Whenever in a contested case the officials of the agency who are to render the final decision have not heard and examined all of the evidence, the decision, if adverse to a party to the proceeding other than the agency itself shall not be made until a proposal for decision containing a statement of reasons and including a determination of each issue of fact or law necessary to the proposed decision has been served upon the parties, and an opportunity has been afforded in each party adversely affected to file exceptions and present argument to the officials who are to render the decision…
– Hawai’i Revised Statutes, Chapter 91-11
On Friday, May 13, the Board of Land and Natural Resources met at Waikoloa, Hawai’i, to consider, among other things, the Conservation District Use Application of the Hawaii Electric Light Company for expansion of its power plant at Keahole, North Kona.
As explained by Roger Evans, administrator of the Department of Land and Natural Resources’ Office of Conservation and Environmental Affairs, “there is an anomaly with this application.” The report by Evans’ staff, he noted, contained no discussion of the pros and cons of the project. And, despite the fact that a contested case hearing had been granted on the application, the staff could give the board no recommendation of a hearings officer, either. The first hearings officer appointed by the chairman of the Land Board had disqualified himself after being named as a defendant in a lawsuit brought by one of the contestants. A second hearings officer was found, but suffered a heart attack before the hearing could begin.
The statutory time limit that the Land Board had to consider the matter was due to expire on May 18. Evans estimated that a time extension of at least 134 days (a figure not explained) would be needed to conduct the contested case hearing and bring it before the Land Board for a decision.
But HELCO had not requested another time extension and, according to the DLNR staff’s reading of state law, HELCO alone among the parties in the contested case had the authority to ask for more time. If the Land Board failed to act on the application before the clock ran out, HELCO would automatically be allowed to proceed with the project for which approval had been sought. In the parlance of the Land Board, HELCO would have won by default.
“We feel the only recommendation that we could come to the board with this morning is as follows,” Evans told the Land Board: “that the board deny this application without prejudice, to avoid an automatic board approval by default.”
Over a Barrel
Ben Kudo, attorney for HELCO, put quite a different spin on the decision facing the board. “We would like to bring to the Land Board’s attention state law, Chapter 91, section 91-11,” Kudo said. “This particular section of Chapter 91, which is the Administrative Procedures Act, says that the Land Board shall not render a decision adverse to any party except the state until the Land Board has had the opportunity to hear and examine the evidence submitted by the parties” to the contested case.
Because HELCO had not had a chance to present its 21 witnesses and hundreds of exhibits during a trial-like contested case proceeding, Kudo said, the Land Board would be violating the law were it to deny HELCO’s application:
“We conclude that a denial is a decision adverse to HELCO. It is adverse because of the time frame required for us to put into place the power necessary to meet the anticipated demands of this island by the year 1995. To delay this procedure any further would extremely prejudice HELCO’s ability to accomplish that.”
Already, Kudo said, one year and eight months had passed since HELCO’s filing of the application, in August of 1992. “Unfortunately,” he added, “our hands are tied at this moment to be able to give you any further extension of time.”
‘A Chancy Situation’
Christopher Yuen, board member from the Big Island, noted that much of the delay had been HELCO’s doing. “The environmental impact statement [for the power plant expansion] was only approved four months ago, right? The board couldn’t act until the environmental impact statement was approved.”
Kudo acknowledged that the final EIS was not accepted as complete until January of 1994. Under further questioning by Yuen, Kudo said that permits needed to operate the power plant were still pending in other agencies, and that in no case was a permit conditioned upon a favorable vote by the Board of Land and Natural Resources. “These permits are [moving] in parallel,” Kudo said. “One is not the prerequisite of the other.”
Yuen also questioned Kudo on the matter of compliance with the Administrative Procedures Act. While the board may violate Chapter 91-11 by denying the project, Yuen said, “isn’t it true that we cannot, by the same token, approve your project today?”
Kudo acknowledged that that was true.
Yuen pointed out the risks that would attach to any favorable decision by the Land Board on HELCO’s application prior to completion of the contested case: “You’re already in court, you have somebody who is dogging you legally, and you are presenting a situation where any action that the board takes is a violation of the Administrative Procedures Act. If we deny it, it really doesn’t do you any good to go to court, because that’s going to take longer than the rest of the process, starting from the beginning. If we approve it, your nemesis is going to have you in court, and they at least have an argument… that the action of approval was a violation of the Administrative Procedures Act. It’s a chancy situation.
Kudo: “Mr. Yuen, since you’ve raised the issue – yes, what you’ve said is true. However, one of the parties, Waimana [Enterprises, Inc.], has tried its best to thwart any attempt by HELCO to get any permit, including filing injunctive action to stop the contested case from proceeding. Their motive plain and simple is that their competitive position is enhanced if they’re able to deny or delay any of our permits. It is not in their best interest that we go forward, whether it’s a contested case or a permit action. Given that, and the choices that you’ve just laid out before us, we would rather take our chances with no action being taken today, and being appealed in court.”
