Can a private entity’s petition to designate state lands as Important Agricultural Lands advance without the state’s permission?
That question and many others arose last month, when the Land Use Commission met to consider a petition to designate 12,123 acres of land in west Kaua‘i as Important Agricultural Lands (IAL). Under a 2003 executive order, the lands were encumbered to the state Agribusiness Development Corporation, an entity established by the Legislature to promote agricultural enterprises and maintain infrastructure needed for their success, including irrigation lines, reservoirs, and roads. Four years later, the ADC delegated management of irrigation and drainage infrastructure in the area to a tenants’ cooperative, the Kekaha Agriculture Association (KAA).
In 2018, the ADC gave its blessing to a request from KAA to petition the LUC to designate the lands as IAL, “and to certify ADC’s authorization as landowner.”
Finally, on December 2, Doug Codiga, the attorney representing KAA, filed with the LUC the formal petition requesting IAL designation.
The KAA does not own the land, prompting commissioners to ask on whose authority it filed the petition. Myra Kaichi, the ADC’s executive assistant, set out the ADC’s position:
“We grappled with the question of whether the ADC is the proper authority to give approval for lands set aside by the governor. … Our position is that when lands are set aside to ADC … they’re not public lands as that term is used in Chapter 171 [Hawai‘i Revised Statutes].
And the management and control is transferred. … ADC happens to still keep the [Department of Land and Natural Resources] informed of everything we’re doing, particularly when it’s something that’s perpetual.”
But does the set-aside convey title?
Commissioner Dawn Chang pressed on this point, asking Kaichi: “You indicated that the ADC has management control of these lands through the executive order. But in that order, is there a reverter clause? If the land is no longer used for the purpose [set forth in the executive order], it would revert back to the Board of Land and Natural Resources?”
“Yes,” Kaichi replied.
Chang then turned to Codiga. LUC rules require petitions to be filed with the permission of the landowner, she noted, with the landowner being defined as one who holds the fee-simple interest. “Given the reverter clause, and given the ADC only has management authority … what is your opinion as to whether this requires the BLNR to provide authorization – or is it just the ADC through its board action?”
Codiga replied that the petition is based on the authority granted to the ADC through the executive order.
“You would agree with the reverter clause, that the BLNR is still the owner?” Chang asked.
Codiga: “It is appropriate to defer to the ADC as to how it recognizes its authority.”
Chang turned back to Kaichi, asking if she believed the ADC had a fee-simple interest in the land.
“Such an interesting question,” Kaichi replied. “You have raised the crux. Any time the issue of ownership, fee-simple interest – every time we encountered this, the answer depended on the situation. I can appreciate your likening the reverter interest to a lease, where at the end of the lease all entitlements revert to the fee owner. I never actually got a consistent position from the DLNR … and don’t know in this particular situation what position the DLNR would take.”
In any case, Kaichi said, the fee interest “is not held by the DLNR. It’s held by the state of Hawai‘i.”
Referring back to Kaichi’s statement that the DLNR is kept informed of “everything we’re doing,” LUC chair Jonathan Scheuer noted that when the ADC approved the filing of the petition back in January 2018, it also requested “that the Land Board also approve the KAA action.”
More specifically, the staff report to the ADC for that board action states, “Although the ADC manages these lands, the fee simple interest in and to the lands remain [sic] with the state of Hawai‘i, through its Board of Land and Natural Resources. Therefore, simultaneous with this request, the ADC has requested that the Land Board also approve the KAA’s proposed action.”
Minutes of that meeting indicate that in arguing for the IAL petition, Kaichi herself stated at the time, “the ADC has requested that the Land Board also approve the KAA’s proposed action.”
Commissioner Gary Okuda asked if there were any evidence in the record showing that the Land Board ever approved the IAL petition of KAA.
Kaichi acknowledged there was none. “The ADC didn’t secure approval from the BLNR,” she stated. She added that in her recollection of the ADC meeting of January 2018, “the ADC was not taking on the responsibility of getting approval of DLNR. We were suggesting they would get approvals. We did send a letter to [BLNR Chair Suzanne] Case. I don’t think it was responded to. We didn’t intend to go to the BLNR to secure approval.”
Nor, it seems, did ADC or KAA reach out to anyone else. At the very start of the meeting, William Aila, director of the state Department of Hawaiian Home Lands – which holds substantial acreage adjoining the petition area – asked the LUC to defer any action on the petition or, failing that, to grant DHHL a contested case hearing on the petition.
Aila was following up on a request that he initially made in an email to the LUC at 12:10 a.m., just hours before the start of the LUC hearing. In that email, Aila stated that he had learned of the petition and the LUC hearing on it “a few hours ago.” He had no position on the petition itself, he said, but “we just need more time to understand how the IAL petition” could impact plans to develop DHHL property.
Beth Tokioka, communications manager for the Kaua‘i Island Utility Cooperative (KIUC), also asked the commission for deferral. “We have concerns about the petition. Unfortunately, we only learned about the petition yesterday.”
