Four years after a controversial Land Board vote, the Hawai`i Electric Light Co. is still battling to keep alive a Conservation District Use Permit to expand its power plant at Ke`ahole, near the Kona airport on the western side of the Big Island.
The matter of the CDUP’s validity has been taken now to the state Supreme Court, which will hear arguments in no less than three appeals from the court of Third Circuit Judge Ronald Ibarra. Arrayed against HELCO are two Keahole residents living nearby; a potential competitor, Kawaihae Cogeneration Partners; the state Department of Hawaiian Home Lands, which owns adjoining land; and the Keahole Defense Coalition, a nonprofit organization.
The Supreme Court is not the only hurdle that HELCO must surmount before the way is cleared for installation of the new Keahole generators. Its clean-air permit from the state Department of Health has been appealed to the Environmental Protection Agency in Washington, where it awaits final decision. In addition, it must receive further approvals from the state Public Utilities Commission before most costs of installing the two combustion turbines it has already purchased for Keahole can be included in the rate base.
But by far greatest cause for delay in HELCO’s plans to expand Keahole has been the litigation over the Conservation District permit. The eventual outcome could have far-reaching consequences not only for HELCO, but for the very way the Board of Land and Natural Resources conducts its business.
The Disputed Permit
The CDUP at issue is actually an amendment to a permit first issued to HELCO in 1973, which allowed installation of three 2.75 megawatt diesel generators on about 15 acres of land in the Conservation District. The permit was amended in 1984, 1987, and 1988 to allow additional capacity to be installed. In asking for approval of the 1988 amendment, HELCO officials promised it would be the last time they came before the Land Board in hopes of receiving approval of expanding their operations at the Keahole site.
(Although the site remains in the Conservation District, surrounding land is in the Urban or Agriculture land use district. The fact that HELCO has not sought redistricting of its own 15 acres into the Urban district, even when it was urged to do so by the Office of State Planning, suggests that somewhere along the line, officers of the company decided it would be easier to win approvals for expansion from the state Land Board, which controls uses in the Conservation District, than from the County of Hawai`i.)
In the late 1980s, HELCO began the planning process for a major expansion of generating capacity in west Hawai`i. The planners’ first choice was Kawaihae. After that was Pu`uanahulu, near the new county landfill.
HELCO went so far as to put up a meterological tower at Kawaihae to collect the atmospheric data. But the Hawaiian Homes Commission eventually decided to exclude non-Hawaiian corporations from the bidding process it set up to lease the power-plant site. Kawaihae Cogeneration Partners, headed by part-Hawaiian Albert Hee, was awarded the lease in July 1993.
After that, HELCO turned its attention to the Pu`uanahulu site, owned by the state. Again, it received permission from the Board of Land and Natural Resources to begin collecting meterological data and in 1993, published a draft environmental impact statement for a power plant there. But, according to a statement made by HELCO President Warren Lee, “when our planners sat down and looked at the planning process, what it would take to get the Pu`uanahulu site operational, it came out that the site would not be available perhaps until late 1996, and that was entirely too late for us, because we needed to put power, we felt, on-line by late 1994.”
At that point, HELCO decided to expand Keahole by installation of about 60 megawatts of generating power while continuing to pursue acquisition of land at Pu`uanahulu for a larger generating station. On August 26, 1992, HELCO applied for an amendment to its CDUP to expand the Keahole power plant. It expected to have the two diesel-fired combustion turbines plus a steam-powered generator on line as early as 1995.
A Bumpy Road
The DLNR determined that an environmental impact statement would need to be prepared for the expansion. The applicable law at the time, Chapter 183-41 of Hawai`i Revised Statutes, required applications for Conservation District permits to be acted upon by the Land Board within 180 days, but provided for a time extension should an EIS be required for the project being sought.
In January 1993, HELCO sought the first 90-day extension. By spring of 1993, it completed its first draft EIS, but the DLNR and the state Office of Environmental Quality Control determined the document did not provide all required information. HELCO had to prepare another document, which was not accepted as complete by the DLNR until January 1994.
