Case Title: In re Contested Case Hearing on the Water Use Permit Application filed by Kukui

Citation: 116 Haw. 481

Docket Number: 

State: hawaii

Court: Hawaii Supreme Court

Date: 2007-12-26T00:00:00Z

Document:
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IN THE SUPREME COURT OF THE STATE OF HAWAT'T

 

00"

 

92 9300

IN THE MATTER OF THE CONTESTED CASE HEARING ON THE WATER USE
PERMIT APPLICATION FILED BY KUKUI (MOLOKAI), INC.

No. 24856

130

 

 

APPEAL FROM THE COMMISSION ON WATER RESOURCE MANAGEMENT
(CASE NO. CCH MOS7-1)

DECEMBER 26, 2007

MOON, C.J., LEVINSON, NAKAYAMA, AND ACOBA, JJ.,
AND CIRCUIT JUDGE SAKAMOTO, IN PLACE OF DUFFY, J., RECUSED

OPINION OF THE COURT BY NAKAYAMA, J.

‘The present matter involves multiple appeals from the
December 19, 2001 final decision and order of the Commission on
Water Resource Nanagement

(“the Commission”) approving Kukui
(Holoka'i) ,

Inc.'s (“KNI's") application for water use permits.

on appeal, intervenor-appellants (collectively referred to as
~pppellants”) Department of Hawaiian Hone Lands (“HHL”), Office

of Hawaiian Affairs ("OHA"), and Judy Caparida (“Caparida”) and
Georgina Kuahuia ("Kuahuia") generally allege multiple violations

of the Commission's public trust duties under the Hawai'i

Constitution, the State Water Code ("Code"), and the public trust
doct rin

 

Specifically, the Appellants raisi

the following
points of error.

DHL asserts that: (1) the Commission failed to

recognize that the preservation of a sufficient and accessible
water supply for the current and future development of Hawaiian

Hone Lands is a distinct public trust “use”; (2) the Commission

failed to apply even minimal scrutiny to KMI’s request to divert

public trust resources; (3) the Commission erroneously placed the
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burden of proof on DHEL to produce “conclusive evidence” of harm

to the public trust resource:

 

(4) the Commission's decision te
grant KMI's application, subject to recall or modification if it
is later denonstrated that the public trust resources have been
harmed, violated the precautionary principles (5) the Commission
exceeded its statutory authority by considering an untimely
existing use application; (6) the Commission lacked authority to
grant new or proposed uses at a hearing to determine existing
uses; and (7) the Commission lacked authority to grant existing
uses that were not claimed in KMI's application.

OHA contends that: (1) the Conmission erred by

allocating water for “proposed uses” during proceedings to

 

determine existing uses; (2) the Commission erred by concluding
that KMI had correlative rights to transfer ground water; (3) the
Commission erred by not utilizing the precautionary principle
espoused by this court in In re Water Use Permit Applications, 94
Hawai'i 97, 9 P.3d 409 (2000) (“Waiahole 1”); (4) the Conmission
erred by concluding that OHHL's constitutional water reservation
Was not an “existing use” and thus did not limit the granting of
other permit applications; (5) the Commission erred by ignoring
the fact that KMI’s hotel and golf course closed, thus
eliminating the “purpose” of the water sought; and (6) the
Commission’s utilization of Attorney Yvonne ¥. Izu created a
direct conflict of interest requiring vacatur of the Commission's
final decision and order.

Caparida and Kuahuia argue that: (1) the Commission
failed to comply with the five-year deadline set forth in Hawai'i
Revised Statutes ("HRS") § 174C-S0(g), thus rendering its

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application of HRS § 174C-50(b) inappropriate; (2) the Commission
erred by approving new uses insofar as KMI represented that its
application was only for existing uses; (3) the Commission
erroneously concluded that KMI's proposed use would have no
measurable impact on traditional and customary gathering rights
of native Hawaiians; (4) the Commission erred by failing to
recognize DHHL's constitutional water reservation as an “existing
legal use” and concluding that KMI’s request could be
acconnodated without compromising the reservation or exceeding
the sustainable yield of the Kualapu'u aquifer: and (5) the
Commission erred by denying their motions to (a) reopen the
record to receive information regarding the closing of KMI’s
hotel and golf course, and (b) continue the October 17, 2002
hearing until the foregoing information could be incorporated
into the parties’ arguments and considered by the Conmission.

For the following reasons, we hold that: (1) DHHL's
reservation is a public trust “purpose” and not an “existing
legal use”; (2) the Commission failed to adequately scrutinize
fort's request to divert water? (3) the Commission appears to have
placed the burden of proof on DHHL to demonstrate that pumpage at
KOI's well would increase the chloride concentration at the DHHL
well site (4) the Conmission’s decision did not violate the
precautionary principle; (5) the Comission erred by considering
an untimely application; (6) KMI requested both existing and new
uses; (7) pursuant to HRS § 174C-49(c), KMI may transport water
from Well #17; (8) the Connission erred when it failed to
consider the impact that the closing of the hotel and golf course

would have on its allocation of water to KMI; and (9) the

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Commission impermissibly shifted the burden of proving harm to
those claiming a right to exercise a traditional and customary
native Hawaiian practice.

Accordingly, we vacate the Commission's Decenber 19,
2001 final decision and order, and remand the matter for further
proceedings consistent with this opinion.

1. BACKGROUND

on May 13, 1992, the Commission designated the island
of Moloka‘i as a Water Management Area. The Commission’ s
designation took effect on July 15, 1992, thereby triggering a
one-year period’ during which users were required to file
applications for a permit to continue any pre-existing
wwithdrawal, diversion, impoundnent, or consumptive use of
water[.J" HRS § 174C-48(a) (Supp. 1992).

on June &, 1993, Moloka'l Irrigation System and Moloka‘t
Ranch submitted an initial joint application for a water use
permit to divert water from Well #17 (Well No. 0901-01) for use
at the Kaluako'i Resort and Kualapu'u Town. Moloka' Ranch owned
the land overlying Well #17 at that time. However, on October
19, 1993, ownership of the land was transferred to KMI. On

1 HRS $ 174c+50(¢) (Supp. 1992) provides as follow:

 

An applicetion for a permit to continve an existing use must be
Rade within period of one year from the effective date of
Gesignation. Except for appurtenant rights, failure to apply
Within this period creates s presumption of abandonment of the
se, and the user, if the user desires to revive the use, must
apply for a permit under section 174C-S1, If the commisolon
Setermines that there se just cause for the failure to file, it
ey allow a late filing. However, the comiesion may not allow a
[ete Hilng more than five years after the effective date of rules
Ssplenenting ehie chapter. The commission shall send two notices,
one of which shail be by registered mail, to existing users to
file for an application for a permit to Continue an existing use

 

   

 

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December 15, 1993, KMI submitted its own application requesting a
permit authorizing the use of 2.0 million gallons of water per
day ("mgd").
on April 14, 1994, the Conmission staff recommended
that the Commission consider KMI’s submittal as a late filing,
pursuant to HRS § 174C-S0, insofar as it was not filed within one
year of the July 15, 1992 effective date of the Commission's
Water Management Area designation, Nevertheless, the staff
recommended that the Commission find good cause for the late
filing based upon the following:
‘The opplicant has stated that the deed to the land was in the
Process of being transferred at about this time. le did not
Eoresee the unexpected delays caused by three changes in the
anagenent staff cf the party selling the property. He has stated
Thots as soon as the transfer was secure, he was able to sigh a2
Jondowner, thereby allowing his suamitesl of

application te the Commission, Staff finds the
Suee cause for a late filing.

 

 

on March 14, 1995, following several revisions, the
Commission staff recormended that the Commission authorize an
interim use of 871,420 gallons per day ("gd"). The Commission
voted to accept the staff's reconmendation. The Conmission filed
its notice of action on Mazch 30, 1995. KMI thereafter filed a
motion for reconsideration and also appealed the March 14, 1995
decision to this court and the second circuit court. KMI's
motion for reconsideration vas denied on June 14, 1995, and its
appeals to this court and the second circuit court were disnissed
for lack of appellate jurisdiction.

on May 21, 1996, the Commission reviewed 2 staff
reconnendation to amend the interim existing use allocation and

authorize 1.169 mgd. Following public comment, the Commission
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voted to reject the staff's recommendation and reaffirm the March
14, 1995 interim existing use allocation of €71,420 ad. KMT
thereafter requested a contested case hearing on the matter.

The contested case proceedings commenced on Noverber
23, 1998, before hearings officer Peter Adler (“Adler”). On May
15, 2000, following the evidentiary portion of the proceedings,
the Comission filed its “Proposed Findings Of Fact, Conclusions
Of Law, And Decision And Order{.]” On July 31, 2000, DHHL, OHA,
WI, and Ceparida and Kuahuia filed their respective exceptions.?

on October 15, 2001, Caparida and Kuahuia filed
*wotion For Reopening Of Record And Continuance Of Argument On
Exceptions To Hearing Officer’s Proposed Decision And Order”
based upon a discrepancy between the actual metered water uses
reported by KMI and certain information provided by Molokai
Public Utilities, @ subsidiary of KMI.?

