural resources – most especially, the ‘alala – found on McCandless Ranch lands. In settlement of a federal lawsuit filed in 1993 by the National Audubon Society and the Hawai’i Audubon Society, the owners of McCandless allowed government biologists onto ranch lands to study the ‘alala and, if possible, remove their eggs for transfer to an offsite bird propagation facility for hatching, rearing, and subsequent release.
Around the same time, the heirs of Lester Marks, facing a large inheritance tax, put their share of the McCandless Ranch lands on the market. Asking price for Kai Malino Ranch, as they called it, was $8.3 million. Working closely with the Fish and Wildlife Service, The Nature Conservancy negotiated a sale price of $7 million for the 5,300 upland acres of the ranch; the difference of $1.3 million between asking and selling prices would be treated as a charitable donation by the sellers to the refuge. The plan was that TNC would buy the land initially, then turn around and sell it to the government when funds were available. In the meantime, TNC was providing the sisters with monthly payments that helped offset interest on the inheritance tax.
Purchase of Kai Malino became the top-ranked item in the Interior Department’s Land Acquisition Priority System for fiscal year 1995-96. But changes in the partisan make-up of Congress led The Nature Conservancy to withdraw from its involvement in the project, in the belief that a quick back-to-back turnover of the property to the government would no longer be possible. With Rosehill’s assistance, the owners of Kai Malino Ranch floated their own management plan for the property, which they renamed Kuaola Refuge. Involving, among other things, koa logging, predator trapping, ecotourism, forest restoration, and habitat improvement for ‘alala and other birds, the plan was seen as a way turn a neglected ranch into a money-making enterprise. To support conservation components of their plan, ranch owners indicated they could obtain financial help from the state’s Forest Stewardship Program and through cooperative agreements with the Fish and Wildlife Service.
In March 1996, the plan was challenged in federal court by the National Audubon Society and the Hawai’i Audubon Society. By May, the lawsuit was stayed after the owners agreed to apply for the necessary incidental take permit under the Endangered Species Act. Despite the changes in Congress that had given The Nature Conservancy pause, funds for acquisition were now in the federal budget and the owners’ negotiations with the Fish and Wildlife Service were back on track. A purchase price was settled on, but the sellers also extracted a promise from the service that the sellers’ donation of easements “will constitute mitigation” for future incidental takes of endangered species should any occur in connection with “low-impact developments now contemplated on the remaining lands.”
When the deal closed, everyone seemed to breathe a sigh of relief. “This has been kind of a mixed plate of sorts,” Nohea Santimer told the Honolulu Star-Bulletin in October 1997. “This is kind of the end of a long disagreement with Fish and Wildlife over how these lands should be managed for benefit of the birds or for the benefit of additional species as well.”
It may have been the end of one disagreement, but it was the opening bell for another, which, if possible, has been even more acrimonious and protracted.
A Flawed Notice
According to the “Agreement for the Purchase of Lands,” dated April 1, 1997, a title report had revealed a number of “purported claims” to the property. To address this, the sellers could clear the title themselves and provide an uncontested deed to the government, or the government, at the sellers’ request, would initiate condemnation proceedings. Either way, the process of clearing title would be difficult and prolonged. With condemnation, however, the sellers would be able to obtain most of the payment (and pay off the IRS bill) almost as soon as the judge hearing the case determined that the sellers had good claim to the land. Arguing for condemnation from the government’s side was the fact that it allowed the Fish and Wildlife Service to take possession of the land almost as soon as the agreed-upon sales price had been deposited with the court.
The sellers chose condemnation. In October 1997, the federal government deposited checks totaling $7.78 million with the U.S. District Court and the condemnation proceedings began.
At once, the sellers’ attorney, Francis P. Hogan, sought release of the funds. The “trustees have tax obligations and other obligations to pay,” he wrote the court. The interest on those obligations – 9 percent, in the case of the IRS – exceeded the amount earned in the court’s account, and even if the trustees were not awarded possession of the funds, they were sure they could find a better interest rate than that obtained by the court. On October 31, the amount they owed to the IRS came to $3,489,022.80 on an estate tax bill accumulating since 1990. State taxes came to $796,452.14.
Judge David A. Ezra granted possession of the land to the Fish and Wildlife Service on December 8, 1997. But payout to the sellers was on hold while the court awaited the filing of claims from parties whose ancestors might have had kuleana (inholding) or other unresolved interests in the property. To allow for such filings, notice of the condemnation had to be advertised in a newspaper of general circulation in the county where the property was located.
As it turned out, the U.S. Attorney’s office in Honolulu had published notice of the condemnation, but not in a newspaper published in Hawai’i County. The error was discovered in April 1998; proper publication was made in the first two weeks of May.
Relations between buyer and seller were already strained. The flawed public notice, adding weeks if not months to the time it would take to resolve the case (and tens of thousands of dollars in interest on the IRS claim), could only make matters worse. By June, Robert Smith, manager of the Pacific Islands office of the Fish and Wildlife Service, put Department of Justice attorneys on notice: “The situation at Kona Forest is critical. Unless we can demonstrate some reasonable progress on the issue of the IRS debt, we can expect property damage, or worse. Please help us!”
Prompting Smith’s concern was the growing rancor between the owners and the service. Refuge personnel were reporting ongoing cattle hunts and gunshots, even in the area of ‘alala during breeding season. Owners and their representatives were not receptive to the notion they had to obtain service permission to go onto their former lands, where they still had domestic cattle and assorted items of personal property.
The growing mistrust manifested itself in disputes over issues that might have been easily resolved among parties without the long history of bad blood. In addition to the government-caused delays in paying the IRS and the sellers,1 a controversy over what constituted the sellers’ personal property on the land sold ballooned into, literally, a federal case that is still ongoing. Last but by no means least is the access issue.
The Fish and Wildlife Service, for its part, has claimed that the sellers have no legal right to be on the refuge land absent a special permit; it has tried to place terms and conditions on the sellers’ use of the land, but the sellers, who control access to the property, have openly and repeatedly mocked such efforts.
A Donnybrook Over Roads
The seaward boundary of the refuge lies at about the 2,000-foot elevation. To get to it from the state belt road, it is necessary to cross over about a of mile private land. The sellers have a jeep road going to the refuge from the belt road, but they did not have clear title over the road as it neared the highway. A surveyor was hired to stake out a path for a new driveway and road that would lie on land to which the sellers had clear title and which would – so the Fish and Wildlife claims – meet up after about half a mile with the existing ranch road leading to the west-northwest corner of the refuge. (Locating a route among all the kuleana holdings must have been challenging; according to a contractor’s report, “Kai Malino’s property is about 40′ wide at its thinnest point in this area.”)
The purchase agreement called for the Fish and Wildlife Service to be responsible for obtaining permits for and building the new access, with the sellers agreeing to grant the service a temporary license to use an existing jeep road to the refuge until the new driveway and road were finished.
In January 1998, as the service was attempting to move forward on the access issues, Joe Santimer informed the service that the sellers wanted to change the location of the government easement, adding over a mile of new road. But the next day, Santimer’s wife informed the refuge manager that “Les Marks Trust was no longer going to try to change the location of the road,” Fish and Wildlife Service records indicate.
Still, the prospects of Joe Santimer doing the roadwork and of a road alignment other than what the service expected to have continued to be a hurdle in resolution of access issues. In a letter to Santimer in August 1998, Jerry Leinecke of the Fish and Wildlife Service’s refuge office in Honolulu wrote, “During a meeting earlier this year… you raised the idea of doing the roadwork yourselves and charging the service a fee as a way to recover your costs and make a profit. The idea of a one-time user fee was discussed as a way to make payment to you.
“As stated during that meeting and in subsequent discussions, the service is willing to consider a proposal if you wanted to prepare and submit one to us. Since then, however, it has been unclear to us if you still plan to submit a proposal to us or not. You mentioned once that you wanted us to take bids; and now, more recently, you are asking about authorities and rules for user fees.”
If the service agreed to have Santimer do the work without the project going out to bid, Leinecke wrote, “the [Purchase] Agreement would have to be changed accordingly… There is no book or regulation that sets these fees,” but whatever the fee, it would have to be “a reasonable amount based on the suitability of the road and driveway,” he added.
