“I almost can’t believe I’m going to say this,” said commissioner Mike Buck before moving to defer taking action on alleged violations of the interim instream flow standard (IIFS) for Olowalu Stream in West Maui.
At the commission’s October 18 meeting, Buck said it was clear that Olowalu Water Company, which diverts water from the stream to serve 50-60 customers, had been negligent in its responsibility to meet the IIFS that the commission set on March 20, 2018.
Company representatives, who were only recently brought on board, begged for more time to address the allegations and remedy the situation.
The commission ultimately acceded.
Water Commission staff had recommended that the commission find that OWC had violated the IIFS for 553 days between January 1, 2019 and October 7 of this year.
They recommended daily fines, resulting in a proposed penalty of about $440,000. They also recommended charging the company about $30,000 to cover administrative fees and costs the commission incurred installing a gaging station on the stream at OWC’s request.
Whether staff will stick to these fine recommendations when the matter comes before the commission this month remains to be seen.
Winding Road
The October meeting was not the first time the OWC faced allegations of violating the Water Code. On May 15, 2018, the commission fined the company $1,000, plus $500 in administrative fees, for building a 30-foot long, 12-foot wide concrete dam/spillway in the stream and diverting two million gallons a day without authorization.
The commission also required OWC to submit a remediation plan within six months that would include the installation of an animal access channel and the alteration of the intake sluice gates “to prioritize water flow to the stream.”
After a June site visit with staff from the commission and the state Division of Aquatic Resources, OWC submitted a remediation plan on August 9, 2018, which was slightly revised the following month.
Staff gave OWC six months, starting in July 2018, to complete the work.
“Staff considers the period from January 2019 to the present to be the enforcement period,” the October 18 staff submittal states.
Using stream gaging data, staff found that between January 1, 2019 and March 29, 2022, “there were at least 548 days (46.3%) where the mean daily flow on Olowalu Stream, measured below Diversion 961 at the Lower Olowalu Ditch, violated the interim IFS. This occurred while OWC continued to divert water for non-public trust uses,” staff states.
OWC diverted as much as 454,000 gallons a day, despite the IIFS not being met. Staff noted that OWC has been inconsistent, at best, in reporting to the commission the amount of water it diverts.
“Commission staff have requested that the streamflow diverted by Diversion 961 be reported in a timely manner. From 2019 to 2020, OWC failed to report diverted flow for 16 months. Since October 2021, OWC has failed to report a single value for diverted flow,” staff wrote.
On April 12, staff issued OWC a notice of alleged violation regarding its failure to meet the IIFS.
OWC replied on May 27 that it believed that the commission’s March 2018 decision regarding the IIFS allowed the company to divert up to 273,000 gallons per day and still meet the IIFS for Olowalu of 2.33 million gallons a day. This, despite the fact that the March 2018 staff report stated, “This interim IFS allows Olowalu Water Company to meet their 0.196 mgd agricultural water demand and 0.141 mgd landscaping water demand at least 50-percent of the time (emphasis added).”
During a July 2022 site visit with OWC and commission staff, “modifications to the diversion intake were again discussed, real-time monitoring of the Lower Olowalu Ditch and streamflow were discussed, and alternative sources of water were discussed. During the site visit, the obvious points of leakage were identified in the system that should be resolved. Since that site visit, no improvements have been made. …
“Based on the monitoring data, if OWC had not diverted volumes in excess of their need, they would have met the interim IFS more regularly,” staff wrote.
Under the Water Code, the commission may impose fines of up to $5,000 a day for IIFS violations. Staff chose to start its fine calculations using the minimum fine under the commission’s penalty policy, $250 a day.
For 553 days of not meeting the IIFS, 4 days of not meeting the IIFS after the commission had designated West Maui as a Water Management Area, and 553 days of repeat violations, staff came up with a minimum penalty of $277,500.
That fine grew with the commission’s addition of a “gravity component.” Because of the risk the violations posed to the resources and because OWC refused to correct the violations after being noticed, staff recommended another $163,250 in fines. It also recommended a fine of $500 for administrative costs.
Staff chose not to apply a mitigative component that could have reduced the fines. “Commission staff recognize that more timely and regular communication to the diversion operator about interim IFS violations could have potentially reduced the violations. However, implementing the modifications to the intake suggested by Commission staff at the June 2018 site visit would have eliminated any potential violation,” staff stated.