‘The Conmission filed its “Findings Of Fact, Conclusions
Of Law, And Decision And Order” on Decenber 19, 2001.‘ Therein,
‘the Conmission denied Caparida and Kushuia’'s notion, and awarded
HUT an existing use permit, pursuant to HRS § 174C-50,
authorizing the withdrawal and reasonable and beneficial use of
$36,000 gd. The Commission further awarded HMI a permit for
proposed uses, pursuant to HRS § 174C-49(a), authorizing the

withdrawal and 4

 

sonable and beneficial use of 82,000 gd.

 

+ iL and OHA filed joint exceptions to the Commission's “Proposed
Findings of Fact, Conclusions Of Law, And Decision And Order{.)"

> ge appears that Coparida and Kuahuia refiled the same motion on
ceteber 18, 2001

«me particulars will be set forth as they becone relevant in the
forthcoming discussion
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Given that the sustainable yield of the Kualapu'u aquifer was

close to full allocation, the Commission subjected both permits

to the following special conditions:

1

 

If there are significant of unexpected increases in
chioriaes er drawdowns in the two DHKL wells, the DNS
Well, or KO's Well 17, substantially in excess of
What’ they were on the effective date of designation,
any party nay petition the Commission, or the
Commission may on ita own notion, order a show caust
hearing ae to why the permittea amounts of withdrawal
of water should not be reduced along with lawful and
equitable reductions in punpage from other wells in
the Kualapu'u Aquifer.

 

 

 

‘The approxinately 100,000 (qd) of water used to clean
the flitere through back washing near the Moana Makant
Subdivision are to be metered, recaptured, and used
for irrigation of the golf course or for other outdoor
Uses. A flow meter, approved by the Chalrperson,
Shall be installed to measure the back wash water used
to clean the filters, ‘The flow meter shall be
operational within 30 days of the issuance of the
Aforenentioned pernite, Meter readings are to be
taken monthly and made available to the Comission
pen request. “If and when the back-washing system is
bo longer needed, that amount of water may be used to
Blend with non-potable alternative sources for the
Fesort’s other non-potable applications and uses.

 

Meters are to be installed within 90 days of the
issuance of the aforenenticned permits (2) to measure
the amount of non-potable sewage effluent going into
the golf course irrigation lake; and (b) to measure
‘the snount of non-potable water withdreun from the
golf course irrigation lake for irsigation of Moles 2
Through 6 of the golf course. Meter readings are to
be taken monthly and nade available to the Commission
st thelr request.

 

Within six-months of the date of issuance of the
aferenenticned permits, KMI will prepare and present
fo the Consission a report on the affirmative steps it
is taking to contrel leskage and evaporation from the
Wir water systen, This report need not include
Leskage or evaporative losses incurred az Ril’ s
permitted water passes through the Molokas Irrigation
System.

 

 

Within twenty-four months of the date of Lesuance of
the aforementioned permits, si will prepare and
present to the Commission & feasibility study on the
Bevelopnent of a new source of nonpotable water near
Mahana which con be blended to ierigate the golf

 
 

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6 ‘Through xeriscaping, low-flow fixtures, water
Elencing, and other similar practices, Koko!
(Woloka't), Inc., or its successors or assigns, will
make every resscnable effort to encourage and practice
the conservation of potable and non-potable water at
its hotel ana resort’ condoninium operations lots and
at private residences that are users of water pamped
fiom well #17. fol will submit a written report to
the Commission, within six months of the date of
issuance of the aforenentioned peraite, on the
progress of compliance with the terms of thi
Eonaition.

 

 

 

 

7 four will prepare and distribute a memorandum to all
ot and condesiniun omners notifying then of the need
to practice conservation of potable and non-potable
waters, A copy of the menorandum shall be sent to the
Conmiszicn.

@ 2 and when HOH is able to establish its oun potable
water delivery system fron Well 17 to the Kaluako!
Notel, resort condominiums, and residential lets, the
anounte permitted a2 “WIS System User charges”

SEIT be Feseinded.

DAHL filed a notice of appeal on January 17, 2002. OHA
filed @ notice of appeal on January 18, 2002. Caparida and
Kuahuia filed a notice of appeal on January 18, 2002.*

IT, STANDARD OF REVIEW
A, Administrative Decisions

HRS § 174C-12 (1993) provides: “Judicial review of
rules and orders of the commission under this chapter shall be
governed by [HRS] chapter 91 [of the Hawai'i Administrative
Procedures Act, or HAPA]. ‘Trial de novo is not allowed on review
of commission actions under this chapter.”

Regarding appeals from agency decisions generally,

 

+ on February 22, 2002, while the appeal was pending, Kaluakoi Land,
LIC filed a “Motion For Substitution Of Parties[.)" Therein, Faluakos Land,
LLC explained thet it acquired the assets of WI.

 

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HRS § 92-14 (g) (1993) enumerates the standards of review
applicable te.an agency appeal and provide:

dpon review of the record the court may affirm the decision of the
agency or renand the case with instructions for further,
proceedings; or it may reverse or modify the decision and order if
Ehe substantial rights of the petitioners may have been prejusiced
Because the administrative findings, conclusions, decisions, oF
orders ere:

(1) in eiolation of constitutional and statutory provisions or
(2) In excess of the statutory authority or jurisdiction of the
agency oF

3) "Made upon unlawful procedure: or

(4) Affected by other error of law; or

(5) Clearly erroneous in view of the reliable, probative, and
Subetantial evidence on the whole record; oF

(6) Arbitrary, or copricious, or characterized by abuse of
discretion or clearly unearranted exercise of discretion.

GATRI v. Blane, 88 Hawai'i 108, 112, 962 P.2d 367, 371 (1998)
(citing Poe v, Hawai'i Labor Relations Bd., 87 Hawai'i 191, 194-
95, 983 P24 $69, 572-73 (1998).
{Fors} are reviewable under the clearly erroneous standard
to determine if the agency decision was clearly erroneous in view

of reliable, probative, and substantial evidence on the whole
record. Alw AT 295, 297, 942

Pi2d' $39, 541

 

 

 

 

 

 

   

cecision was in violation of conseitucsonal or statutory
provisions, in excess of statutory authority or jurisdiction of
Sgency, or affected by other error of law. isrdin v-Bkibs, 84
Hawai! 305, 310, 933 7.28 1339, 1348 (2997) (elestione omitted) 7
ARS 6S 92-149) (2), (21, and (4)

“A COL that presents mixed questions of fact and law is
reviewed under the clearly erroneous. standard because the
Conclusion is dependent upon the facts and circumstances of the

particular case.” Price‘, Zoning Bd of Ampeals of City and
u TP Hewat 166, 172, 683 6-24 625, 633 (1954) .

‘an appellate
and experience

 

 

linen nixed questions of law and fact are presented,
court must give deference to the agency's expert
in the particular field. visions

fc, Yi RaniL, 72 Haw, 419, 420, 794 F.2d 1115, 1216 (1990)
S[rfhe court should not substitute is own judanent for thet of the

agency.” Id (citing Canara v. Aasnlud, 67 Hox. 212, 216, 685
Plze 794, 787 (1984))-

Boe, 87 Mawas"t at 197, 983 P.2d at $73
Ince Water Use Permit Applications, 94 Hawai'i 97, 119, 9 P.3d
408, 431 (2000) (“Waiahole 1”) (quoting Curtis v, Board of
Appeals, 90 Hawai'i 384, 392-93, 978 P.2d 822, 830-31 (1999).

An FOF or mixed determination of law and fact is clearly

     

 

 

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erroneous when (1) the record Lacks substantial evidence to
Support. the finding cr determination, or (2) despite substantial
Svidcnce to support the finding or determination, the appellate
Court is left with the definite and firm conviction thats mistake

 

fae been made.” See Leslie v, Estate of Tavares, sl Hawai'i 394,
309, 384 Pe2d 1220, 1226 (1995). "We hove defined ‘substantial

as credible evidence which 1s of sufficient quality and
Value to enable a person of reasonable caution to
Support a conclusion.” id, quoting Skate v, Kotig, 91 Hawai'i
Sib, 328, 984 P.2d 78, 67 (1999)).

 

B. Statutory Interpretation
In construing statutory language, this court has
adhered to the following framework:

First, the fundenentel starting point for statutory interpretation
[elthe language of the statute itselz. Second, where the
Statutory languege i¢ plain and unambiguous, our sole duty is to
Give effect to ies plain and obvicus meaning. Third, inpiicit in
the cask of Statutory construction is cur foremost obligation to
ascertain and give effect to the intention ef the Legislature,
nich is to be obteined primarily from the language contained in
The statute itecl£. Fourth, when there is doubt, doubleness of
neaning, of incistinetiveness or uncertainty of an expression used
Tha statute, an ambiguity existe. And fifth, in construing an
anbiguoss statute, the seaning of the ambiguous words may be
SSoght by examining the context, with which the ambiguous words,
Phrases, and sentences nay be compared, in order to ascertain
Eheir true meaning.

