Supreme Court Throws Waiahole Dispute Back to Water Commission
The Hawai`i Supreme Court had little good to say about the decision of the state Commission on Water Resource Management in the Waiahole ditch contested case. When the court completed its review of the appeal and issued its findings on August 22, the commission’s dividing of the waters was left in tatters.
Kamehameha Schools/Bishop Estate and Campbell Estate, two of the parties whose arguments were rejected by the court, asked the court to reconsider. On September 28, the court threw out their requests and stated that if questions existed about the status of existing water usage, they should be directed to the Water Commission.
Despite the court’s evisceration of the commission’s most important decision in its short life, no change in the status quo is likely for months – or, indeed, years, if the commission proceeds at the same stately pace of deliberation that characterized the Waiahole contested case.
Linnel Nishioka, executive director for the Water Commission, has not yet developed a timetable for action. “At this point,” she told Environment Hawai`i, “what we’re looking at is how we’re going to be able to implement the decision – what type of staffing, personnel we’ll need.”
Early last month, following entry of the formal court order, the Water Commission issued a statement in response to the Supreme Court’s final entry of its judgment. The commission would halt further diversions form the windward streams affected by the ditch “until interim instream flow standards are set,” it said. And, in what it described as an “interim order,” the commission announced it would allow the two leeward users whose permits the court specifically rejected to continue drawing from the ditch, “until a decision can be made on their pending applications for water use permits.”
Nishioka said that the commission gave its staff two months to prepare proposals for interim instream flow standards for the windward streams. If this timetable holds, water watchers can expect Waiahole-related issues to come before the commission by the end of the year.
Next Steps
Who benefits from the court’s decision? Despite the court’s remand of allocations of windward water to leeward parties, it is too early to predict the final outcome. It may well be that as the commission reconsiders the issues, it will simply find a better way or more evidence to defend its first decision.
Nishioka was not working for the commission when the Waiahole contested case took place. “I’m not real familiar with the case and am not sure what was presented at the initial hearing,” she told Environment Hawai`i when asked whether the case would be reopened.
Reopening is “one of the options we’re looking at,” Nishioka said. “Depending on the type of evidence that was introduced at the initial hearing, we may have to reopen for further evidence.”
“We’re initially looking at five windward streams that tap off the ditch,” she said, referring to the Supreme Court’s order that the Water Commission go back to the drawing boards in establishing interim instream flow standards for windward streams. “We’re looking at how we can establish interim instream flow standards like the court instructed us to do. We’re still trying to find out of there’s any further information out there – continuing studies on aquatic resources and stuff on those streams. We’ll probably reconvene one or more of our TAC committees” (TAC is short for Technical Advisory Committees.)
As Nishioka said, one of the problems in establishing interim instream flow standards is a lack of good information. Anticipating this, when the Water Commission issued the Waiahole decision in December 1997, one condition imposed on the leeward parties receiving ditch water was that they “prepare, or contract for, a portion of the studies and monitoring activities” required. “The commission shall establish a committee to recommend a reasonable amount for the funding, and coordinate and set up the mechanism for the collection, accounting, and distribution of the funds. The committee shall submit its findings and recommendations to the Commission for approval within eight months from the date” the decision was issued.
With the appeal to the Supreme Court, the commission held off enforcing this condition. Consequently, even though the court upheld the commission’s right to require Campbell Estate and other leeward parties to underwrite stream studies, in the nearly three years’ time since the commission issued its order, none of the studies called for in the decision has been done.
Conflicted Commissioners?
When the contested case was first heard, two commissioners – Robert Girald and Herbert “Monty” Richards – recused themselves. No reasons were cited, although Richards’ recusal came after disclosures (in Environment Hawai`I) of close business ties between several of his companies and Campbell Estate, one of the leeward petitioners. Richards’ also owned stock in another leeward petitioner, Dole/Castle & Cooke, at the time the contested case hearing began, although he later sold his shares.
On October 3, the Water Commission issued an interim order allowing the participation of Richards and Girald in the remanded case. Both commissioners had submitted letters to the Water Commission following the release of the Supreme Court’s decision last August. Girald said in his letter that the reason for his original recusal was that he was an employee of Amfac, although on leave at the time. With Amfac no longer a party to the case, Girald’s conflict no longer exists.
