On Maui, the county’s right to draw water from the largest single source in its system has been challenged by a builder claiming exclusive rights to the same water for use in a huge, 540-acre community consisting of 2400 houses and 22 acres of commercial development near Wailuku.
And the director of the state Commission on Water Resource Management, which has the ultimate authority over uses of water drawn from the ‘Iao aquifer, seems to have sided with the developer over the county.
At the center of the dispute is Wailuku Shaft 33, which taps into the ‘Iao aquifer. The shaft, dug a century ago, until recently was thought to provide about 5.77 million gallons a day to the county Department of Water Supply’s feed to central and south Maui. A consultant’s report in September suggests the actual draw may be something less – on the order of 4.85 mgd – but whatever the actual figure, the shaft is the largest single source of water for the county’s central Maui service area.
In 2003, the Water Commission designated the ‘Iao aquifer a ground water management area. Existing water users had one year from the date of designation (July 21, 2003) to apply for a water use permit.
If they missed that deadline, they risked losing their right to continue taking water from the aquifer. Under the state Water Code, they would be classified as new users, whatever existing use they may have had would be considered as abandoned, and they would have to stand in line behind all other applicants for existing uses before they could get permission to draw water from the designated aquifer.
The water use permit application form developed by the Water Commission staff has a line for the signature of the applicant as well as one for the owner of the land where the water source is found. As early as February 2004, and again in March, the county Department of Water Supply asked the agent for landowner Kehalani Mauka LLC, affiliated with Stanford Carr Development, to review and sign the county’s water use permit application form. The landowner didn’t respond.
As the deadline approached, county water department staff asked staff of the Water Commission for advice on how to proceed. According to Ellen Kraftsow, a planner with the DWS, “Charley Ice [on the Water Commission staff] … verbally informed me that DWS should submit the application without the landowner’s signature and that it should be okay, even if we had to send the signed copy later.” Another DWS staffer, Eva Blumenstein, received similar advice when she spoke with Lenore Nakama of the Water Commission staff. “I asked her what we should do if the landowner would not sign our application before July 21,” Blumenstein said in an affidavit. “Lenore responded that perhaps CWRM could assist with getting the landowner’s signature. She also advised that we should submit the application on time, even if we couldn’t get the landowner’s signature. She said that either with or without the landowner’s signature, it should not be a problem, and that CWRM would likely process our application.”
On July 2, the county submitted its water use permit applications for the Wailuku Shaft and other water sources in the ‘Iao aquifer. Two days before the July 21 deadline, Yvonne Izu, deputy director of the Department of Land and Natural Resources and the chief staff person for the Water Commission, wrote George Tengan, director of the Department of Water Supply, that the commission “can not accept the application as complete for processing without the landowner’s signature. Your failure to submit a completed application by July 21, 2004, may raise the issue of whether your application can be treated as a continuing existing use.”
Not until September 8 was the DWS able to get Stanford Carr to sign its permit application. At that time it submitted a complete – albeit late – application.
‘In Limbo’
As the county sought to obtain the landowner’s signature, the landowner was preparing its own water use permit application for Wailuku Shaft 33. Even though the water delivery infrastructure associated with the shaft belongs to the county, it was apparently the intention of Kehalani Mauka to wrest rights to use the water away from the county, ensuring that its development would have an adequate supply. According to information attached to its application, the company “is in the process of negotiating a lease with the county Department of Water Supply that would, if a lease is reached, allow the county to continue to use Shaft 33 for municipal purposes. If agreement on a lease with the county is not reached, the Kehalani Mauka, LLC or its designee, will continue the municipal use of Shaft 33 as a public utility, regulated by the Hawai‘i Public Utilities Commission.” Among identified existing uses for the water was the entire Kehalani development, even though much of the development has yet to be built.
In August, the Water Commission published notice of the completed applications it had received. The county’s Wailuku shaft application was not among them. When Blumenstein asked commission staff why not, she was told that the county’s application was rejected because it lacked the landowner’s signature.
On August 10, county water director Tengan protested to Izu. “This state of affairs leaves DWS in the unenviable position of not knowing whether a major source of the Maui public water supply will be available to the public,” he wrote. “Therefore, DWS asks that CWRM explicitly state whether DWS’s application for Wailuku Shaft has been accepted, rejected, or is in limbo… DWS also requests that CWRM clarify … what the impact of acceptance of the competing application will be (if any) on DWS’s continued ability to provide water to the public from this source.”
Tengan’s letter received a response from Peter Young, administrator for the DLNR and chairman of the Water Commission. “Our staff is in no position to advise that a water use permit application can be processed without the landowner’s knowledge or acceptance as evidenced by signature,” he wrote. “As the deadline has passed with your application still incomplete, your application might be considered ‘in limbo’ with respect to continuing existing uses.”
A Question of Grammar?
Further correspondence between the county and the commission escalated tensions. After the commission received the county’s completed permit application bearing Stanford Carr’s signature, Izu informed Tengan: “Existing use of Wailuku Shaft 33 is the subject of a complete application by Kehalani Mauka, LLC, and will be considered as such. If we were to accept the [county’s] application now, we must do so with the proviso that the shaft’s use is a new use, to be considered after existing uses are acted upon.”