Auakuni v, Awana, 115 Hawai'i 126, 133, 165 P.3d 1027, 1034
(2007) (citation omitted).

 

 

 

 

 

III, DISCUSSION
It 4s now well established that the public trust
doctrine is a “fundamental principle of constitutional law in
Hawai'i,” Waiahole 1, 94 Hawai'i at 131-32, 9 P.3d at 443-44, and
that its principles permeate the State Water Code. See id. at
130, 9 P.3d at 442 ("[(T]he legislature appears to have engrafted
the doctrine wholesale in the [State Water] Code.”); see also In

re Wai'ola 0 Moloks'i, Inc., 103 Hawai'i 401, 429, 83 P.3d 664,
692 (2004) ("(T]his court traced the historical development of

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eee cwweeeuvw).042o

the public trust doctrine in Hawai'i and reasoned therefrom that
article XI, sections 1 and 7 of the Hawai'i Constitution .
adopted ‘the public trust doctrine as a fundamental principle of
constitutional law in Hawai'i’ and that the legislature, pursuant
to the constitutional mandate of article XI, section 7,
incorporated public trust principles into the (Water] Code.”
(Citing Kalahole 1, 94 Hawai'i at 130-32, 9 P.3d at 443-45.)).
We have recently explained the basic precepts of the

state water resources trust as follows:

cunder the public trust [doctrine] and the Code, permit
applicante have the burden of justifying their proposed uses in
{Ugnt°SF protected pubiie sights in the rescurce.”" Mgianole I, 94
onai's at 160, 9 Paid at 472, The Water Code requires,

Alia, that the opplicant prove that the proposed use of water 4s a
Rfeatonable-beneficisl use" and is “consistent with public
dneerest.” HRE 46 174CM49(a) (2) and. (4) (1993). "Reasonable~
beneficial use” is defined a “the use of water in such a quantity
be i pacesaary for economic and efficient utilization, fora
porpeses and in a manner which is both reasonable and consistent
Wieh the state and county land use plans and public interest.”
ins'§' 1740-3. (2993) (emphasis added) «

 

 

Furthermore, besides advocating the social and economic utility of
their propeved uses, permit applicants must also genonstrate the

 

Eitennstive water sources. Such a requirenent ss intrinsic to the
public trost, the seatstory instream use protection scheme, and
fhe definition of "zeasonable-beneficiel" use, and is an essential
part of any balancing between competing interests.

Meiahole 1, 9¢ Hawai'i at 161, 9 P.3d at 473 (citation onitted)

Tenphasi? added). In addition, “applicants must stiil dencnstrate

thelr actual neede and, within the constraints of available

knowledge, the propriety of draining water from public streans to
Taty those needs." dd, at 162, 9 P.3d at 47ée

 

 

‘the Water Commission, on the other hand, is duty-bound to
place the burden on the applicant te Justify the proposed water

Use in Light of the trust purposes and "weigh competing public and
private water uses on a caserby-cace bagis(,]” requiring a higher
Tevel of scrutiny for private commercial water usage. id, at 142,
S'Piid at 454, Horeover, es discussed aupra in section TIT-A.1.,
the Water Commission’ findings aust reasonably explain and
Sustity its conclusions ang rulings. 1d, at 157-58, 9 F.3d at
tes-70.Finalty,

 

 

the Commission must not relegate itself to the role of

u
 

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ere “onpire passively calling balls and strikes for
Sdversaries appearing before it,” but instead must take the
Initiative in considering, protecting, and advancing public
Eights in the resource at every stage of the planning and
decisionnaking process... = Specifically, the public
trust compels the state duly to consider the cumative
Impact of existing and propésed siversions on trust purposes
nd to inplenent reasonsble measures to mitigate thie

 

 

Impact, including using alternative resources. «= + Ip
the ata
Silssense, and forest re with

Heke riahts comand under the laws of our state.
Ld. st 143, 9 P.36 at 455 (citations omitted) (emphasis added)
In‘Light of the foregoing, this court must take a "close look” at
the Water Commission's action to determine if it complies with the
Water Code and the public trust doctrine.
Inte Water Use Permit Applications, 105 Hawai
P.3d 643, 657-58 (2004) (“Waiahole II”).

Although expressed in terms of the diversion of water

 

 

1, 15-16, 93

from public streams, this court has stated that the doctrine
“applies to all water resources without exception or
distinction[,]" Waiahole I, 94 Hawai'i at 133, 9 P.3d at 445, and
“unlimited by any surface-ground distinction.” Id, at 135, 9
P.3d at 447. With these general principles in mind, we turn to
the arguments presented on appeal.

A. DHEL's Points of Error

Le ‘
o eT

DHHL, OHA, and Caparida and Kuahuia each assert that

DHHL's 2.905 mgd reservation is a distinct or existing “use”
under the public trust. They thus challenge the Commission's

conclusion of law (“COL”) #24, which states as follows:

 

24. Di, OWA, and Intervenors, Judy Caprice (eke)
Georgina Kuahuta, and Sarah Sykes.
thet the water reservation in favor Of ol
Kuslapo'u Aquifer te an existing legel use that is
being interfered with by this proposed use. The
Comission disagrees because @ water reservation i

 

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not an existing legal use,
However, that issue has been conclusively resolved by
this court’s opinion in Mai‘ola, filed during the pendency of the
present appeal. Therein, se concluded that, “pursuant to the
plain language of HRS § 174C-49(d) and HAR § 13-17-63, a
‘reservation’ of water does not constitute an ‘existing legal
usa’ for purposes of HRS § 174C-49(a) (3). lai‘ola, 103 Hava
at 427, 63 P.3d at 690 (emphasis added). Nevertheless, we held

that DHHL’s constitutional reservation of water resources

 

“constitutes a public trust purpose[,]” Wai'ola, 103 Hawai'i at
430, 83 P.3d at 693 (emphasis added), “entitled to the full

panoply of constitutional protections afforded the other public
uy." Ia

trust purposes enunciated by this court in Waiahole

  

As such, the Commission was obligated to “take (DHHL's
reservation] into account in the planning and allocation of water
resources, and to protect [it] whenever feasible(,]” id. (citing
Maiahole I, 94 Hawai'i at 141, 9 P.3d at 453 (quoting Nat‘)

Audubon Soc'v v. Superior Court of Alpine County, 33 Cal.3d 419,
169 Cal. Rpte. 346, 658 P.2d 709, 728 (cal. 1983), cert, denied,

 

464 U.S. 977 (1983))), insofar as its status as a public trust

purpose rendered it “superior to{) the prevailing private

 

‘th Maianole 1, this court identified the following three public
trust purposes:

(1) water resource protection, which includes “the maintenance of
asters in their natural state” as "a distinct use” and “disposes
of any portrayal of retention of waters in their natural state 2
‘waste’"; (2) domestic use protection, particularly drinking
waters and (3) the exercise of native Hawaiian and traditional and
Costomary rights.

 

203 Hawas's at 429, 83 F.3d at 692 (citing Maiahole J, 4 Hawai'i at
9 P.3G at 448-50)

 

 

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interests in the resources at any given time.” Id, at 429, 83
P.3d at 692 (citing Waishole I, 94 Hawai'i at 138, 9 P.3d at

450). As previously mentioned, the public trust doctrine
“effectively prescribes 2 ‘higher level of scrutiny’ for private
commercial uses . . . (and) that the burden ultimately lies with
those seeking or approving such uses to justify them in light of
the purposes protected by the trust.” Id. (citing Waiahole 1, 94
Hawai'i at 142, 9 P.3d at 454), That being said, the Commission
is, by no means, categorically precluded from approving uses
which may compromise DHHL's reservation, so long as the
Commission's decision is “made with a level of openness,
diligence, and foresight commensurate with the high priority
these rights command under the laws of our state.” Id. (citing
Wajahole I, 94 Hawal' at 143, 9 P.3d at 455)7 gee also Najahole
LZ, 105 Hawai's at 16, 93 P.3d at 658 (same); Hai'ola, 103 Hawai‘
at 433, 83 P.3d at 696 (“Thus, to the extent that the
Commission's decision compromised DHHL’s existing wells in the
Kualapu's aquifer system, we believe that the Commission did so
‘with a level of openness, diligence, and foresight commensurate
with the high priority these rights command under the laws of our

state.’” (Citation omitted.)).’