CWRM hydrologist Ayron Strauch told the commission last month that the intake modification aimed at ensuring the IIFS amount remains in the stream was still undone, and the low flow channel OWC constructed to meet the May 2018 commission order “does not provide any connectivity across the dam during extreme low flow conditions.”
In early October, OWC proposed a settlement that would have required the company to complete many of the modifications it was already required to make. Staff rejected the offer.
“Everything they were proposing to do they were already required to do,” Strauch explained, adding that there is language in the Water Code that prevents the commission from settling “if they’re required to do it anyway.”
Commissioner Paul Meyer asked about the basis for such a large proposed fine and how it compared to other enforcement cases.
Commission deputy director Kaleo Manuel agreed that the fines in this case were hefty, but said they could have been a lot more. He said the fine was determined after conversations with staff. He said that the opportunities provided to OWC to meet the IIFS have gone unrecognized.
“Staff is recommending fines to showing the severity of our responsibility,” he said.
“Please don’t interpret my question as looking for lightening or amending these recommendations. Your points are very well taken and well made and on solid ground,” Meyer said.
Commission chair Suzanne Case added that there is precedent for levying large fines and that those fines have been paid.
Commissioner Neil Hannahs said that he was working for Kamehameha Schools when it “received a fine commensurate to this amount. We worked that out. It certainly got our attention. It hints that’s what we’re trying to accomplish here: What will it take to get someone’s attention? … It’s an important enforcement tool. At this level, I think it’s going to get some attention. Hopefully it’ll get some reconciliation that’s on the ground.”
‘Lame Excuses’
When it came time for OWC to testify, its attorneys Darene Mastuoka and Cal Chipchase were present, as was the company’s Steve Miller.
Chipchase immediately took the blame for the settlement proposal. “I thought I was being responsive. It’s on me for misunderstanding what was wanted in a proposal from us,” he said.
He indicated he and Matsuoka, who also represented Molokaʻi Properties in an earlier agenda item that day, (see cover story), had not been working on the OWC case very long, “even less time than we’ve been on the Molokaʻi Ranch stuff. You inherit some history with that. I do want to assure commission, as we’ve been working with OWC, our full intent to come into compliance.” He said there had been some work in the last couple of weeks on the dam leak staff had identified.
“While the road to getting to compliance has been slower than it should have been it’s not because of an un unwillingness or indifference to doing that,” he said.
He asked that the commission defer the matter for 30 days because they had only received the staff’s report on Saturday, three days before the meeting.
“We haven’t had an opportunity to see if an amicable solution can he reached accepting some level of responsibility [and] working with staff to achieve the main goal of compliance moving forward, rather than bankrupting a small purveyor that has 60 customers,” he said.
Buck asked Chipchase to describe what happened between May 2018 and October 2022 with regard to the system modifications.
“I can’t speak to that whole history. … I’ve only been involved somewhat less than the period since the NOV,” Chipchase replied. He confessed that based on what he had been able to assess, OWC was, at worst, guilty of negligence, “not understanding what the situation was, what was needed to be in compliance.”
He said that while he did not want to point fingers at commission staff, he believed OWC would have begun fixing the problems sooner if there had been more dialogue with staff earlier. (It should be noted that five of the IIFS violations occurred AFTER the NOV.)
“We all bear responsibility,” he said.
OWC’s Miller also plead ignorance to what happened over the past few years, since he had only been with the company for a little more than a year.
Miller said the company lost Dave Minami, who had managed the diversion system for more than 20 years. He added that new staff is learning system and all of the company’s time and attention has been on meeting the IIFS for Kauaʻula Stream. That IIFS was also set in March 2018.
“There hasn’t been a lot of attention on the Olowalu Diversion. It’s not intentional. It may be negligence, but definitely not something our company has been trying to get away with, getting more water for our 50 users,” he said.
If the commission deferred the matter, he said more work could be done on getting more specifics on what happened between 2018 and 2022.
Case seemed more concerned with what OWC could do in those 30 days to ensure it meets the IIFS.
Strauch said that back in 2018, the OWC and commission staff discussed a plan to modify the diversion so that the company would not have to worry about meeting the IIFS.
“After six months, something got shoved aside and that plan never got implemented. I can’t speak to why the operator did not make necessary modifications they agreed to make,” he said.
“The modifications wouldn’t take very much,” he continued. “All that needs to happen is, lower the sluice gate and open a window at the water level so only higher flows go into the ditch and low flows stay in the stream.”
“It doesn’t take an engineering degree to figure that out,” Strauch said.
Miller said that is absolutely something OWC can work on.
Hannahs asked about eliminating the leakage below the dam that staff had identified back in May 2018.
Chipchase said that according to OWC’s operations people, that had been corrected weeks ago.
Tiare Lawrence, a founding member of the non-profit Kamalu o Kahalewai who had documented OWC’s violations, was not swayed by what she called the “lame excuses from counsel.”
She asked the commission to impose the fine as recommended by staff.
“Peter Martin and his companies need to be reminded that they do not own the water,” she said, referring to OWC’s owner, who also owns the Launiupoko Irrigation Company.
Molokaʻi’s Teave Heen, who had testified earlier in the meeting on the failure of the water diverter there to restore East Kawela Stream, also supported the full fine.
“I see how much effort goes into [adopting] IIFS and see how easily they can be violated and see how easily those violations can be excused. … Our state Water Code needs to be taken a little more seriously,” she said.
‘Really Frustrating’
Commissioner Aurora Kagawa-Viviani asked staff how many exchanges it had with OWC over the years-long enforcement period.
Strauch said he didn’t have a documentation of the number of exchanges, but said that he would run into OWC staff in the field and talk about how much water was flowing. Before Minami left OWC, Strauch said he would talk to him maybe quarterly about system operations. “Sometime in 2019, somebody decided it was not critical to make the changes,” he said.
“How many official notices were exchanged?” Kagawa-Viviani asked.
Manuel referred to the documentation in the staff submittal. He went on lament those diverters who, through their own negligence, don’t know what’s going on.
“How do we get water users to be better water stewards? That’s the challenge that we’re having here. We set systems and policies in place that are blatantly ignored or disregarded. The order in 2018 made it very clear it’s the obligation of diverter, not the staff to chase after them. … The burden is not on us,” he said.
“To be honest, it’s really frustrating working and supporting staff to do this work and have private companies come up with reasons why they cannot meet their obligation. We tried to communicate with them. Nothing stopped them from making these improvements. … While the response is they just had the submittal to review since Saturday, nothing prevented them from making the improvements. …
“This commission has an opportunity to really help shape behavior. … I stand here really supporting staff who are really trying to do their work. I do not recommend deferral. It’s not going to benefit anybody. We need to get action and get things done. Waiting 30 days to get improvements done that were delayed for four years is really frustrating,” he continued.
Strauch also countered Chipchase’s claim that the leaks had been fixed. “Our last site visit was October 7, 11 days ago. The three points of leakage were still leaking,” Strauch said.
Despite Manuel’s plea, Buck suggested that the commission defer the matter for 30 days. “Let’s see what the company can do in 30 days. Hold the level of the fine the way it is. We might end up with a better solution. I am lukewarm on that recommendation, but I think it’s important that the commission at least have a discussions on that. I don’t think we should reward being completely negligent on the water code,” he said.
Commissioner Hannahs said he had some empathy for Chipchase, Matsuoka, and Miller because they were new to the situation. However, he added, OWC is not new.
“There is a willfulness about the negligence … that weighs in terms of the gravity of the fine,” he said.
Commissioner Kagawa-Viviani expressed her concern that after the 30 days, OWC may still request a contested case hearing on any fines.
Given that, Buck asked Meyer for his thoughts on what message the commission was sending if it voted to defer.
Meyer seemed committed to imposing some kind of fine.
“I am very very much supportive of the rule and regulations this commission has. I don’t think we have to back off or modify any of those. The resource is too important,” he said, warning that a lack of enforcement could “end up like another Red Hill,” a case in which the U.S. Navy severely contaminated public drinking water sources.
He said he supported staff’s recommendations and was uneasy putting them off for a month, but it might be worth it if it gets improvements made immediately.
He seconded Buck’s motion to defer for 30 days. The motion passed unanimously.
Manuel said that staff would return with recommendations that may or may not include amendments.
— Teresa Dawson
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