Izu’s letter left Tengan puzzled. “Due to your use of the subjective tense, we cannot determine whether you have in fact accepted our application as complete,” he wrote on September 22. “Please advise, in clear, unambiguous language, whether the commission has accepted” the county’s application. Recognizing that the commission as a body had not acted upon the county’s application in any open meeting, Tengan went on to ask Izu “who made the decision, and when that determination became effective, so that DWS can file the appropriate legal challenge to it.”
Tengan also asked Izu’s about Kehalani Mauka’s “competing application for the same source.” Her letter, he wrote, “suggests that the Commission has made findings that Kehalani Mauka’s application is complete, and that its proposed use of the Wailuku Shaft for a development that has not yet been built, and which was not in existence as of the date of designation, is an existing use…. There can be no question that DWS is currently, and for 13 years has been, the sole existing user of this source. At the very least, DWS is entitled to due process before being stripped of existing user status in favor of another party.”
“We respectfully remind you,” Tengan wrote, quoting the Supreme Court’s decision in the Waiahole Ditch dispute, “that ‘the state may compromise public rights in water resources pursuant only to a decision made with a level of openness, diligence, and fore sight commensurate with the high priority these rights command under the laws of our state.’”
And Izu, who represented Campbell Estate in the Waiahole dispute, quoted the decision right back to him in her reply. Yes, the county’s application was complete, but it was also late, she wrote, and therefore would have to be treated as an application for a new use. As the Supreme Court stated in the Waiahole case, Izu wrote, whatever leeway the commission may have had to accept late applications ended on May 27, 1993, five years after adoption of rules to implement the Water Code. This, Izu said, leaves the commission “without any discretion to allow a late filing, no matter how just the cause for late filing may be.”
Then Izu flung down the gauntlet. If Tengan disagreed with her determination that the landowner’s signature is necessary for a complete application, “we invite you to file a petition for declaratory ruling.”
On October 26, the county picked it up.
The County’s Position
Jane Lovell, deputy corporation counsel for the county of Maui, prepared the request for a declaratory ruling, asking the commission to find that the county’s application “complied with the express requirements of the Water Code.” Nothing in either the code or the commission’s rules requires the landowner’s signature, she wrote. The statute requires only the name and address of the applicant and landowner be provided.
The commission’s “stated purpose for requiring the landowner’s signature on a water use permit application is to demonstrate that the landowner approves of the existing user’s application,” Lovell wrote. “While that rationale may make sense when applied to applications filed on behalf of private users, it has less persuasive effect when the applicant is a governmental body with the power to condemn the property on which the source is located.”
The penalty provided in the Water Code for a late existing-use application is the presumption that the applicant has abandoned the use. “That, of course, makes no sense whatsoever in this case,” Lovell said in an interview with [i]Environment Hawai‘i[/i]. “First, we weren’t late. Secondly, we’re the only user of that source and have been for some 13 years.” In addition to asking the commission to declare that the filing was not late, the county was also challenging the apparent presumption of abandonment and seeking to have any finding that its application was late barred by what attorneys call the doctrine of estoppel – basically, that even if the county erred in filing an application without the landowner’s signature, it did so in reliance on assurances by state officials – in this case commission staff members – that there would be no penalty.
“One of the most telling points is that no party to my knowledge has filed any objection whatsoever to our petition except com mission staff. Certainly the parties that were in contention over the Wailuku Shaft – namely, Stanford Carr and Kehalani Mauka, his company – came to a resolution in early September when he agreed to sign our application.”
Lovell provided some background on the evolution of the disagreement between Kehalani Mauka and the county that led to filing of the two competing applications. “The well is on their land,” she said, “but they weren’t using it and weren’t in a position to use that water. They have no infrastructure to take water from that source to their development. Thirteen years ago, the Department of Water Supply agreed to maintain the shaft and pumps, on the unwritten understanding that when Kehalani Mauka’s project needs water, water will be available to serve that project.
“The problem, however, is that there are no reservations for water meters for that project. And then the aquifer was designated. Shortly thereafter, Kehalani Mauka comes back and says we want our 1.2 mgd of water right now. We said, ‘We’re really sorry but we don’t have it. We’ve been designated, we’ve been cut back, and we don’t have an additional 1.2 mgd… We’re giving out meters on a first-come, first-served basis. If you come in with a request for a meter, we’ll give it to you if we have the water.’
“At that point, Kehalani Mauka decided they would apply for this source, thinking that way, if they got it, they’d take what they need first and let the county take the rest. The problem is that they’re not an existing user.”
If, for some reason, the county’s request for relief is denied, Lovell added, “there’s no way Kehalani Mauka can be able to hook up new houses. For sure, no new meters are going to be issued. If the commission accepts their argument that future use is actually an existing use and gives the well to Kehalani Mauka, then they might be able to pump from that source, but the infrastructure to get the water from the source to their development belongs to the county.”
And if the county does not prevail in its application for an existing use permit? “We would have no choice but to appeal… This source represents over a quarter of central Maui’s public water supply.”