 

+ ie also note that OWA additionally asserts that D#iL' s water
reservation rights are grounded in the "federal-reserved-water-rights”
Sect rine pronounced in the United States Suprese Court's decision in Minter,
Si Uniced states, 207 U.S. 564 (1906). In Hal‘ala, however, this court
Fejected that precise svgiment, stating that “the 1991 amendments to [the
sn Womes Cormiesion Act) § 220, HRS $ 174C-€9(a) (7), and HRS § 2
2Ol{a) comprise the state law equivalent to the Winters doctrine for purposes
of honesteaders on Hawaiian homelands. Thus, eh Soctrine is
Inapplicable to the present matter.” 103 Hawai at 420 n.20, 83 F.3d at 631
poze

 

     

     

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‘The Commission failed to adequately scrutinize Kuz!
peguest to divert water.

DHHL’s second point of error contends that the

Commission failed to apply even minimal scrutiny to KMI's request

 

to divert water from the Kualapu'u Aquifer for private connercial
use. This is an apparent reference to this court’s previous
admonition in Haiahole I, that “[u)nder no circumstances . . . do
the constitution or the Code allow the Commission to grant permit
applications with minimal scrutiny.” 94 Hawai'i at 160, 9 P.3d
at 472, For the following reasons, we agree with DHKL that the
Commission's decision lacked the requisite degree of scrutiny.

a. The sustainable yield

Specifically, DHHL argues that the Commission failed to
apply the requisite level of scrutiny insofar as it relied on the
5.0 mgd sustainable yield determination in spite of evidence that
the Kualapu'u Aquifer may be overdrawn and that the sustainable
yield may actually be as low as 3.2 mgd. The Commission counters
that the 5.0 mgd sustainable yield is statutorily deemed to be
the appropriate planning guideline when balancing such competing
interests. Utilization of the sustainable yield, the Commission
clains, is neither “rigid” nor “inflexible” to the extent that
any uncertainty as to the accuracy of the sustainable yield is
adequately addressed by the fact that any party may petition for,
or the Commission may on its own order, a hearing to show cause
as to why the permitted anounts of water should not be reduced.
KuI also argues that the sustainable yield is the appropriate
guidepost when allocating water from the Kualapu'u Aquifer. KM

points out that the sustainable yield was set by rulemaking

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procedure, and that any challenge to the accuracy of the
sustainable yield must be made via a petition to amend or modify
the sustainable yield pursuant to HRS § 174C-31(p). We agree
with the Commission and HMI that the Commission did not err by
relying on the sustainable yield determination.

The Commission is mandated by the Code to determine a
sustainable yield for each hydrological unit within the state.
See HRS § 174C-31(f) (2) (1993). The term, “sustainable yield,”
is defined by the Code as “the maximum rate at which water may be
withdravn fron a Water source without impairing the utility or
quality of the water source as determined by the commission.”

HRS § 174C-4 (1993). The Commission is instructed to calculate

 

the sustainable yield “using the best information available
HRS § 174C-31() (2). At the time of KMI's application, the
sustainable yield for the Kualepu' Aquifer was determined to be
5.0 nad.

As the Conmiseion and KMT suggest, the Code precludes
the ad hoc revision of the sustainable yield. The sustainable
yield figures are critical components of the state water plan,
see generally HRS § 174C~31, and may not be modified absent
notice and a public hearing, See HRS § 174-31(m) (1993) ("The
commission shall not adopt, approve, or modify any portion of the
Hawaii water plan which affects a county or any portion thereot
without first holding @ public hearing on the matter on the
island on which the water resources are located. At least ninety
gays in advance of such hearing, the commission shail notify the
affected county and shall give notice of such hearing by

publication within the affected region and statewide.”)

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Moreover, in Haiahole I, this court has impliedly endorsed
reference to sustainable yield determinations in the context of

ground water permit applications:

Early designation of instream flow standards furthers
several inportant objectives. First, it fulfills the Ca
Gury of protection under constitution and statut
Shetzean uses do not. suffer inadvertent ang needless inpaimen'
He alse preserves the integrity of the Commission's comprehensive

  

 

 

Planning function. If the Comission deciges instream flow
este tno wilt have ah Setahh
ses. Bs wen
eaedlate demande. See [dovgies W_ Macoougal,
ie Values Sfessonsble Benet Pot Heal
z te U. Haw. C. Rev. 1, €6 6 n. 302
(issei] (citing Unites stetee v. State Water Resources Control

Baa, 162 Cal. App. 34.82, 227 Cal. RptE. Jez, 160 (1966)).
Fintuly, initial designetion of instream flow standards relieves
the Commission, ae well ae existing and potential offstrean users,
of the complexity and uncertainty presented by the unsettled
Guestion cf instfeam flow requirenents. S2¢ id. [at] 56-55, 66.
Shoe the Connission tranelates the public interest in instream
flows into "a cereain and nanegeable quantity (, tJhe reference to
Consistency with the pablic interest in the definition of
Feascnable beneficial use likewise becones a reference to that
quantity.” Ids at 62

 

 

 

 

94 Hawai'i st 148-49, 9 P.3d at 460-61 (emphasis added) (sone
brackets added and some in original). Although the foregoing
excerpt expressly refers to surface water instream flow

standards, this court has analogized ground water sustainable

yield determinations to instream flow standards, See id, at 148,

 

9 P.3d at 460 ("The
recognized in its decision, that the Code contemplates the

provisions confirm what the Commission

instream flow standard as the surface water corollary to the

ground water sustainable yield.” (Quotation marks onitted.}).
hence, contrary to DHHL's assertions, it would be

inappropriate for the Commission to reevaluate the sustainable

yield figure in a permit application proceeding.

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b, DEEL’ s application to withdraw water

DHHL additionally asserts that the Comission’s
approval of Hill's request to divert water cannot be reconciled
with the Commission's refusal to grant DHHL's request for water
on the grounds that there were “very real concerns” over
sustaining the “potable quality” of the wells located in the
Kualapw'y Aquifer. Although the Conmission does not address this
point, KMI asserts that the Commission staff's reconmendation to
reject DHHL's application for additional pumpage was based upon
the fact that increased punpage in the two existing DHHL wells
would increase chloride content in not only DHHL's wells, but
also the County Department of Mater Supply's ("DNS") wells. The
Commission's staff recommended that increased withdrawals cone
from new wells located elsewhere in the aquifer. KMI now accuses
DIL of seeking to have KUI’s preexisting uses reduced so that
DHRL can obtain permits for new uses of water without incurring
the expenses of creating new wells in the Kualapu'u Aquifer.

For the following reasons, DHHL’s argument is without merit.

‘The Commission explained its treatment of DHHL's
application in its findings of fact, summarized as follows. DHHL
controls 25,383 acres of land on Molokai reserved for Hawaiian
homesteaders and services these areas with water drawn from two
wells located at a single site overlying the Kualapu's Aquifer.
DHHL previously obtained a permit to withdraw .367 mgd to serve
its Hoolehua and Kalamaula homestead areas. On September 13,
1996, DHL filed an application to increase its pumpage to 1.247
mgd. The Commission staff recommended the denial of DHHL's

application on the grounds that the geographic concentration of

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the DHHL, DS, and KI wells “militated against granting a permit
for the requested new withdrawals of .879 mgd from the existing
DHHL wells... .” The staff suggested that “such new
withdrawals from the Kualapuv aquifer should be from new wells
strategically located elsewhere within the aquifer so as not to
interfere with the water quality in the existing wells.

Specifically, the staff submittal cautioned that

[che] two OWN wells (WelL nos. 0801-02 6 02), the County
Department of Water Supply (OMS) well (Well no. 0801-03), and the
Kokol Molokai Well 17 (Weil no. 0901-01) all resid
half mile of each other. In terme of @ regional sea
Wells are concentrating punpage in one spot in the aquifer system.
Chicrige levels in the two ONL wells and the ‘ONS well are
Lensitive to pumping rates... Early low chloride readings
from those weilt were around 60 mg/l during the 1980's but hu
Hisen above 100 mg/l daring more recent years of the 1980's. On
Sccasion, chloride levels Rave reached 180 mg/1, The EPA
potability guideline for chloride is to 250 ng/i. ‘Therefore, the
Enereases in chloride levels in response to relatively small
increoses in punpage from this well fleld is an indication that
LScalized upcening and interference between these wells is
occurring:

 

  

 

 

At a January 28, 1998 public hearing, DHL proposed reducing its
request to .21 mgd, to be taken fron its 2.905 mgd reservation.
‘The Conmission requested that DHHL arrange for the United states
Geological Survey (“USGS”) to determine whether an approximate .2
rgd increase in punpage would cause chloride levels in the well
field to rise to “unacceptable levels.” DHHL thereafter informed
the Comission that the USGS was not able to ansver that
question, inasmuch as the USGS hydrological model was designed to
simulate regional draxdowns and could not predict local scale
upconing and drawdowns in the innediate vicinity of a particular
well, The Commission also found that chloride increases in one
of the DAHL wells was “in large part attributable to the
conmencenent of pumping in the (DNS well] in 1991, which raised

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the level of withdrawal from 0.367 to 0,867 mgd in the immediate
area.” DHEL asserts that its application now “languishes
unapproved” due to the Commission staff’s recommended denial of
its application."

