Hawaiians Seeking Stream Restoration Challenge ‘Holdover Status’ of Diversion

“It sounds like you got the gun in your hand …,” Stanley Roehrig began.

“That’s right!” David Frankel interjected.

“… and nobody else has bullets,” Roehrig said.

“They’ve had the gun to the head of our clients and have been pulling [the trigger] for generations. Do you know how many generations of Hawaiians who’ve had to move off the land, who’ve had to give up kalo production, because of what those guys have done? And it’s time to stop,” Frankel said.

— December 11, 2015, meeting of the Board of Land and Natural Resources

Unable last December to renew revocable permits allowing Alexander & Baldwin, Inc. (A&B) and the East Maui Irrigation Co., Ltd., (EMI) to continue diverting up to 450 million gallons of water a day (mgd) from East Maui streams, across thousands of acres of state and private lands, to central Maui, the state Board of Land and Natural Resources is now relying on a notion — not described in any statute — that it can maintain the status quo by simply declaring a “holdover status.”

The Native Hawaiian Legal Corporation, on behalf of a non-profit group of native Hawaiian taro growers and cultural practitioners from East Maui — Na Moku Aupuni o Ko`olau Hui — is seeking to formally put an end to that status, as well.

Had the board ignored legal precedent and approved renewal of the permits at its December 11 meeting, the action would almost certainly have been quickly overturned in court. [On December 21, more than two weeks before A&B announced it would be closing subsidiary Hawaiian Commercial & Sugar’s (HC&S) operations on Maui, 1st Circuit Judge Rhonda Nishimura indicated she would be invalidating the court “holdover” revocable permits to A&B and EMI that the Land Board had been annually renewing since 2002, most recently in 2014. On January 8, she issued a ruling to that effect.]

But faced with, among other things, contested case hearing requests from East Maui residents Healoha Carmichael, Lezley Jacintho, and Na Moku, the Land Board simply could not renew the permits again. Hawai`i Supreme Court decisions regarding the proposed solar telescope on the slopes of Haleakala and, more recently, the Thirty Meter Telescope on Mauna Kea, have affirmed that the Land Board must hold a contested case hearing (if one is requested) before it issues a permit.

Loath to disrupt the diversions, which feed A&B subsidiary Hawaiian Commercial & Sugar’s (HC&S) 30,000 acres of cane fields in central Maui and provide roughly 8.5 mgd to the Maui County Department of Water Supply for Upcountry Maui’s agricultural and domestic water needs, the Land Board approved a motion by member Chris Yuen to affirm a holdover status ordered years ago as part of a contested case hearing, and to “maintain the status quo pending the issuance of the interim instream flow standards (IIFS).” IIFS, which are the minimum flows that must be left in streams for public trust purposes, are set by the state Commission on Water Resource Management, which is expected to amend the IIFS for 27 of the more than 100 diverted East Maui streams some time this year.

Yuen stated that the affirmation of the holdover “does not constitute a long-term decision on the issuance of water.”

In her ruling last month, however, Judge Nishimura frowned on the Land Board’s authorization of A&B/EMI’s use of state lands and waters “on a holdover basis,” specifically because it has gone on for so long. The contested case from which the initial holdover order grew began in 2001, when A&B sought to move from month-to-month revocable permits to a 30-year lease for the right to divert East Maui water. As the contested case dragged on, bouncing to Circuit Court, then back to the Land Board, two more holdovers were ordered, with the last one in 2007.

“A&B’s continuous uninterrupted use of these public lands on a holdover basis for the last 13 years is not the ‘temporary’ use that HRS Chapter 171 [the state’s public land use law] envisions. Otherwise, holdover tenants could arguably be allowed to occupy public lands almost in perpetuity for continuous, multiple one-year periods. Such a prospect is inconsistent with the public interest and legislative intent,” she wrote.

A&B attorney David Schulmeister has argued that although holdovers extending beyond one year are not authorized by statute, the Hawai`i constitution, which tasks the Land Board with protecting public trust resources, implicitly gives the board the authority to grant holdovers.

“If it is true that the board has an obligation to protect the public trust, … if they have the duty to protect the public interest, then they have to have the power to do it,” Schulmeister told the Land Board at its December 11 meeting.