‘Compressed’
Waimana’s founder and president, Albert Hee, presented testimony to the Land Board, as did his attorney, Michael Matsukawa. A wholly owned subsidiary of Waimana, Ola La’a, is one of two limited partners making up Kawaihae Cogeneration Partners, which is seeking to build a power plant and desalination facility on land leased from the Department of Hawaiian Home Lands at Kawaihae, just up the coast from Keahole. (The other partner is Kaimana Energy I, Inc., a wholly owned subsidiary of Diamond Energy, Inc., a Delaware corporation.)
Hee repeated claims he has made for months that HELCO has discriminated against his native Hawaiian-owned company by refusing to negotiate terms of a power purchase agreement. “I intervened in this case as the last option. When [the DLNR] had the public hearing in January [1993], I did not request intervention … because I thought we could hopefully work something out,” Hee told the board. “It was only until it was very clear that HELCO has no intention to deal with the local company that I said it’s time to ensure that my rights are protected. And that’s why I’m in this case.”
Matsukawa explained why Waimana had gone to court to seek a temporary restraining order against the first scheduled contested case hearing. “It was not until February 14, 1994, that we formally received notice that the hearing would commence within five weeks. And we had parties scheduled on the mainland for witnesses, exhibits – the typical things necessary… for a trial-type procedure… A contested case prehearing conference was scheduled for the 24th of February, where we had to … compress everything into a short time period….
“After initial efforts either to extend the hearing dates or extend the processing period failed …we felt it was just inherently unfair that there would not be an adequate opportunity to present the evidence to the hearings officer in a timely manner and with the time to review it and present an order or recommendation to the board.
“Based on that, we felt it was important to at least get a temporary restraining order to stop the March 16 hearing date… We didn’t say we don’t want a hearing process at all. We just didn’t want it to start within such a compressed time frame.”
As a result of the court action, all the parties to the contested case agreed that HELCO would request a 45-day extension of the May 18 deadline, on condition that the contested case hearing begin by May 2. When the second hearings officer was taken ill, any chance of meeting that condition disappeared.
Two Votes, No Decision
For the board to take an action, the law requires that it be approved by a majority of the full complement of six board members – in other words, that there be at least four votes cast in support of that action. It does not matter if a board seat is vacant, or if a board member has been excused because of a conflict of interest or other good reason. (In the HELCO case, at-large board member Sharon Himeno excused herself.)
At the close of testimony, Chris Yuen moved to adopt the staff’s recommendation on the HELCO application – that is, that the application be denied without prejudice. When Land Board Chairman Keith Ahue called the question, Yuen and Ahue were the only ones voting in support of the motion. Kaua’i board member Herbert Apaka, O’ahu board member Michael Nekoba, and Maui board member William Kennison all voted against the motion.
Yuen once again took the floor: “Mr. Chairman, I think that the people who are willing to see the project go through” – that is, board members Apaka, Nekoba, and Kennison – “should then make a motion to approve it, to approve the CDUA.”
After a few moments of thunderous silence, Yuen continued: “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.
Nekoba then said he did not have enough information to support or deny the HELCO project. “And, therefore, based on that, I don’t feel that I should vote on this second motion.” Kennison announced he concurred with Nekoba.
Ahue called the question. “The motion on the floor is to approve HELCO’s CDUA. All in favor, say aye.”
Silence.
Ahue called for the no votes. Yuen called out his “No.” Ahue added his. “Two no’s,” Ahue announced.
That was it. HELCO won its approval, by default.
See You In Court
By the following Tuesday, attorneys for Waimana had filed a writ of mandamus in the state Supreme Court, seeking to void the default approval. Also, in Third Circuit Court in Kona, Matsukawa filed an appeal of the Land Board’s non-decision.
According to Matsukawa, the state law imposing the 180-day time frame for Land Board action on applications is not “in harmony” with the Administrative Procedures Act, which sets out the framework for the handling of contested cases. The law that puts the Land Board under the gun to act – Chapter 183-41 – was passed by the Legislature in the 1950s. It was intended to protect applicants against the dilatory actions of state government, and achieved this by putting the applicant in the driver’s seat when it comes to requesting extensions. (Even so, the law, which provides for just one time extension, does not anticipate the type of prolonged process associated with HELCO’s application and many others today. HELCO, for example, sought and received three time extensions beyond the original 180-day period for board action provided by law.)
Matsukawa claims that the state has been misinterpreting a statute that is outdated, “giving it life it never had.” To give to the applicant “ultimate control over the process” was not the intention of legislators, he said in a telephone interview after the board meeting. “It creates a disharmony in the law” by making it impossible for the board to meet the terms of both statutes. Rather, the board must choose which law to follow.
As Environment Hawai’i went to press, court action was still pending.
— Patricia Tummons
Volume 4, Number 12 June 1994
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