Commissioner Gary Okuda asked how KIUC found out.
“Someone alerted someone on our senior staff that this was on the agenda. We are concerned about it as it relates to the West Kaua‘i Energy Project. The LUC has not been recently on our radar screen. … We’ll start monitoring your agendas more in the future.”
Commissioner Lee Ohigashi asked if KIUC had any kind of interest adjoining the project area or in the area proposed for IAL designation.
“Yes,” Tokioka responded. “Very briefly, the West Kaua‘i Energy Project is a renewable project we’re developing, a pumped storage hydro project. It includes state lands, including ADC lands, the Mana reservoir. It requires us to construct facilities at the reservoir, rehabilitate the reservoir.”
KAA as Farmer
LUC rules limit the right of persons to file an IAL petition to either the landowner or the “farmer,” with permission of the landowner.
So, Chang asked Codiga, is KAA filing as a farmer?
A farmer, Codiga replied. “We acknowledge the terms ‘landowner’ and ‘farmer’ may be subject to interpretation. If the commission chose to exercise its discretion and concluded it was appropriate to interpret ‘landowner’ to encompass KAA, we would not object. … However, we think the clear inter- pretation is that this is a farmer petition. KAA is a farmer.”
KAA does not farm anything, as Kaua‘i commissioner Dan Giovanni pointed out. “In my reading of your petition, KAA is responsible for management of infrastructure and is not necessarily a farmer. I’m confused,” he said.
Codiga acknowledged that KAA is “an independent legal entity, a cooperative … comprised of farmers.” Five of its members are engaged in farming activities, he added.
“So why isn’t it ADC that represents the farmers more directly, as opposed to the infrastructure entity?” Giovanni asked.
Codiga replied that KAA and ADC “concluded that the co-op is a better fit. … It was decided that if you look at who are the farmers, you’re looking at members of the co-op.”
Are there farmers on the proposed IAL area who are not members of KAA? Giovanni asked.
“I believe there are other agricultural farmers, if you will, or agriculturalists, who are doing activities on the land who are not members,” Codiga answered.
Kaichi attempted to clarify. “The members of KAA are the bigger tenants,” she said. “Of all the licensed lands, they represent the largest share, but not 100 pecrent of all Kekaha lands. KAA is comprised of these large members who also service, provide services, infrastructure improvements, infrastructure repairs, for all farmers, large and small. The question for the ADC is, is this in the best interests of the lands and tenants. In my mind, there’s no question of how this could not be in their best interests.”
Lee Ohigashi, the commissioner from Maui, wanted to know what notice was given to these smaller farmers about the plan to designate their lands as IAL. “It seems that these tenant farmers … have an interest in the property and therefore, as a matter of due process, I’m just wondering what notices were given before filing this petition,” he said.
Codiga said he was not aware of any formal notice.
Big Island commissioner Nancy Cabral followed up with questioning of Josh Uyehara, president of the KAA board. Had other farmers on this land been notified “in an official manner that the land they’re leasing is being swept up in this petition?”
Uyehara said KAA had put together a short informational document on the benefits of IAL designation, particularly the tax credit incentive. “No certified letter, nothing like that. But we did have process over a number of years.”
Documents submitted by KAA in support of the petition state that just three tenants account for the majority of active agricultural operations in the proposed IAL area. Hartung Brothers, Inc. (formerly Syngenta) occupies 2,314 acres; Corteva Agriscience 767 acres; and Kauai Shrimp 415 acres. Wines of Kauai, in the mauka lands of the tract, occupies 127 acres, while Koke‘e Farms occupies 62. Smaller tenants hold licenses for about 167 acres, according to the petition. Of the more than 12,000 acres proposed for designation, nearly 4,000 are “fallow but available for license to new farmers.” The rest of the proposed IAL area – consisting of about 4,377 acres – “are designated for continuity for maintaining critical land mass important to agricultural operation.”
Deferral
The commissioners agreed that given the outstanding issues of ownership and the evident lack of notice to tenants, further deliberation on the IAL petition should be deferred.
Scheuer summarized the concerns. “I want either an additional briefing on the specific issue of whether or not BLNR authorization is required … or verification that the BLNR has approved it, before it comes before us. … And then, moving on to more of a suggestion, when you have notable agencies and neighbors showing up at a hearing and saying, hey, we never heard about this, it makes everybody’s job a heck of a lot easier for more outreach before moving forward. It would behoove the applicant to do outreach to any and all affected parties, including their own tenants.”
Chang also wanted the parties to address the matter of who is the appropriate applicant, KAA or ADC.
LUC executive officer Dan Orodenker explained that given the commission’s hearing schedule, it would be months before the matter could be taken up again, and in no way could it do so earlier than April.
“I assume that’s adequate time” for the parties to prepare their briefs, Scheuer said.
The motion for deferral was unanimously approved.
— Patricia Tummons
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