The Commission’s Position
On December 15, the commission heard the county’s request as well as its staff’s recommendation that the petition be denied. Izu argued that rather than grant the county the declaratory ruling it asked for, the commission issue an alternative declaratory ruling, finding that the county’s application in July was incomplete and by the time it was complete, it was late and thus could not be accepted by the commission as an existing use permit application. While the Water Code does not explicitly require signatures for per mit applications, the commission’s administrative rules do, Izu wrote. And in cases where the applicant is not the landowner, the land owner is considered a joint applicant, and therefore signatures from both the applicant and the landowner are required, she told the commission.
The doctrine of estoppel could not be invoked, she wrote, because “neither Ice nor Nakama advised MDWS that the application would be processed without the landowner’s signature. Nor would they have given such advice.” In any case, she continued, the doctrine of estoppel can’t apply in this case since the agency has no discretion in the matter at all: its hands are tied by the Water Code, which permits the commission no authority to accept a late application, she argued.
Izu argued in similar fashion against the county’s efforts to rebut the presumption of abandonment. “The issue of abandonment of use would be relevant if the commission had the authority to exercise discretion in accepting late applications,” she wrote. “However, based upon the Supreme Court’s ruling that the Commission lacks authority to exercise discretion to accept late filings, the fact that MDWS has not abandoned its use is irrelevant.”
Commission Discussion
At the commission meeting, Izu and commissioner Lawrence Miike tried to reassure Maui County representatives that being classed as a new user, as opposed to an existing one, should not be cause for alarm.
“The commission has no intent to stop the county from using water,” Izu said, adding that under the public trust doctrine, “domestic uses clearly rise to the top.”
Later, Miike added the county should not assume that all applicants for existing use permits will be granted what they seek. He also pointed out that the county’s 5.77 mgd use from the Wailuku Shaft is not included in the existing-use total. This, he said, means that the water now being used by the county could be available for new users, with the county being “first in line” among them.
Roy Hardy of the commission staff noted that water from the caprock part of the aquifer, which does not include water taken from tunnels in the basal portion, is currently below the sustainable yield. “You can’t lump all existing users together,” he said.
For the county, such assurances weren’t good enough. The sustainable yield for the ‘Iao aquifer is currently being reevaluated and many people believe that it will be revised downward. If the sustainable yield does drop, there may not be any water left for the county after existing uses are met.
And so the county, represented by Lovell at the commission meeting, continued to argue that its application was not late. Lovell again pointed out that the Water Code doesn’t require the landowner’s signature on the application. If the commission decides that its administrative rules require a signature, she said, it should also consider this: under Hawai‘i Administrative Rule 13-167-27, if any document is not in substantial conformity with the rules, the commission may refuse to accept it or may require its amendment.
Lovell argued that the commission could find that the county’s application was submitted on time, but failed to adequately meet rule requirements. Stanford Carr’s late signature, she said, could be considered an amendment.
“If you treat our application as a new use and treat the developer’s application as an existing use, you are standing the facts and logic on their head,” she said, adding that other applications for existing uses have been deemed incomplete, not late, and have required modification. She also cited a 1973 case against the City and County of Honolulu where estoppel was allowed based on an employee’s erroneous interpretation of the law.
Responding to Lovell’s “legal details” about signatures and applications, Miike said, “In my personal opinion, if you don’t sign an application, you don’t have an application… [Without a signature], it could have come from Mars. If it were signed, and other things were incomplete, that would be okay, but a lack of signature, I have a problem with that.”
Lovell noted that Kehalani Mauka used the county’s own pumping figures and location in its application claiming existing use, and “their application was not signed by George Tengan.”
Commission chair Peter Young asked staff whether the two applications could be merged into one, since they cite the same source and amount used. Miike, Lovell and Hardy dismissed the idea because the intended use differs. In addition, they said, Kehalani Mauka’s application includes inaccuracies.
Young then asked whether Kehalani’s application, which cited the county’s pumping as its use but lacked a DWS signature, was also incomplete. He did not get an answer. But when Maui commissioner Meredith Ching asked if an existing use application later found to be a new use would be “knocked out in the process,” Izu assured her it would be, adding, “There’s going to be enough sustainable yield left to serve the county, even if they stand in the new-use line.” She acknowledged that if the sustainable yield dropped, the county would be in jeopardy if it had not been granted a use permit. But once a permit is granted, she said, it doesn’t matter whether it is for a new or existing use.
Furthermore, “If they [Kehalani Mauka] don’t get an agreement with the county and they get a permit from us, they can’t use it,” Izu said.
While Miike seemed to lean toward denying the county’s petition for a declaratory ruling, other commissioners weren’t so sure. Chair Young noted that the commissioners were not furnished with copies of the county’s petition or recent correspondence from Tengan at the meeting, and he did not seem prepared to make a ruling without them. Commissioner Jim Frazier then moved to defer any decision on the petition to allow staff and the attorney general’s office to review the arguments presented by county during the meeting.
Patricia Tummons,
with Teresa Dawson reporting on the Commission meeting
Volume 15, Number 7 January 2005
Leave a Reply