Should his argument ultimately fail, the seemingly endless status quo of the diversions — in which commercial uses have taken precedence over the needs of those with constitutionally protected rights — may finally be turned on its head.

The Appeal

On January 8, mere hours after Judge Nishimura had declared the 2014 permit renewal invalid, NHLC attorneys David Kimo Frankel, Summer Sylva, and Camille Kalama filed an appeal on behalf of Na Moku attacking the holdover status the Land Board affirmed on December 11.

The attorneys point out that the Land Board did not provide any notice in its agenda that it would consider re-affirming the holdover status. Also, they told the court, the board had failed to notify their clients who had are part of the original 2001 contested case hearing that the board on that day would be considering or accepting testimony on the re-affirmation.

What’s more, they wrote, the Land Board doesn’t even know how many streams A&B and EMI divert, how many diversions exist, or how much water is diverted in the area covered by the four revocable permits.

“BLNR has never issued an order requiring A&B and EMI to provide data regarding how much water is diverted daily from each of the diverted streams within the area covered by revocable permits 7263, 7264, 7265, and 7266,” they wrote.

“According to A&B, approximately one third of the water flowing through the EMI ditch system does not originate from state land,” they wrote, adding that if all diversions of streams on lands covered by the revocable permits were stopped, “the EMI ditch system would still transport, on average according to A&B, at least 30 million gallons of diverted East Maui surface water each day.”

Contrary to Schulmeister’s argument that the holdover status remains valid, NHLC argues that the Land Board’s holdover authorizations granted in 2001, 2002, and 2007 expired long ago.

“A&B and EMI currently lack any legal authority to use the 33,000 acres of state land covered by [the four permits] or to divert water from any of the streams flowing across those lands,” the appeal states, adding that the Land Board’s December 11 decision to re-affirm the holdover status prejudiced Na Moku’s substantive and procedural rights under the state’s laws governing contested case hearings.

Furthermore, the NHLC argues, the board’s affirmation violates state laws governing the use of public lands; conduct of public meetings; environmental reviews; and coastal zone management. In addition, the attorneys allege the board breached its duties to protect the public trust and traditional and customary practices.

The NHLC asks the court to reverse the Land Board’s reaffirmation of the holdover status, declare that A&B/EMI have no legal authority to use the land and divert the water from streams covered by the four revocable permits, and to stop the companies from taking any more water from streams within the permit areas until they receive the authority to do so in compliance with the state’s environmental review (Chapter 343), public land use (Chapter 171), and coastal zone management laws (Chapter 205A).

They made these same arguments in a January 11 proposed amended complaint in the case over the 2014 permits.

A Rebuttal

Schulmeister, who has represented A&B on this issue since 2001, has argued at length in the 2014 permit case and to the Land Board at its December 11 meeting that the holdover is, indeed, still valid.

When A&B asked the Land Board in 2001 to consider granting it a 30-year lease or license and to renew its permits in the meantime, the NHLC requested a contested case hearing on the matter on behalf of East Maui taro farmers who required more stream flow to maintain their lo`i. At the same time, the NHLC petitioned the Commission on Water Resource Management to amend the interim instream flow standards of 27 of the streams diverted by EMI.

Rather than launching an investigation of its own to determine how much water should be returned to streams to meet public trust needs, including those of the taro farmers, the Land Board chose to piggyback on whatever the Water Commission decided. However, given that it would likely be years before the commission amended the IIFS for all the streams involved, the Land Board held a contested case hearing in 2005 on how much water should immediately be returned to streams to meet taro needs, pending the Water Commission’s decisions.

Schulmeister told the Land Board in December that in the contested case hearing on the interim release of water, the NHLC argued against the holdover the board had issued in 2002.

“The argument was, ‘Look, there is no statute that allows the permits to go beyond the one year if we haven’t gone to auction.’ We had this unique situation where we were trying to go to auction but it was tied up in this contested case hearing, so it was put in this holdover status,” Schulmeister said.

In his view, it would be disastrous to find there is no legal basis to continue the diversions until interim instream flow standards are amended and an environmental impact statement is completed.

“So what do we do? We shut down the county of Maui? Shut down the plantation?” he asked the board. “There’s a lot of what I’d call … reflexive propaganda. ‘The plantation is dewatering the streams,’ and on and on. I understand that for some people their mission in life is to make that argument [but] it’s the facts and evidence that should be considered,” he said, noting that over the years EMI had on its own and under the direction of the Land Board and Water Commission released a lot of water back into some of the same streams the taro farmers draw from.