A responding letter from Bill Rosehill in late September disputes the service’s claim that the new roadway easement from the belt road could merge with the existing ranch road after half a mile. In addition, he said, “Joe [Santimer] remains interested in constructing the road… Joe will give FWS a bid after FWS first secures outside proposals. Keep in mind, this is not government land and only we will be the sole authority as to who does work and what that work will entail.”
“In summary,” Rosehill wrote, “FWS needs to 1) recognize the PA [Purchase Agreement] as the governing language as to where the road will be, 2) seek an outside estimate of what the road would cost and, 3) have Joe put in the road.”
An obviously exasperated Leinecke replied on October 16: “We are not willing to get into a debate with you regarding what the parties did or did not agree to in the [Purchase] Agreement… If LMT wants to make you their legal representative, then they need to notify our realty office in Portland…
“Also, we are no longer willing to consider changing the Agreement so Joe Santimer can do the road work. The hassle, the demands, and the lost time with no visible signs of progress has led us to the decision to stay with the Agreement as written. When the time comes for us to do the roadwork, Mr. Santimer can bid on the job, along with other potential contractors, in accordance with federal contracting procedures.”2
‘Other Appropriate Means’
While Leinecke may have washed his hands of the dispute, it continued to simmer at higher levels. In May 1999, regional administrator Carolyn Bohan attempted to set a deadline for resolution of the matter. As to a new roadway extending all the way from the highway to the refuge, which the sellers were claiming the Fish and Wildlife Service had to build, “There was never any discussion about constructing an entirely new road all of the way up to the refuge land during the negotiations for and the execution of the agreement… We are not agreeable to constructing an entirely new road.”
And until the road was completed, the sellers were obligated to provide an access license to refuge lands along existing roads, she continued. She set a response deadline of June 25 or, she concluded, “we will then consider other appropriate means to obtain the needed access.”
The deadline passed uneventfully, so far as access was concerned. Indeed, another year passed, with no progress to speak of.
In March 2000, regional realty supervisor Catherine Sheppard wrote the sellers: “We cannot wait any longer for you to convey access from the highway up to our makai boundary, and along the northern reaches of the refuge, nor can we allow you to impose restrictions on our access.” She outlined the Fish and Wildlife Service’s plans for obtaining access through condemnation, with the Les Marks Trust being granted road and utility easements as required. Sheppard asked the trustees if they would be willing to allow an appraiser on the property to perform the needed survey work. Moani Zablan and Nohea Santimer responded by letter dated April 10 (copied to Senator Inouye): “Your letter can only be viewed as a form of anticipatory breach inasmuch as it contemplates ownership of the road as opposed to the agreed upon easement… We have an agreement which you are bound in good faith to perform. We want to grant the USFWS an access easement. May we suggest a person-to-person meeting … to discuss the location of the government’s access easement…contemplated in the agreement?”
While the Fish and Wildlife Service read this as an encouraging sign, subsequent communication from Rosehill and Joe Santimer suggested otherwise. Rosehill, for example, wrote on June 1 that “easements are not contractually required by the sale agreement.” “We continue to want to offer the FWS an access easement,” he stated, but instead, “you pursue continued raping of our private lands.”
Still, the face-to-face meeting occurred in Kona that summer, leaving realty officer Shirilla “optimistic that Les Marks was finally willing to try to work something out cooperatively,” she wrote. “We were very disappointed later when we learned that they changed their minds about letting an appraiser on the property, and now they would only let us look at what they wanted us to accept – the route that would require about 1.5 miles of new road.”
The Fish and Wildlife Service seemed to be moving more and more toward the view that condemnation might be the only way for the service to obtain access, even though, as regional realty supervisor Sheppard explained, the service does not like to undertake condemnation when the landowner is unwilling to sell.
To head off such action the sellers offered easements on at least three separate occasions, but none were along the alignment the service wanted. In addition, the offers involved the service paying for the access as well as other terms unacceptable to the service. In an offer made in April 2002, for example, access would have been along a ranch road leading to the refuge’s southern border. The offer “is most appropriate for the FWS and American taxpayers,” Zablan and Nohea Santimer wrote, since the access followed an existing road and eliminated the government’s need to acquire the road along the refuge’s northern boundary. Their proposal, they said, would save taxpayers the need to build a new road from the highway to the refuge (a cost they pegged at $850,000) and the cost (which they put at $1.3 million) of purchasing the 2.85 miles of road belonging to the sellers along the refuge’s northern boundary, which the government had thought it had obtained an easement to use as well.