To keep its application alive during the period of EIS preparation and review, HELCO continued to ask the Land Board for time extensions. Altogether, the board granted a series of time extensions that pushed the deadline for board action back to May 18, 1994.
Only after the EIS was completed was it possible to schedule the contested case hearing that the Land Board had authorized. Contesting HELCO’s request were two residents of the Keahole Agricultural Park, Peggy Ratliff and Mahi Cooper, and Waimana Enterprises, which was then a partner in Kawaihae Cogeneration Partners, which had obtained the lease for a power plant at Kawaihae.
A DLNR hearing officer, Rodney Maile, was scheduled to begin the hearing in mid-March, but before he could do so, Waimana sued to stop the proceedings. Waimana said it did not receive notice of the scheduled contested case until February 14, 1994, a month before the contested case was to begin. This, it claimed, gave it insufficient time to prepare its arguments and witnesses.
At the urging of Third Circuit Judge Ronald Ibarra, the parties to the case agreed that the hearing would begin on May 2, with HELCO committing to request that the Land Board once more grant it a time extension — this one for 45 days — of the processing deadline.
However, on March 17, a week after the agreement was made, hearing officer Maile, apparently upset at having been named as a defendant in the Waimana complaint, withdrew from the case. Because of statements made by Waimana, Maile said, he would be unable to judge the matter fairly. Two weeks passed before a new hearing officer, Glenn Nagata, was hired on April 4.
Further Delays
But on April 22, ten days before the hearing was scheduled to begin, Nagata was hospitalized with what were reported to be heart problems. The DLNR was unable to find another hearing officer on such short notice, and so, on April 25, it asked HELCO to request that the Land Board grant it yet another 180-day time extension to allow the contested case hearing to be concluded.
HELCO instead asked only for the 45-day extension, as provided for in the agreement reached with Waimana in Judge Ibarra’s chambers. This would not be sufficient time to complete the contested case, the DLNR staff contended. In its submittal to the Land Board of May 13, 1994, staff planner Don Horiuchi wrote:
“The scheduled May 2, 1994, contested case hearing will not be held because of the loss of our hearing officer. We, therefore, will be unable to proceed in this matter with even a 45-day extension of the processing period,” Horiuchi wrote. Even assuming a hearing officer could be found quickly, it would take typically two months between the time the hearings began and the hearing officer’s recommendation was made to the Land Board, Horiuchi said. And if the board didn’t want to vote the first time it heard the matter, there would be another two-week deferral period, he noted, plus delays could be expected in the review of the matter by the attorney general. Altogether, Horiuchi said, a deferral of at least 134 days would be required to process a contested case.
But, the Land Board was informed by its staff, time extensions can only be granted if the applicant asks for them — and, in this case, HELCO was not going to do so. For that reason, the staff recommendation was for denial of the application without prejudice. If the board did not vote to deny by the deadline of May 18, 1994, Horiuchi wrote, “the application will be approved by default pursuant to Chapter 183-41(a), Hawai`i Revised Statutes.”
A Non-Vote
What the Land Board did, or did not do, on May 13 remains a subject of dispute. A motion to deny the permit without prejudice was made by Big Island board member Chris Yuen, but it received just two votes — his and that of board chairman Keith Ahue. Three other board members voted in opposition. (The sixth member, Colbert Matsumoto, had recused himself because of a conflict of interest.)
Yuen then asked for the board members in opposition to his motion to make their own motion to approve the CDUA. No one did.
Yuen: “If nobody’s going to make a motion like that, I’m going to make a motion and vote against it. I make a motion to approve the CDUA. And the reason I’m doing this is so that we have a vote on the CDUA and the thing does not go through simply by default.”
Ahue seconded the motion. But when the vote was called, the three who had opposed Yuen’s motion for denial refused to vote for approval. Only Yuen and Ahue cast their votes against the motion.