“Between 2007 and today, the facts on East Maui have changed. Now, all of the streams where taro is growing, the low flows are allowed to pass,” he said.

He stressed repeatedly that the NHLC never appealed the Land Board’s decision in 2007 to hold over the four permits until the original contested case concluded and appoint a monitor to ensure adequate water was released from the diversions to East Maui taro farmers in the meantime. (The Water Commission addressed the IIFS in 2008 and 2010, but, following an appeal from the NHLC on the IIFS amendments in 2010, a contested case hearing was held for all 27 streams. Recommendations from the hearing officer, Lawrence Miike, are expected early this year.)

Later, when board member Stanley Roehrig asked Schulmeister why the NHLC didn’t appeal the 2007 decision, Schulmeister speculated, “I think they agreed it’s nonsense to think the board doesn’t have the power to protect the public interest until this is resolved.”

If the 2007 holdover was meant to last until the contested case hearing was resolved, has the Land Board’s annual renewal of the revocable permits been an implicit termination of the holdover status? Schulmeister asked.

“We don’t know. I’m not sure the board knows,” he said, answering his own question.

“What you don’t want to do is launch ourselves into a situation Mr. Frankel is trying to project, where suddenly the county and the board are madly trying to get water to 35,000 people in Upcountry Maui,” he said.

Caleb Rowe, corporation counsel for Maui County, testified that the EMI diversion provides the vast majority of the water needed for Upcountry Maui, part of the Department of Water Supply’s second-largest water service area on the island, which includes a hospital, several schools, and 450 acres of farmland.

“We need A&B to have a legal right to have this water for us to take that water from them. Eighty percent of the water that serves the Upcountry community comes from these streams. Twenty percent is from wells pretty much at capacity, largely over concerns over legacy pesticides,” Rowe said.

Should the diversion stop, there would be a health crisis, Rowe argued. “People wouldn’t be able to clean themselves, [there would be] issues of fire prevention, food shortages, with the Kula ag park not being able to grow food,” he said.

Maui Land Board member and Ulupalakua Ranch operations manager Jimmy Gomes interjected, “We wouldn’t have water for all our cattle. All the ranchers, if you look at the Kula area, we’re totally dependent on it.” (Because of his and his company’s reliance on the diversions, Gomes later recused himself from discussing or voting on the matter.)

Shifting the Paradigm

Despite Schulmeister’s and Rowe’s testimony, the NHLC’s Frankel and Kalama gave several reasons why the Land Board could not renew the permits, many of which were included in their January 8 appeal to January 8 and 11 filings in 1st Circuit Court: 1) the board failed to investigate and protect native Hawaiian practices; 2) granting the permits would violate the public trust doctrine; 3) an environmental impact statement needs to be done first; and 4) granting the permits before conducting a contested case hearing would “violate due process as well as other constitutional obligations.”

“EMI is a private, commercial user. Their priority is the lowest,” Frankel told the board, adding that the county could still receive water from the ditch should the Land Board choose not to renew the permits.

“We made it very clear to the county, we’re not seeking to stop the county’s use of water from the ditch,” Frankel said.

Board member Roehrig asked how the county would get the water if not through EMI.

Frankel replied that the Land Board has a 1938 agreement that gives it the right and ability to use EMI’s ditch to transport water.

“Four-hundred-fifty mgd is the [ditch’s] capacity. Maui takes 8 mgd. That’s a fraction. A tiny, tiny fraction of water. Do you think our clients want to jeopardize … public health and safety? That’s ridiculous.”

In any case, he continued, given the Hawai`i Supreme Court’s December 2 decision in the Thirty-Meter Telescope case and its earlier decision in the case involving construction of the Daniel K. Inouye Solar Telescope on Haleakala, the board could not make a decision that day.

“You have to hold a contested case hearing,” he said, arguing that the due process of his clients, not A&B’s or EMI’s, are affected.

“Their RP [revocable permit] expires on December 31,” he said.

Land Board chair and Department of Land and Natural Resources director Suzanne Case was clearly uncomfortable with the board’s hand being forced in light of the potential consequences.