Richards informed the commission on August 30 that the reason for his recusal was his ownership of Dole/Castle & Cooke stock. Since he no longer owns any, Richards says, the reason for his recusal no longer exists. The commission agreed, and voted to allow Richards to participate in the remanded case. However, the other business interests of Richards were not addressed in his letter. Nor did the commission take note of the fact that Richards’ Kahua Ranch testified in support of the leeward parties during the public testimony portion of the Waiahole case.
Finally, commissioner Brian Nishida, who was not on the commission at the time the case was first heard, has recused himself from the remanded case. Nishida is vice president and general manager of Del Monte Fresh Produce (Hawai`i), inc., which is a party to the proceeding.
The Court’s Decision
The Supreme Court’s 166-page opinion discusses in detail the objections to the commission’s decision made by the various parties involved. Here is a summary of several significant issues the court considered:
The Public Trust. One of the main points raised by Hawai`i’s Thousand Friends, a planning group that was party to the Waiahole contested case, was that the doctrine of public trust assigns value to the conservation and protection of natural resources, including, in this case, the aquatic resources in the windward streams and in Kane`ohe Bay, into which the streams flow. After rejecting the arguments of the Land Use Research Foundation, another party to the case, that the “public interest advanced by the trust is the sum of competing private interests,” the court held that “the object [of public trust] is not maximum consumptive use, but rather the most equitable, reasonable, and beneficial allocation of state water resources, with full recognition that resource protection also constitutes ‘use.’ ”
“Specifically, the public trust compels the state duly to consider the cumulative impact of existing and proposed diversions on trust purposes and to implement reasonable measures to mitigate this impact, including the use of alternative sources,” the court went on to say.
The Water Code: Several pages of the court’s opinion are spent discussing the state Water Code’s “declaration of policy” (Section l74C-2, Hawai`i Revised Statues). The law states that the code “shall be liberally interpreted to obtain maximum beneficial use of the waters of the state for purposes such as domestic uses, aquaculture uses, irrigation and other agricultural usesÉ However, adequate provision shall be made for the protection of traditional and customary Hawaiian rights, the protection and procreation of fish and wildlife, the maintenance of proper ecological balance and scenic beauty, and the preservation and enhancement of waters of the state for municipal uses, public recreation, public water supply, agriculture, and navigation.”
The state Departments of Agriculture and Land and Natural Resources argued to the court that the phrase “maximum beneficial use” promotes “consumptive uses such as agriculture” over instream uses. “On the contrary,” the court found, “this provision does not dictate maximum consumptive use, but instead requires maximum beneficial use for the range of purposes described, with the condition that ‘adequate provision shall be made’ for various protective purposes.”
At the same time, the court rejected the arguments of the Waiahole-Waikane Community Association that the code’s “adequate provision” mandate “grants an absolute priority to resource protection.” In the court’s view, the Water Code describes “a statutory public trust É under which resource ‘protection,’ ‘maintenance,’ and ‘preservation and enhancement’ receive special consideration or scrutiny, but not a categorical priority.”
Instream Flow Standards. Instream flow standards “are an integral part of the regulatory scheme established” by the Water Code, the court noted. Ideally, instream flow standards are to be based on scientific data, including measurements of flow, aquatic resources, and the like, gathered over a long time span. Until such data are in hand, however, the commission has adopted “interim instream flow standards,” or IIFS, based generally on the status quo at the time the Water Code took effect.
In the absence of sufficient science, the Water Commission has adopted a policy of amending the interim instream flow standards, which is what it did in the Waiahole contested case. The commission’s amendment of the Waiahole interim instream flow standard was challenged by parties on both sides of the Ko`olau divide. The state, the City and County of Honolulu, and Kamehameha Schools/Bishop Estate “allege that the commission erred by amending the WIIFS absent sufficient evidence of the exact quantity of water required for instream uses.” Waiahole-Waikane Community Association and Hawai`i’s Thousand Friends “argue that the commission wrongfully allocated water for offstream use before determining the quantity actually needed for the streams; in particular, they contest the designation of the [agricultural] buffer flows.”
In making its decision, the Water Commission “weighed instream and offstream uses under the provision [in the Water Code] addressing ‘competing applications’ for water use permits,” the court found: “This analysis misconstrues the code’s framework for water resource management. Petitions for interim instream flow standard amendments are not among the water use permit applications ‘competing'” under the code.
“In order for the ‘instream use protection’ framework to fulfill its stated purpose,” the court went on to say, “the commission must designate instream flow standards as early as possible, during the process of comprehensive planning and particularly before it authorizes offstream diversions potentially detrimental to public instream uses and values,” the court ruled. “The tentative grant of water use permits without any determination of instream flow standards É presents the least desirable scenario: no assurance that public rights are receiving adequate provision, no genuine comprehensive planning process, and no modicum of certainty for permit applicants and grantees.”
Basically, the commission worked backwards, the court determined: “Having conceded the lack of a firm scientific basis for its disposition, the commission then allocated a quantity of water to windward streams that it deemed ‘practicable’ in light of immediate and near-term offstream demandsÉ Close review of the commission’s reasoning, therefore, reveals the nature of its decisionmaking process: without any proper findings as to the actual requirements for instream purposes, or the reasonableness of offstream diversions relative to these requirements, the commission effectively assigned to windward streams the water remaining after it had approved the bulk of the offstream use permit requests.”
For much the same reason, the court rejected the commission’s designation of 5.39 mgd available as a “nonpermitted groundwater buffer” for potential future agricultural use on the leeward side of the island. “[W]here the commission has yet to designate proper instream flow standards,” the court found, “a buffer stands the constitution and code on their headsÉ Even where the commission sets out in earnest to determine the appropriate instream flow standards, we think that a formal ‘buffer’ category serves less as an instrument of protection than as a distraction from the mandated task of establishing minimum instream flows.”
Water Use Permits. The Waiahole-Waikane Community Association challenged the provision of 2,500 gallons per acre per day (gad) for every acre of land in agriculture, even though only a fraction of the acreage may be in actual cultivation at any given time. After reviewing the testimony presented to the commission on water use, the court wrote: “Here, the record contains patent incongruities that the commission’s decision does not satisfactorily resolveÉ [W]e vacate its adoption of the 2,500 gad figure and remand for further proceedings consistent with this opinion.”
The court also vacated allocations to ICI Seeds, Gentry Development Co., and Terry Cozzens’ Circle C Ranch and remanded the applications to the commission.
Use of Kahana Stream to Cover System Losses. In the commission’s decision, 2.1 million gallons a day from Kahana Stream was used to account for leaks and other losses associated with operation of Waiahole Ditch. Kahana Stream was chosen as the source of this “lost” water, the commission declared, “because there was no evidence presented concerning any present demand for the use of Kahana water.” In going on to list the numerous flaws in the commission’s reasoning on this point, the court wrote, “First, and most troublesome is the suggestion that retaining water in streams constitutes waste.”
The commission more properly should have given consideration to the Waiahole-Waikane Community Association’s claims that the system was wasting water due to deficient operation and upkeep, the court found. It continued: “in relying on a lack of evidence to justify inaction, the commission ignores its own affirmative duty under the public trust and statutory instream use protection scheme to investigate, consider, and protect the public interest in the flow of Kahana Stream.”
The commission was ordered to “scrutinize such an allocation as it would any other proposed ‘use,’ pursuant to the permitting process.”
Claims of Ali`i and Correlative Rights. Bishop Estate claimed it had sovereign “ali`i” rights to water, and both Bishop Estate and Castle & Cooke claimed “correlative rights” to ground water collected by the ditch. But, the court found, on the issue of ali`i rights, “KSBE does little more than revive the same claims of absolute right to water previously disapproved by this court” and dismisses the argument. On correlative rights, the claims in this case “exceed the scope of such rights at common law,” the court determined.
The Requirement to Fund Stream Studies. Campbell Estate and other leeward parties asked the court to reject the condition in the Waiahole decision that requires them to fund studies and monitoring activities on windward streams. Among other things, they argued that there was no “essential nexus” between the requirement and the nature of the permit they were seeking and that it amounted to an illegal tax.
The court determined that the commission did indeed have “general authority to condition the permits upon compliance with the É funding requirement, which more properly falls under the category of a regulatory fee rather than a land development exaction.” Still, it reserved resolution of this question “pending the determination of the appropriate fee schedule by the commission.”
— Patricia Tummons
Volume 11, Number 5 November 2000
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