Obviously, the Commission was concerned with the effect
of increased pumpage on the chloride content in the well field.
Hence, inasmuch as KMI's application to continue an existing use
did not threaten to increase pumpage, the Commission could
reasonably have granted KMI's request for existing uses and
denied DHHL’s request for new uses. Moreover, the Commission
correctly recognized that the Code contemplates a preference for
existing uses.? See HRS § 174C-49(a) (3) (1993) ("To obtain @
permit pursuant to this part, the applicant shall establish that

the proposed use of water . . . (wlil] not interfere with an
euisting use of water... .” (Emphasis added.)); Waiahole 1,

94 Hawai'i at 165 n.67, 9 P.3d at 478 n.67 (“[T]he Code gives
‘existing’ legal uses priority over ‘new’ uses in the permitting
Ke'olau Acric, Co., Ltd, v. Comm'n of iater Res.

Momt., 83 Hawai'i 484, 492, 927 P.2d 1367, 1375 (1996) (“Existing

 

process.”

uses are given preferences under the Code... .”). In

 

accordance with that preference, the Commission declined to
uproot a preexisting use in favor of a new use. Therefore, the

Commission's decision in that regard does not appear

 

+ tere is nothing in the record that indicates any further action
con DiL's application.
+ 4m its coL 424, the Commission stated that “[sJection 174C-50(4),

Rs, states that an existing use shall be given priority over any other
Spplication provided that the sge remains the same and 12 reasonable
beneficial ang water is available:

 

 

a

 

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unreasonable, arbitrary, or capricious.

‘The same cannot be said, however, for the Conmission’s
decision to permit KMI to withdraw 82,000 gd from the aquifer for
“new” uses. As mentioned, the Commission's staff recommended
that the Commission deny DHHL’s request for new, public uses on
the grounds that (1) the DHHL, DNS, and KMI wells “all reside
within one-half mile of each other(,]”" (2) the wells “are
concentrating pumpage in one spot in the aquifer system(,]” and
(3) “increases in chloride levels in response to relatively small
increases in pumpage from this well field is an indication that
localized upconing and interference between these wells is
occurring.” Inasmuch as KMI’s well is, per the Commission's
staff’s own recommendation, contributing to the concentrated
pumpage, we are compelled to wonder why the Commission did not
similarly toll KMI’s request for new uses. We do not suggest
that the Commission did not have a valid reason for its
conclusion or that the Commission was absolutely barred from
reaching its result. Rather, the Commission has simply failed to
explain the rationale behind the disparate treatment. Due to the
apparent contradiction, we remand the issue for additional
findings of fact and conclusions of law. “Clarity,” we have
said, “is all the more essential ‘in a case such as this where
the agency performs as a public trustee and is duty bound to
demonstrate that it has properly exercised the discretion vested
in it by the constitution and the statute.’” Waiahole II, 105
Hawai" at 11, 93 P.3d at 653 (citing Save Ourselves, Inc, v.
louisiana Envtl, Control Comm'n, 452 So.2d 1152, 1159-60 (La.
1964)). See also Waiahole I, 94 Hawai'i at 163, 9 P.3d at 475

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("A reviewing court must judge the propriety of agency action
solely by the grounds invoked by the agency, and that basis must

be set forth with such clarity as to be understandable.”

(Quoting Louisiana=| 52 F.3d 255, 259
(9th Cir, 1995).) (Quotation marks omitted.)).
©. The Commission failed to consider the feasibility

 

of alternative sources of water.

DHHL further points out that the Commission failed to
provide any indication that it considered the feasibility or
practicability of alternative sources of water for KMI’s
requested uses.” The record confirms DHHL’s allegation, and
that omission requires us to vacate KMI’s permits.

This court has, on multiple occasions, expounded on the
necessity of considering alternative sources of water in
balancing the distribution of a scarce public trust resource.

In Waiahole I, the Estate of James Campbell (“Campbell
Estate”) was among various applicants before the Commission
requesting diversion of water from the Waiahole Ditch. 94
Hawai'i at 164, 9 P.3d at 476. The record indicated that
Campbell Estate already possessed permits to pump 35 mod of
ground water from beneath its lands to support its agricultural

Id, The record

 

purposes, but lacked proper pumping mechanism
also contained testimony that “it would require millions of

dollars to put infrastructure in place to pump water from the
Pearl Harbor aquifer wells to the Campbell Estate fields which
currently use Waiahole Ditch water." Id. at 164-65, 9 P.3d at

\ Neither the Commission ner KMI respond to this argunent in their
oppellate briefs.

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476-77. ‘The Commission expressed findings recognizing Campbell
Estate’s permits. Id. at 165, 9 P.3d at 477. The Commission
also made “various general findings on the effects of irrigation
on leeward aquifers, the costs of developing other alternative
sources, and future growth in water demand.” Id, The Commission
ultimately decided to conditionally approve the leeward
agricultural uses “[i]f and until treated effluent or ground
water is available(.]" Id, This court found the Commission’ s
decision to be unacceptable insofar as the Conmission’s findings
failed to “answer, with any reasonable degree of clarity, why it
As not practicable for Campbell Estate to use ground water
permitted to it and not otherwise in use as an alternative to
diverting the sole source of water for windward streams,
especially given the still unsettled state of instream flow
standards.” Id, Accordingly, we vacated Campbell Estate's
permit and remanded the matter for further proceedings. Id.

on remand, the Commission determined that Campbell
Estate had no practicable alternatives and issued Campbell Estate
a water use permit for 4.74 mgd. Waiahole II, 105 Hawai'i at 16,
93 P.3d at 658. On appeal before this court in Waiahole II,
appellants argued that Campbell Estate failed to meet its burden
of establishing that no practicable alternative sources of water
existed. Id, This court again found the Conmission’s analysis

deficient:

tn the instant case, the Mater Commission entered no FOF# oF CoLs
a5 to whether Canpoell Estate met ite burden. Instead, the Water
Geenieaion found, based on the testimony of Bert Hatten (Hatton),
S'conpell Estate witness, that “ontil che Supreme Court issued
ics decision in August 2000, Campbell Estate was assured of
Welahole Ditch water, so they did not conduct s systematic study
Ghalternative water sources. During the past € months, there

 

 

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sn some informal and very genersi discussions about

igs if Diten water were no longer available.” D
Informal” and “very general discussions” are
Gnautticient to satiety Campbell Estate’ burden.

 

   

 

Id. We subsequently opined that “(t]he Water Commission’ s

 

analysis should have ceased when Campbell Estate failed to meet
its burden of establishing that no practicable alternative water
sources existed.” Id, We thus concluded that, “inasmuch as the
Water Commission entered no FOFs or COLs as to whether Campbell
Estate satisfied its burden of establishing that no practicable
alternatives existed, we renand the matter for further
proceedings relating thereto.” Id. at 17, 93 P.3d at 659.

Here, the Commission entered no FOFs or COLs as to the
existence or feasibility of any alternative sources of water
whatsoever, The Commission has thus failed to hold KMI to its
burden of denonstrating the absence of feasible alternative
sources of water. See Waiahole I, 94 Hawai'i at 161-62, 9 P.3d
at 473-74 ("Furthermore, besides advocating the social and

 

economic utility of their proposed uses, permit applicants must
also denonstrate the absence of practicable mitigating measures,
including the use of alternative water sources.”). "Such a
requirenent 42 intrinsic to the public trust, the statutory
instream use protection schene, and the definition of
‘reasonable-beneficial’ use, . . . and is an essential part of
any balancing between competing interests... ." Id. (footnote
and citations omitted).

Indeed, the Commission appears to have reserved
consideration of feasible alternative sources of water until

after the permit has been granted. In its decision and order,

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FOR PUBLICATION IN WEST'S HAWAI REPORTS AND PACIFIC REPORTER,
the Commission included, as a condition to the granting of KNI's
permits, the following contingency: “Within twenty-four months

of the date of issuance of the aforementioned permits, HMI will

prepare and present to the Commission = feasibility study on the
development of a new source of nonpotable water near Mahan which
can be blended to irrigate the golf course.” Such a practice is
fundamentally at odds with the Commission's public trust duties.

the feasibility of a new source of nonpotable water (1

 

alternative source of water) should have been considered prior to
the granting of KMI‘s permit, not after the fact. The Commission
cannot fairly balance conpeting interests in @ scarce public
trust resource if it renders its decision prior to evaluating the
availability of alternative sources of water. ‘Thus, KMI's
failure to demonstrate the absence of practicable alternatives
should have terminated the inguizy. See, g.ae, Waiahole Ii, 105
Hawai'i at 16, 93 P.3d at 658 (“The Water Commission's analysis
should have ceased when (the applicant} failed to meet its burden
of establishing that no practicable alternative water sources
existed.”)