“[Y]ou are saying that because you’ve requested a contested case hearing, then automatically there can be no decision … on these revocable permits. So therefore, the water runs dry on January 1. You are saying that,” she told Frankel.

“No,” Frankel replied.

Case: “Yes.”

Frankel: “No.”

Case: “You’re saying that.”

“No, I’m not!” Frankel said finally. “People are making leaps which are inaccurate and unfair. If the revocable permits expire on December 31, EMI will not have legal authority to take water for their commercial ag operations. However, there’s a very easy process you guys can go through to allow the county to continue to take water.”

He added that EMI has private land from which they divert water. Although he did not concede that this was being done legally or properly, he told the board, “If you guys do not extend the permits, there’s nothing stopping EMI from diverting water, a good quantity of water, through the EMI system.” And logistically, he continued, it will take time to turn these diversions off even if the permits were allowed to expire on December 31. The claim that come January 1, the ditch will run dry, “that’s not reality,” he said.

He suggested that the Land Board could exercise its easement over the ditch system to authorize the delivery of water to the county for domestic purposes.

“Once you make a decision like we are asking for, it gives us the ability to actually sit down and properly negotiate with A&B,” he said, which is when board member Roehrig told him he sounded like he had a gun in his hand and was the only one with any bullets.

Despite Frankel’s assurances that the Land Board had the authority to allow the county to receive water through EMI’s system, member Chris Yuen asked him, “Wouldn’t your argument about Chapter 343 apply to the County of Maui’s access to domestic water from this license area as well?”

Frankel said that it probably would, but that allowing the county to divert without an EIS versus A&B/EMI diverting was the lesser of two evils and he was not going to sue to stop Maui County from providing domestic water.

When that seemed to give Yuen little comfort, Frankel said it would be very easy for the Land Board to provide the county with water through the diversion system via an executive order.

“Could someone sue you over it? Could be, but their case would be significantly weaker than ours,” Frankel said.

When Yuen said he didn’t see the difference, legally speaking, between water going to HC&S or to Maui County, Frankel replied that one takes around 450 mgd, while the other only 8 mgd.

Still, Yuen said, “I don’t even know how you get 8 mgd [to the county], I mean, mechanically.”

When it came time for the public to testify, the board heard from a number of people opposed to the permit renewal, including East Maui residents and members of the Sierra Club. Marjorie Ziegler, executive director of the Conservation Council for Hawai`i, pointed out that the maintenance of the status quo for so long has allowed A&B and EMI to control the permit areas for “a mere $5-10 an acre per year. I find those numbers just staggering.”

And not only do the diversions “come on the backs of native Hawaiian people who need that water for other purposes … they come at the expense of the native stream fauna,” she said.

Despite concerns over the possible impact that ending the permits would have on Upcountry Maui, Ziegler pointed out, “Who was worried about the Hawaiians when this water was taken? … There was no consideration for these people who depended on this water a long time ago.”

“Are we trying to right the wrongs of the past using the Water Code and Chapter 343 and contested case hearings? You bet. Because what else are we supposed to use?” she asked.

She urged the Land Board to start righting those wrongs now because weaning some of the current users off the diverted water and finding alternative sources will take time.

“HC&S is gonna bag sooner or later. You know they’re not gonna stay. What you gonna do with all the water they’re using for sugar? They’re gonna hang onto it as long as they can just like they did in Waiahole [on O`ahu]. It’s time folks, we gotta start planning,” she said.

Coda

In the end, the Land Board tried to maintain the status quo without actually taking an action that would be subject to environmental reviews or violate anyone’s due process rights. The board, with Gomes recused, decided to simply “affirm the holdover status of the revocable permits.”

“The desire is to maintain the status quo pending the issuance of the interim instream flow standard,” Yuen said.

Following Judge Nishimura’s ruling that those permits are invalid, it’s unclear what the current legal status is of the ongoing diversions. Maui County has asked Nishimura to stay enforcement of her ruling pending an interlocutory appeal, A&B/EMI and the Land Board have asked for a re-hearing, and NHLC’s clients have asked to amend their original complaint and to transfer the case to the newly established environmental court. A hearing on all of these motions had been scheduled for February 1.

— Teresa Dawson

For Further Reading

Environment Hawai`i has given extensive coverage to East Maui water issues over the years. For more background, see the following: