In the Conservation District

Judge Overturns Land Board Denial Of Time Extension for Engelstad House

The embattled Conservation District Use Permit of Ralph and Betty Engelstad to build a house in Lanikai, O’ahu, has been judicially revived. An order issued January 2, 1997, by Circuit Judge Kevin Chang reversed the decision of the Board of Land and Natural Resources 13 months earlier to deny a time extension sought to complete construction of the 30,000-square-foot house.

Chang’s order centers on the fact that Roger Evans, former administrator of the now-defunct Office of Conservation and Environmental Affairs, which handled Conservation District applications, informed the Land Board during its deliberations on the Engelstad permit that an attorney general opinion prevented the board from approving the time extension without the project having received Special Management Area clearance from the appropriate county agency.

The Engelstads’ attorney, Benjamin Matsubara, was not allowed to see the AG opinion that Evans referred to. This, Matsubara argued in court, kept the applicants from being able to prepare for and “meaningfully participate” in the board’s discussions on the subject. When neither the attorney for the Land Board nor the Land Board itself could produce the opinion Evans had referred to, Chang determined that the Engelstads’ “constitutional rights to due process have been violated” and granted the Engelstads a three-year extension of time on their Conservation District Use Permit, effective January 2, 1997.

A Tangled History

The Engelstads’ permit to build was itself the product of court action. In 1987, the Engelstads filed their third application (the first was rejected; the second was withdrawn) to build their enormous dream house in Lanikai with the Board of Land and Natural Resources. The 180-day statutory deadline for board action was established as January 30, 1988.

However, in November 1987, Evans moved that deadline up to December 21, 1987, at the request of Engelstads’ attorney, Benjamin Matsubara. When the board considered the application on December 18, one member was recused while another was absent, leaving just four board members to act on the application. Under state law, the board needs a four-vote majority before it can take affirmative action. Three board members agreed with the staff recommendation to deny the permit, while the Maui board member, John Arisumi, voted to grant the permit. One vote shy of the four-vote majority needed for action, the board was not able to deny the permit.

However, the board later challenged Evans’ revision of the 180-day deadline. Upon the advice of the attorney general, the deadline was re-established to expire on January 30. On January 21, 1988, the board took another vote on the Engelstad application. This time, it was able to gather a four-vote majority to deny the application.

Engelstads appealed this reversal to the First Circuit Court. In 1989, then-Circuit Judge Robert Klein entered an order granting the Engelstads the Conservation District Use Permit they had sought. While the Land Board could set no special conditions or restrictions on the permit, the standard conditions spelled out in the Department of Land and Natural Resources Conservation District rules would apply. Among those conditions was a three-year limit for completion of construction.

Further Delays

The 1992 deadline was not met. Indeed, by that time, construction had not started, nor, in fact, had construction plans been approved. Still, in July 1992, the Land Board granted the Engelstads the three-year extension they had sought, with the deadline for completion of work set at July 24, 1995.

By the time that deadline rolled around, the Engelstads still had not begun building their house, although some preliminary soil tests had been undertaken. On July 18, Matsubara submitted a petition for a time extension to the DLNR, arguing that the delays were due to no fault of the Engelstads.

The Land Board considered the request at its meeting of October 27, 1995, in Hilo. The staff report to the board from its Office of Conservation and Environmental Affairs stated, “The board has already allowed the permittee a three-year extension to redesign and construct the home. There is no obligation for the board to further extend the permit’s construction deadline.” The recommendation of staff was for denial of the time extension request.

In his testimony to the board, Matsubara, attorney for the Engelstads, explained the chief reasons for the delays encountered in pursuing construction of the residents. The Engelstads had been unable to obtain the required building permits from the City and County of Honolulu due to a determination by the city’s Department of Land Utilization that a major Special Management Area permit would be required for construction of the driveway. The Engelstads were contesting this in court, Matsubara said, and in the meantime, it was impossible to proceed with construction.

After hearing testimony on the request, the board voted to go into executive session to discuss legal issues with its assigned deputy attorney general. Roger Evans also participated in that session.

About 45 minutes later, the board reconvened in open session. Board Chairman Mike Wilson announced that Evans had “some clarification to provide.”

New Considerations

In his comments, Evans indicated that now that he was aware that the Engelstads’ property had been placed by the City and County of Honolulu into the Special Management Area, additional factors should be brought to bear in the boards consideration of the Engelstads’ request for a time extension. Specifically, Evans mentioned that an attorney general opinion from 1981 prevented the board from approving any Conservation District Use Application unless and until SMA clearance had been obtained by the applicant from the county where the project was to be built.

In addition to the reasons for denial explained in the staff report, Evans said, “we understand now that the city and county has required now, for whatever purposes, an SMA compliance in some form. We, with that knowledge now, need to bring to the board’s attention the salient fact that affects all of our CDUAs… [A]s part of our standard process, we have a requirement, and that requirement is that before the board take any action, and before the staff recommends any approval action on a case where there is an SMA requirement imposed by any county, that clearance must be obtained by the applicant. It is the applicant’s burden to provide us with clearance…

“The reason we do this is that we are in receipt of… a written memorandum from our department attorney general… that stated in fact that prior to the staff recommending approval on any application, once the city or county made a determination that the SMA requirement had to be complied with, then that compliance had to occur before you could recommend approval. And the attorney general’s office at that time went farther, and they also indicated that not only could you not recommend approval, but the board could not, under the statute, approve the project until that necessary prerequisite of SMA compliance had been met.

“Based upon that legal advice, that we received in the form of a memorandum relative to Conservation applications, we feel comfortable with our recommendation this morning. You’ll note, on our recommendation, that it’s basically a single recommendation that the board deny the petition. We’d like to, if you will, modify that to the degree that we feel it is necessary that legal compliance ……. [B]y legal compliance I mean that we comply with our attorney general’s memorandum.

“So that would be that we recommend denial because, in this case, the county has made a determination that an SMA permit of some form is required… Secondly, coupled with that, on the advice of our attorney general, [which governs] our actions once we’re aware of that” that is, the fact that the county was requiring SMA compliance.

On the basis of Evans’ expanded justification of his recommendation for denial, the board voted unanimously to deny the Engelstads’ request.

In the next two months, Matsubara repeatedly asked the DNLR for a copy of the attorney general’s ruling Evans had referred to, but it was not provided to him. On December 13, 1995, the board notified the Engelstads that their request was denied. Among other things, the board cited the Engelstads’ failure to secure SMA clearance from the City and County of Honolulu.

To Court – Again

Matsubara filed an appeal of the Land Board’s action on January 10, 1996. A central feature of the appeal was his assertion that the Engelstads’ rights to due process and equal protection under both the state and the U.S. constitutions had been violated by the board’s failure to provide them with a copy of the attorney general opinion on which Evans appeared to rely so heavily.

That claim was just one of a total of five causes of action listed in the appeal. Others were a claim that the board’s denial was “arbitrary and capricious,” a claim that the board’s action, including its effective revocation of the Conservation District Use Permit, was “in excess of the board’s statutory authority,” a claim that the refusal to grant a time extension was “clearly erroneous,” and, finally, that the permit revocation was a “taking” of the Engelstads’ property without compensation, which is once more prohibited by both U.S. and state constitutions.

After the appeal was filed, the Department of Attorney General finally responded to Matsubara’s request that he be provided with a copy of the cited AG opinion. In a letter dated April 15, 1996, Matsubara was informed that the AG’s office was “unable to locate, if one exists, the attorney general’s Opinion referred to by Mr. Roger Evans during the October 27, 1995 hearing. Warren Price, then Attorney General, submitted a letter to the county of Kaua’i regarding the Special Management Area in Hanalei. We have enclosed a copy for your reference. However, Mr. Evans stated that this was not the opinion he was referring to.”

In his opening brief filed with the court in August 1996, Matsubara wrote: “It is undisputed that the board relied upon a nonexistent AG’s opinion and related misinformation presented by Mr. Evans in reaching its decision on appellants’ petition. Further, appellants had no prior notice that this AG’s opinion would be raised at the hearing thereby precluding them from raising any meaningful defense on their behalf. Clearly, appellants were the victims of the very types of governmental actions the due process clauses were meant to prohibit.”

Against this, the best argument the DLNR’s attorney could raise was the claim that, “There is no evidence that the Land Board relied upon the alleged AG’s opinion or entertained any SMA-related considering in making its decision.”

The Verdict

The missing or non-existent AG opinion was, among all the complaints raised by Matsubara, the one that appears to have resonated with Judge Chang. In his ruling and order filed on January 2, 1997, he determined that “Appellants’ constitutional rights to due process have been violated in this case.” For that reason, he went on to say, “It is not necessary for the court to address the remaining issues regarding whether the board exceeded its statutory authority, whether the board should be stopped from relying upon certain rules and statutes, and whether the board’s denial of appellants’ petition constitutes a taking of appellants’ property.”

Chang clearly rejected the attorney general’s argument that the missing AG opinion played no role in the board’s decision on the time extension request, citing the “circumstances preceding and surrounding Mr. Evans’ post-executive session presentation at the October 27, 1995, Land Board hearing” and the fact that the December 13, 1995, letter to the Engelstads “tracks the purposed subject matter of the non-existent AG’s opinion” in stating that no permits may be issued without SMA clearance.

The judge’s ruling does not, however, exempt the Engelstads from having to comply with SMA requirements. At present, two court challenges to the city’s imposition of SMA requirements on the Engelstads are pending.

Nor does it exempt them from having to comply with such DLNR rules and regulations relating to construction in the Conservation District. The last paragraph of judge Chang’s order states, “Appellants Ralph L. Engelstad and Betty N. Engelstad must comply with all orders and decisions issued by the Court or any governmental entity and all rules, regulations, and the statutes applicable to the construction of the residence.”

(For additional background, readers may consult articles in the following editions of Environment Hawai`i: September 1990, “[url=/members_archives/archives_more.php?id=421_0_34_0_C]For a House in Lanikai, The Fourth Time’s the Charm[/url]”, February 1991, “[url=/members_archives/archives_more.php?id=532_0_33_0_C]Update: Ka`iwa Ridge Is Spared As Board Defines Construction[/url]”, April 1992, “[url=members_archives/archives_more.php?id=813_0_32_0_C]Champion of the Homeless? (Ralph Engelstad)[/url]”, and December 1995, “[url=/members_archives/archives_more.php?id=1148_0_29_0_C]Board Extinguishes Conservation Permit For Engelstad House on Lanikai Hillside[/url]”.)

Volume 7, Number 9 March 1997