In return, the government would have to pay $100 per month, “with increases of 50 percent every five years,” a “pro rata share of the real property taxes” on the road, a “pro rata share of all costs to maintain” the easement (but with the government to pay for “routine bulldozing,” maintenance of gates and fences “to the [owners’] satisfaction), and “all legal, professional, operational, etc., costs incurred” by the owners “as a result of this non-exclusive easement.” (Such costs would include “but not be limited to, legal fees, surveyors, appraisers, utilities, airfare, lodging, car rental, etc.”) In addition, the easement could be terminated “immediately” and at the owners’ sole discretion if the owners’ “business and/or personal activities or use of it’s [sic] property or exercise of its privileges guaranteed by the Purchase Agreement are disrupted or jeopardized in any way” by the government. Also, if the owners were ever to be sued by the federal, state, or county government, or any environmental agencies, groups, or individuals, the access agreement would be terminated and the federal government would agree to pay all of the owners’ legal costs, broadly construed. Other conditions were attached as well, along similar lines.
It was a non-starter as far as the Fish and Wildlife Service was concerned. “While we appreciate your efforts,” realty division chief Sheppard wrote, “the offer for access as presented is not something we can accept.” Instead, Sheppard enclosed an offer to purchase outright the land that the service had thought it was going to receive an easement over, as well as a 100-foot-wide strip of land along the northern boundary of the refuge, which included the boundary road.
Since then, with the filing of a federal lawsuit over relocation issues in August 2002, there has been no apparent progress on acquisition of access to the Kona unit of the Hakalau Forest National Wildlife Refuge.
Meanwhile at the Refuge
The last sighting of ‘alala in the wild was in the spring of 2002, when Jeff Burgett spotted an aging couple known as the Kealia pair. Without access, the Fish and Wildlife Service’s management of the Kona refuge land has been practically non-existent. The primary tasks of fencing and removal of ungulates has not taken place. A $1 million grant for fencing given to the service by the Packard Foundation had to be surrendered, since fencing cannot be done at reasonable cost without overland access.
Release of captive-bred ‘alala to the area has been suspended, with the young birds falling prey to ‘io (Hawaiian hawk), disease, and other problems.
Still, some work is getting done at the refuge. “We’re monitoring the last of the remaining birds and doing some baseline inventory work on vegetation and invertebrates,” a Fish and Wildlife Service staffer said recently. And, of course, the ranching goes on. Refuge personnel spotted “brand new cattle troughs and salt licks” on refuge lands as recently as a few weeks ago.
— Patricia Tummons
Next month: The controversy over moving costs.
- The IRS bill of $3,829,141.64 was paid in August 1998 and the sellers received about $2 million the following month, with the total accounting for 75 percent of the agreed-upon purchase price. In November 1999, the court allowed withdrawal of all but $100,000 of the remainder. Final judgment in the case, and final payment, occurred in February 2000.
- The issue of Rosehill’s authority to speak on the sellers’ behalf comes up several times in the five years’ worth of correspondence between the Fish and Wildlife Service and the sellers reviewed by Environment Hawai’i. Finally, on June 1, 2000, Rosehill sent a letter to Bohan, informing her that “Instructions have been previously given to you people a number of times in the past that Joe [Santimer] and I have always had full authorization to act as agents for Nohea, Moani, and Noenoe, and to communicate all matters relating to Kuaola Refuge with us.” Below Rosehill’s signature was a typed line reading “Approved by:” followed with the signature of Nohea M. Santimer. That seems to be as close to written authority as Rosehill came. Three months later, in September 2000, Michael W. Gibson of the law firm Ashford and Wriston advised the service that he had “been instructed by my clients to request that all communication between Fish and Wildlife Service and the Les Marks Trust and Nohea Santimer and Moani Zablan be between counsel.”
Volume 14, Number 4 October 2003
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