For the foregoing reasons, we conclude that the
Commission has failed in its public trust duty to hold HMI to its
burden of denonstrating the absence of other practicable
alternatives. The Conmission has thereby failed to establish an
adequate basis for the amount of water allocated to KMI.

4. the Safe Mater Drinking Act

DHHL avers that the Conmission rejected, without
explanation, uncontroverted evidence that KMI was in violation of

the Safe Drinking Water Act ("SDWA”), codified as HRS chapter

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3408.
KNI initially responded that DNL waived the argument
inasmuch as the SOWA was not raised when the Commission and the
parties determined the issues for the proceedings below.
However, KMI only refers this court to a minute order in the
record stating that the parties were limited to the following

matters:

1. bo the existing and proposed uses of mater meet the
criteria for the issuance of « water use permit av provides in
Haw, Rev. Stat. §§ 174C=49(a) and 174C-S0(0) 7

 

2, Are the existing and proposed uses. reasoneble:
beneficial uses as defines in Haw: Rev. Stat. § 114C-3, and
sllowble under the coanon law of the State?

 

Are the existing and proposed uses consistent with the
public interest, including but not limited te, the statement of
policy objectives declared to be in the public interest as set
Forth in flaw, Rev. stat. § 174C-2(c}. Without limiting any other
factual public inerest issues that the parties deen relevant ae
the time, the parties shall address the quantified effect, if eny,
fof the well pumping ef ground water on stream flow and nearehore

 

4. Are the exteting and proposed uses allowable under the
common iaw of the State. mithout limiting any other relevant
factual issues that could be present hereunder, the parties shall
\Sdress whether any party has any appurtenant or riparian right
Under Haw. Rev, Stats § 174C-101, oF any ceher right to water that
is equal to or has priority over’ the exieting and proposed uses of
water by Applicants: the parties shall quantify the amount of
water they axe claiming.

   

 

 

 

 

5. In the event the above-referenced water use
application is not denied, the conditions, if any, that should be
imposed on the Applicants’ water permit for the existing and
Proposed water uses.

To the extent that DHEL argues that violations of the SDWA are
relevant to the question whether the requested existing and
proposed uses are reasonable-beneficial, see discussion infra,
the SDWA violations are fairly subsumed within the second issue

expressed by the Commission above, and the argument has not been

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waived.

HMI additionally asserts that any violations of the
SOWA were irrelevant insofar as (1) full compliance with the SOWA
is not @ prerequisite to obtaining a water use permit under the
Code, (2) the specific violation referred to by DHHL is with
respect to the treatment facility and does not compromise the
quality of water produced by that treatment facility, and (3)
factual evidence of compliance with state and federal regulations
was presented before the Commission. The record indicates that
the Department of Health (“DOH”) filed a "Notice and Finding of
Violation” against KMI, dated August 18, 1993. The DOH found, in
relevant part, that “[KMI] ha(d) been using the Kaluakoi water
system to supply water to the public, after June 29, 1993,
without £Litration that meets the criteria of HAR § 11-20-46(c)
or the Surface Water Treatment Rule ("SWTR”) Administrative
Nanual, as required by HAR § 11-20-46(a) (4).” DHHL submitted
proposed findings of fact describing the foregoing violation,
but the Commission, in its Decision and Order, rejected then
without explanation.

Despite evidence in the record that KMI failed to
comply with the SDWA, we hold that neither the Code nor the
public trust preclude the Commission from allocating water to KM
for the purpose of supplying water to domestic end users from a
delivery system that may not comply with the provisions of the
SOWA. It is clear that this jurisdiction separately regulates
water allocation, sae HRS chapter 174C, and drinking water
standards, see HRS chapter 340E. The Code and the SOWA do not

reference each other, and we can discern no legislative intent to

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make water use permit applications subject to compliance with the
SOWA, See Great Basin Mine Watch v. Hankins, 456 F.3d 955, 964
(9th Cir, 2006) (rejecting the argument that granting a permit to
mine gold violated the water quality provisions of Nevada’s Clean
Water Act, in pertinent part, because “Nevada does not regulate
water withdrawal in the same [statutory] regime as water quality

Although DHHL asserts that the distribution of

 

potentially unsafe water to donestic users is neither reasonable,
beneficial, nor in the public interest, the public interest is
adequately protected by the enforcenent provisions of HRS chapter
340E. See HRS § 3408-8 (Supp. 1995) (authorizing civil and
criminal penalties). Violations of the SOWA are simply not
germane to a review of the propriety of water allocations under
the Code and the public trust

3. The Commission appears to have placed the burden of

 

root ‘chat pumpa: KMI"s wi
would increase the chloride concentration at the OHil.
uel] site.

DHHL also asserts that the Commission erred by placing
the burden of proof on DHHL to produce conclusive evidence of
harm to public trust resources. HHL specifically challenges the
Commission's COL #51, which states as follows:

Finally, DMML asserte that continuing the existing and permitting
the proposed uses would make st inpossible for Dail te ueilize see
fulll allocation in Rualapwo by increasing the chloride

Concentration levels. There was no conclusive evidence presented

 

 

(Emphasis added.) DHHL also continues to assert that the
Commission has, by granting KMI existing and proposed uses,
precluded DHHL from making full use of its reservation. DHHL

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claims that the Commission
allowed powerful private interests to complete their rush-to-
Ronopolize Rualapou water before DUHL could utilize its own
Teservations Ané, with cruel irony, at the same tine it was
Allowing MH to export water for its distant golf course in the
Geserts the Conmission staff recommended denial of Dili” » request
fo°bse' ite reserved water within the boundaries of the aquifer on
Concerns over the vitality of Hualapu's.

(Emphases omitted.)
The Commission, on the other hand, argues that it
correctly required KMI to justify its existing and proposed uses.
With respect to KMI’s existing uses, the Commission refers this
court to its COL #15, which states as follows: “Based on the
evidence presented, the Commission concludes that accountable
existing uses of water from Well 17 remain the same and the
allocation herein is reasonable and beneficial and allowable
under the common law.” As to KMI's proposed uses, the Commission

refers to its COLs Nos. 16, 17 and 18:

16. Section 174C-49(2), RS, places the burden on an applicant
fo establish that the proposed water uses meet all the
following seven criteria:

 

 

 

2. Can be accommodated with the available water source:

D. 1g a reasonable-beneficial use as defined in section
1040-3;

fc. WALL not interfere with any existing legal use of

d, Ts consistent with the public interest:

2, Is consistent with state and county generel plans and

Lend ‘use designations:

 

£, Te consiatent with county land use plans and polici
ana
4g. WALL not interfere with the rights of the department

Of Hawaiian hone lands as provided in section 221 of
the Hawaiian Homes Commission Act.

27, The applicant’ burden of proof is by @ preponderance of the
evicence. Section S1710(5), HRS.

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18. Based on the evidence presented, the Comission concludes,
for the reasons set forth below, that the water se permit
application for proposed uses, "as amended by this decision
and order, meets all the conditions in sections 14C"43(a),
RS, “by 8’ preponderance of the evidence

 

 

 

KMI additionally contends that the evidence in the
record suggests that increased chloride concentration in the D#iL
wells was caused by pumpage in the nearby Das well, and that the
impact of pumpage in KMI’s well on the DHHL wells was unknown:

in this case, the two existing DHAL wells, the DNS well, and
Applicant's well are all within one-half nile of each othe:
P"naeed thereon, it as found that an opconing effect. reaulted
4s "well punpage was concentrated around the tvo OWiL wells and the
bus"well' and that chiorige levels in these wells were sensitive to
Panpage rates. tio finding wae made that Well 17 was similarly
Sffected by increased well puspage.

 

      

We agree with DHKL that the Commission's COL #S1 is
cause for concern. Although the Commission found that the
increase in chloride concentration at the DHKL well site is, in
large part, caused by punpage in the nearby DWS well, it is
undisputed that KMI’s well is also in close proximity to the DAHL
and DWS wells and its impact on the DAHL wells is unknown. Under
these circumstances, rejecting DHHL's argument by simply stating
that “[t]here was no conclusive evidence presented that the
se the chloride

 

proposed punpage in Well 17 alone would iner
concentration to unacceptable levels at the DAHL wells,” gives
the impression that the Conmission improperly placed the burden
of proof on DEEL.