HELCO declared that the board’s inability to get a four-vote majority to deny its application was tantamount to approval of its application by default.
Waimana, joined now by Ratliff and Cooper, claimed that the board’s action, if tantamount to anything, was tantamount to a denial of their due-process right to a contested case hearing. Judge Ibarra agreed. In November 1994, Ibarra remanded the matter back to the Land Board with instructions to conduct a contested case hearing.
A Second Chance
In July 1995, the DLNR hired retired Supreme Court Justice Frank Padgett to serve as hearing officer for the HELCO contested case. The hearing was held over several days in November 1995. Within a month, Padgett issued a proposed findings of fact, conclusions of law, and decision and order, in which he recommended that the Land Board deny HELCO’s permit. Central to Padgett’s recommendation was his determination that in no way was HELCO’s power plant consistent with the purposes of the Conservation District.
The board considered the matter well into 1996. At some point in April of that year, at a meeting not publicly announced, the Land Board met to vote on HELCO’s application.
The results of that vote were disclosed in Minute Order 11, dated April 22, four days before the new board deadline for action on the CDUA. An initial vote to grant the permit was made by then-O`ahu board member Michael Nekoba and seconded by then-Kaua`i member Herb Apaka. Nekoba and Apaka were the only members voting in favor of this motion, with Maui board member William Kennison, Hawai`i board member Yuen, and board chairman Mike Wilson opposing it.
A second vote was taken, this time on a motion by Yuen to adopt the hearing officer’s proposed findings of fact, conclusions of law, and decision and order. Yuen, Kennison, and Wilson voted in favor; Nekoba and Apaka were opposed. The minute order stated that the application was denied and that the “BLNR does not intend to deliberate further, or vote again, on this matter.”
Benjamin Kudo, attorney for HELCO, took exception to the board’s conclusion as to the meaning of the votes. The board’s own rules said the board could not act without a four-vote majority, Kudo wrote. “It is apparent that the votes taken on motions to approve the CDUA or to deny the CDUA lack the majority of four votes required to constitute valid board action, thereby resulting in no action. Accordingly, we find that your denial of our client’s CDUA is violative and contrary to the board’s own administrative rules and regulations.”
Wilson then issued an amended minute order on May 10. Instead of the BLNR being described as having denied the application, the amended order states: “There were only two votes in favor of granting CDUA HA-487A. Therefore, the BLNR will not issue a permit with respect to HA-487A.”
Kudo wrote back to Wilson, saying that because the board didn’t vote (that is, it didn’t have a four-vote majority for either motion), HELCO was entitled to “put its land to the use or uses requested.” Accompanying Kudo’s letters were construction plans, for which DLNR administrative approval was sought. On May 17, the DLNR informed HELCO it would not be processing the plans.
Back to the Court
To the surprise of no one, HELCO’s claim to have won approval, if only by default, of its Conservation District permit application ended up in court yet again.
Judge Ibarra issued an order in the case on January 3, 1997. The judge paid no attention to the amended minute order, since it was made after the expiration of the board’s deadline to act on the case. Instead, Ibarra wrote, “the BLNR erred in stating in paragraph 3 of the original Minute Order No. 11 that HELCO’s CDUA was denied. Four votes of the BLNR are required to approve or disapprove the CDUA as required by Section 171-5, HRS. Accordingly, the BLNR failed to take any action, be it denial or approval, on either the Nekoba motion or the Yuen motion presented for vote.” The BLNR, he continued, thus “erroneously stated that it had denied HELCO’s CDUA.”
The BLNR’s failure to take action results in HELCO being able to automatically put its land to the uses requested in its application, Ibarra found.
But that was not the end of the matter. Over the next year, the parties to the case attempted to determine what limits would be placed on HELCO’s permit, given that BLNR rules governing the conditional use permit that HELCO sought identify several general conditions for all projects. (Until Act 270 of 1994, Chapter 183-41 HRS and the corresponding administrative rules, HAR Title 13, Chapter 2, allowed for conditional use permits in the Conservation District, so-called because the permits came with certain conditions. The rules set forth more than a dozen different de-minims conditions, which the Land Board usually augmented with others in approving such permits.)
In his final judgment, issued February 11, 1998, Judge Ibarra agreed that such default conditions would apply to HELCO, so long as those conditions were consistent with Chapter 183-41.
Just who was to make the determination of consistency was a matter not addressed by the court. Waimana, Ratliff, and Matsukawa were of the belief that the Land Board itself would take up the subject at a public meeting. Unbeknownst to them, the decision had been made even before Ibarra’s final judgment was issued — not by the Land Board, but by its staff, based on an “oral order” of Judge Ibarra made December 1. Kudo was informed of the decision in a letter January 30, 1998, from Wilson, but signed by his deputy, Gil Coloma-Agaran.
According to that letter, the department determined that 14 conditions listed in the rules would apply to the HELCO project. Kudo’s signature, acknowledging receipt of the letter, was also dated January 30.
Neither the court nor the parties opposed to HELCO’s permit were informed of the department’s letter. At a status conference with Judge Ibarra on February 4, held to discuss the final order, HELCO failed to mention the letter, even though the subject of conditions to HELCO’s permit arose. Not until a court hearing on March 9 did Randall Young, representing the Land Board, announce that DLNR staff had issued the determination letter.
(The department’s failure to notify other parties to the contested case of its decision on the question of applicable conditions has prompted still more litigation. On March 17, 1998, Peggy Ratliff brought suit against the Land Board and HELCO, alleging that Coloma-Agaran’s letter constituted an unlawful effort to adjudicate a contested case and, in any case, was not authorized by the board. In addition, Ratliff’s lawsuit alleges that the decision to issue the letter was made in order to circumvent the state open-meetings law. A hearing on Ratliff’s complaint was held in Ibarra’s court on April 24. The judge had not ruled on a motion to dismiss by Environment Hawai`i’s press deadline.)
The Ultimate Appeal
Two separate appeals (one filed by the private parties, the other by DHHL) of Ibarra’s final ruling have been made to the Supreme Court. A third appeal has been filed, asking the Supreme Court to issue a stay that would bar HELCO from any work on the Conservation District permit until the appeals are adjudicated.
Conspicuous by its absence, judicially at least, has been the Land Board. Since 1994, the deputy attorney general representing the BLNR, Randall Young, appears to have lost whatever enthusiasm he might once have had for protecting the position or interests of his client. In hearings before Ibarra, Young now sits with counsel for HELCO and argues against motions made by Waimana, Ratliff, and Cooper.
This absence is noted in one of the briefs before the Supreme Court. “When HELCO challenged the BLNR’s minute orders … the Attorney General did not defend the BLNR’s minute orders. The Attorney General did not appear at oral argument … to defend and to advance the BLNR’s major policy decision.
“Applicants can only conclude that after May 10, 1994, the Attorney General substituted its own judgment for that of the BLNR… This leaves appellants and the public to defend the BLNR and its closing minute orders.”
The Questions
Among the issues that are raised by the HELCO case and that will probably be argued exhaustively before the Supreme Court are these:
What is the number of votes required for the board to “take action”? Is it four (a majority of the board’s membership), or is it three (a majority of the board’s quorum)?
Must the Land Board obtain a majority vote, or even a super-majority vote, or (in the case of two recused members) an absolutely unanimous super-majority vote, merely to block a permit? If so, that means that it is sufficient for an applicant to win over to his or her side just one or, at most, two, Land Board members in order to gain a “default” approval of his or her project.
For several years, the Legislature has been presented with bills intended to address this problem. However, to date, it has failed to vote on any of them. The most recent bill has been held in the Senate committee co-chaired by Randy Iwase, an attorney who is of counsel to the same firm that is representing HELCO in this case (Dwyer Imanaka Schraff Kudo Meyer and Fujimoto).
— Patricia Tummons
Volume 8, Number 11 May 1998
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