Wie do, however, recognize the Commission’ s predicament
when inconclusive allegations raise a specter of harm that cannot
be dispatched by readily available evidence. We note that in
such situations, the public trust doctrine does not handcuff the

Commission. Under the Code and the public trust, it is the

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applicant's burden to demonstrate that the use requested is
“reasonable-beneficial,” meaning “the use of water in such
quantity as is necessary for economic and efficient utilization,
for a purpose, and in a manner which is both reasonable and
consistent with the state and county land use plans and the
public interest.” HRS § 174C-3. Hence, to the extent that harm
to a public trust purpose (i.@,, the DHHL’s reservation) is
alleged, the permit applicant must demonstrate that there is, in
fact, no harm, or that any potential harm does not rise to a
level that would preclude a finding that the requested use is
nevertheless reasonable-beneficial. To that end, although the
present matter involves an allegation of harm that is not readily
ascertainable, the Conmission may nevertheless permit existing
and proposed diversions of water if KMI can demonstrate that such
diversions are reasonable-beneficial notwithstanding the

potential increase in chloride concentration at the DHHL well

 

site.
It may well be that the Commission believed that KMI’s
existing and proposed uses were reasonable-beneficial in spite of
the potential increase in chloride concentration at the DHHL
Wells, but the Commission did not say as much and merely
responded to DHHL’s concerns by pointing to a lack of “conclusive
evidence.” Therefore, we hold that the Commission should be
given the opportunity to clarify COL #51 on remand.
‘The Commission's decision did not violate the
precautionary principle.
DHHL next asserts that the Commission violated the
precautionary principle described by this court in Waiahole 1.

 

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DHL argues that the Conmission’s decision to grant KMI's permit
and reserve jurisdiction to amend it in the event of unexpected
and significant adverse impacts on DHiL’s wells “flies in the
face” of the foregoing principle. DHHL highlights the following
special condition imposed by the Conmission’s Decision and Order:

C. Because the sustainable yield of the Kuslapu'y Aquifer
system is close to full allocation, the issuance of both
permits ie subject to the following special conditions

1. If there are significent or unexpected increas
Chlorides ar drawdowne in the two OHML wells,
ell, oF MMI’s Well 1, substantially in
What’ they were on the effective date of designation,
Sny party may petition the Comission, oF
Conniasisn may on ite on motion, orders
bearing se fo why the peraitted snounts of withdrawal
of water should no be reduced along with lawful ang
equitable reductions in pumpage from other wells sn
‘the Rualapu'y Aquifer.

In Waiahole I, this court endorsed the Commission's

application of precautionary principles in recognition of the

   

   

   

lack of scientific certainty in the allocation of instream flows.
The Commission stated that, “where there are present or potential
threats of serious damage, lack of full scientific certainty
should not be a basis for postponing effective measures to
prevent environmental degradation.” 94 Hawai'i at 154, 9 P.3d at
466. We agreed with the Commission, confirming that, “at
minimum, the absence of firm scientific proof should not tie the
Commission's hands in adopting reasonable measures designed to
further the public interest.” Id, at 155, 9 P.3d at 467.

Here, the scientific uncertainty raised by DHAL is

whether the 5.0 mgd sustainable yield calculation for the

 

Kualapu'u Aquifer is accurate. However, as previously mentioned,

@ permit application proceeding is an inappropriate forum for

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reevaluating the sustainable yield calculation. Hence, it
would be inappropriate for this court, in an appeal of = permit
application proceeding, to nullity a sustainable yield
calculation.

Waiahole I, as applied to the case at bar, instructs
the Commission to faithfully apply the sustainable yield

 

determination. 94 Hawai'l at 148-49, 9 P.3d at 460-61. Having

Gone so, the Commission did not simply ignore DHHL’s concerns
that the sustainable yield figure does not account for localized
upconing and drawdown effects. Rather, the Commission further
reserved jurisdiction to modify KMI’s permits in the event of
“significant or unexpected increases in chlorides or drawdowns in
the two DHHL wells, the DWS well, or KMI’s Well 17, substantially
in excess of what they were on the effective date of
designation.” Under the circumstances presented, the
Conmission’s methodology constitutes a faithful application of
the sustainable yield figure and includes reasonable
precautionary measures. We have said that

the Commission may make reasonable precautionary presumptions or
allowances in the public interest. The Commission may still act
nen public benefits and risks are not capable of exact
Guantification. At all tines, however, the Comission should not
Ride benina scientific uncertainty, but should confront it a3
Systematically and judiciossly a8 poseible--considering every
CListream ose sn view cf the Cumlstive povential harm to instream
es ond values” and the need for neaningfui stedles of stream flow
Feguizenents, ss.

‘evs practical matter, the Commission may decide that the
foregoing balance supports postponing certain uses, or holding
then'co's higher stanoard of proof, pending nore conclusive
evidence of instream flow requirenents. Even if it
Etntatively decides to allow certain offeirean uses to proce

 

 

 

     

 

' pil may challenge the sustaineble yield in an appropriaty

independent proceeding, and the Comission’s ruling may give rise to an
appeal. However, a8 i¢ stands, that issue is not before this court

 

 

33
 

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the Conmissicn may still subject the uses to permit conditions
Gesigned to protect the public interest, Saa"ane § 194e-310)
Atte very legek. the Comission should, asvit did in this case,
Ssluitlon beraite ae aa te contise ite const Teutional and
5 Sahar
inter determine that present insisean floes ars inadequate.

Ids at 159-60, 9 P.3d at 471-72 (emphasis added); cf. Wai‘ola,

103 Hawai'i at 444, 83 P.3d at 707 ("(T]he Commission did not

 

abuse its discretion in imposing a well monitoring system as 2
condition to granting MR-Wai'ola a water use permit in the
present matter and utilizing the Kakalahale well for such

purpose.”) -
5. The Comission erred by considering an untimely
application.

DHHL next argues that the Commission violated HRS
§ 174C-80(c) by considering an untimely existing use application.
HRS § 174C-50(c) provides as follows:

An application for a permit to continue an existing use must be
ade within a period Of one year from the effective date of
Gesignation [of the water management Except for
Sppurtenent rights, failure to apply withia this period creates a
presumption of abandonment of the use, and the user, if the User
Sesizea to revive the use, must apply’ for a permit under section
$Vie-si. “z4°the conméssicn determines that there 42 just cause
for the failure to file, it may allow a late filing, Nowever, the
Conmissicn may not allow 2 late filing more than five years after
the effective date of rules implementing this chapter

 

   

 

   

 

 

DHHL contends that the Water Commission designated the island of
Moloka'i as a water management area effective July 15, 1992, and
that existing use permit applications were due by July 15, 1999.
DilHL concludes that KMI’s application, filed on Decenber 15,
1993, could not be considered as an existing use application
inasmuch as (1) the application was not a legitimate amendment to
an earlier timely application, and (2) the untimely application
the just cause

 

could not be excused for just cause becau:

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exception ceased to be available on May 27, 1993."

WOT and the Commission do not contest DHAL's assertion
that late filing was statutorily precluded after May 27, 1993.
Rather, they contend that the December 15, 1993 application was
an anendnent to an earlier application filed by Moloka'i Ranch,
Kaluakoi Moloks'i, and Moloka'i Irgigation System on June 8, 1993.

A similar situation was presented in Waiahole I.
Therein, the Commission granted Pu'u Makakilo, Inc. ("PMI") a .75
ngd water use permit. Id. at 165, 9 P.3d at 477. In doing so,
the Commission treated PMI’s requested uses as “new,” rather than
“existing,” apparently because PMI’s application to continue
existing uses was not timely filed. id, The Conmission
designated the windward aquifers as ground water managenent areas
effective July 15, 1992. Id, at 166, 9 P.3d at 478. On dune 3,
1993, Waiahole Irrigation Company ("WIC"), the former operator of
the Waiahole ditch, filed a joint use permit application that did
not mention PMI. Id. On June 14, 1994, WIC filed an amended
joint use permit application that referred to PMI in attached
exhibits but did not designate PMI as an applicant. Id, PMI was
not named as an applicant until a subsequent amendment was filed

on October 24, 1994, Id, None of the applications characterized

 

SpBiL, zelies on Haiahole I for ste conclusion that late filings
could not be accommodated after May 27, 1993, Indeed, we stated as follows:

 

HRS § 174C-50(c) allows, the Commission to accept late
flings based on “just cause,” but precludes the Comission from
accepting ipplications more than five years after the
effective date of rules inplenenting this chapter.” The
Conmission promulgates the rules inplenenting the Code

1988 and, thus, could not accept any late applications
2, 1383.

   

 

n tay 27,
cer May"

 

9 Hawai's at 166, 9 P.3d at 478

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PMI's requested uses as “existing.” Id. Although PMI asserted

 

that it did not acquize title to the property in question until
Novenber 21, 1994, and that the initial failure to identity PMI
as an applicant was an “oversight,” this court stated that
“[those) exigencies [did] not compel the Commission to ignore the
express statutory deadline for existing use permit applications.”
Ide

In the case at bar, the Commission should have strictly
applied the statutory deadline for existing use permit
applications as it did in Wajahole I. Here, Moloka'i was
designated a water management area effective July 15, 1992.
Pursuant to HRS § 174C-50(c), existing use applications were due
by July 1, 1993. On June &, 1993, a timely application was

filed requesting permission to withdraw ten percent of the total

 

pumpage fron Well #17. The application identified Moloka'i Ranch
as the landowner, and Kaluakoi Moloka'i and Moloka'i Irrigation
System were identified as the applicants. KMI was not mentioned.
WT obtained title to the land overlying Well #17 on October 19,
1993. HHT then submitted its own application on December 15,
1993, The application identified KMI as the landowner and sole
applicant, We hold that these circumstances are sufficiently
analogous to the facts presented in Waiahole I, such that
Waiahole I's strict application of the statutory deadline
controls. In Waiahole I, despite the fact that the timely filed
application was eventually amended to incorporate PMI’s requested
uses, this court approved the Conmission’s conclusion that PMI’s
application for existing uses was untimely. Consequently, even

assuming, arquendo, that KMI's application constituted a
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legitimate amendment of the timely application filed by Moloka's
Ranch, Kaluakei Moloka'i, and Moloks'i Irrigation System, Waiahole
I denonstrates that such an amendment will not preserve a party's
existing uses if that party is not identified as an applicant for
existing uses in the application filed within the statutory one-

year deadline.

In Light of the foregoing, DHHL is correct that the
Commission erred by considering KMI’s untimely request for
existing uses. Therefore, we vacate the Commission's Decision
and Order to the extent that it grants KMI a permit for existing
uses. If, on remand, KMI wishes to “revive” these expired uses,
ie must apply for a permit under HS § 174C-$1 as the uses are
now presumed abandoned. See HRS § 174C-50(c)

6. HOM requested both existing and new uses.

DIL also argues that despite checking the box for
“existing & new uses” in its application, KMI represented at the
contested case hearing that it was requesting only existing uses.
Based upon KMI's repeated representations at the hearing, DHHL
asserts that KMI waived any request for new uses. DHHL further
contends that the Comission expressly recognized in its Decision
and Order that KMI’s application was for existing uses, but went
ahead and granted a permit for proposed uses. DMHL avers that
the Commission thereby abused its discretion and violated
established practice, its own adninistrative rules, and
principles of procedural due process.

KNI and the Commission, on the other hand, claim that
fait’s application clearly indicated that the application was for

existing and new uses, inasmuch as the box labeled “existing &

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new uses” was checked.
Preliminarily, we note that the parties do not dispute
that the Commission has the authority to consider requests for
existing and new uses in the sane contested case hearing.
Indeed, HRS § 174C-51 (Supp. 1992) states that “[t]he Commission

in its discretion may allow a person to apply for several related

 

withdrawals in the same application for a water permit.

 

Rather, DHHL focuses on (1) the allegedly inconsistent
representation of KMI’s vice president, Ben Neeley ("Neeley"),
and (2) the Conmission's statement, in COL #7, that KMI’s request
was for existing uses.

With respect to its first subargunent, DHL refers this
court to a transcript of proceedings held on November 24, 1998,
wherein Neeley stated that KMI's application was only for
existing uses in the amount of 1.244 mgd. However, Neeley’s
t for new

 

statement, fairly viewed, did not vaive KNI’s requ

uses. The transcript adequately reveals KMI’s position:

 

 

 

 

A The applicetion says 2 million gallons and we've changed it

2 0 you've changed the application?

A Welly what we're applying for is 1.25. That's the way it's
stated in the briefs and everything else.

e So T understand your testimony your application is for
i244 for uses identified on the exhibit in the anounte
Ldentstied on the exnibic, 2 that correct?

° =. Now, if your spplication is limited to uses and
Amounts on the exhibit, then at you said, any representation
for an application in excess of 1.244 isin error, is that
correct?

A Yes, we're applying for the 1.21

© So'uhen KUT applied for 2 million in ite initial application

of 2miiiion gallons per day, in ite amended application.
that was an error?

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[COUNSEL FOR 10H]: I object. Objection, Tt's
argumentative. Reasons are stated in the opening brief. I stand
By ay cbjection, Re have stated in our opening Drief quite simply

that you know, wevdon't agree that we don't have the right to-?
million as on existine use.

However, for purposes of this contested case hearing
in large part because we Unserstand that. puaping out more than
‘ehat our historical punpage would be is 2 problem given the
proxinity of the wells, we can’t punp more from that well

7 ‘ie understand that's a concern for the Kater
commission. “That for cur opening brief and for pursoses of this
contested case hearing we have Limited ourselves to requesting as

‘Snsxisting use the tance of 1283 to-Lez4d-- how often dot have

fo-say that?

HEARINGS OFFICER ADLER: I understand what your
application is for, I believe. And we know there have been many
Gifterent noving averages in the life of this application. You've.
cent ified what ie the water that vou sre seeking, You ack ther
be under an existing use. And 1-presune that inthe

 

 

 

 

Seige new use, Je that correct?
TeobwsEL FOR Rl]: I that’s the only way we're coing
jet it, eure, a 1

searecoing to say it's a new use.
(Emphases added.) Clearly, it was KMI’s position that it was
entitled to an allocation of 2.0 mgd of water for existing uses.
However, it acknowledged the Commission's concern regarding the
effects of pumpage from Well #17 on other wells in close
proximity, and voluntarily limited its request to 1.259 to 1.244
mgd of water. HMI consistently asserted that its request was for
existing uses, but it asked, in the alternative, that the
Commission award the requested uses as new uses if it could not
satisfactorily establish them as existing at the time of
designation.

Under these circumstances, we cannot say that Mr.
Neeley’s statements advocating KMI's primary position constituted
a voluntary or intentional abandonment of KMI’s alternative
position. See generally Enoka v. AIG Hawaii Ins, Co., Inc., 109
Hawad's $37, 585 n.18, 128 P.3d 850, 868 n.18 (2006); Fireman's
Fund Ins, Co, v. AIG Hawaii Ins, Cou, Inc, 109 Hawai'i 343, 354,

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126 P.34 386, 397 (2006).

[As mentioned, DHHL also contends that the Commission
expressly recognized that KMI's application was for existing
uses. DHHL specifically refers to the Commission’s COL 47, which
states that “[t}he application is for an Existing Use Permit
issued under section 174C-50(b), HRS.” DHHL argues that the
Commission nevertheless included a section entitled, “application
for Proposed Water Use Permit,” in which it evaluated KMI's
request for new uses under HRS § 174C~49(a). Contrary to DHHL's
assertions, however, the Commission's approach vas consistent
with the views it expressed in the aforequoted portion of the
transcript of proceedings. To wit, the Commission understood
KMI’s azgunent to be that (1) it was entitled to 1.244 to 1.259
ngd of water for uses existing at the time of the designation of
Molcks'i as a water management area, and (2) if it failed to
establish that all of the water requested was for existing uses,
then it desired an award of whatever remained as new uses.
Hence, it was not inconsistent for the Commission to recognize
that KMI requested existing uses in COL #7 and subsequently grant
new uses in accordance with KNI’s alternative argument.

For these reasons, the argunents presented by DHHL are
without merit.

7. Whether the Commission lacked authority to allocate
Se En
DRHL’s final point of error asserts that the Commission
lacked authority to allocate water to KMI for existing uses not

claimed in its application, DHHL essentially claims that KMI‘s

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failure to include certain other existing uses in its application
constituted an abandonment of those uses, and as such, the
Commission violated HRS § 174C-S0(c) when it allocated water to
these excess uses. As discussed, supra, because we vacate the
Commission's Decision and Order to the extent that it grants KMI
a permit for existing uses, and, upon remand, hold that KMI must
apply for a permit under HRS § 174C-51 to “revive” its expired
uses pursuant to HRS § 174C-50(c), resolution of this point of
error is unnecessary.

B.  OHA’s Remaining Points Of Error

1. 4c! water
from well #7.

OA asserts that the Commission erred when it concluded
that KNI had correlative rights to make reasonable use of the
water. The Commission, however, contends that this court
continues to recognize the correlative rights rule articulated in
City Mill Co. v. Honolulu Sewer and Water Commission, 30 Haw. 912
(Haw. Terr. 1929).

‘This court addressed the applicability of the common
law rules governing correlative rights in Wai‘ola, 103 Hawai'i at
447, 83 P.3d at 710. Therein, we determined that “[{]nasmuch as
the entire island of Moloka‘i has been designated a [water
management area], the conmon law doctrine of correlative rights
is inapplicable to the present matter.” Id. at 449, 83 P.3d at
711, Accordingly, the Commission erred when it relied on city
Mill for the proposition that “KMI has correlative rights to make
reasonable use of the water with due regard to the rights of

other co-owners in the sane waters and subject to regulation by

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the government.”
Instead, KMI's transport of water is contingent on its

satisfaction of the statutory requirements enumerated in HRS §

174c~49(c) (1993). See dda at 449, 83 P.3d at 712. HRS § 174C~

 

49(c) provide:
‘the conson lax of the State notwithstanding, the commission shail
Ground nacer beyond overlying lend of outside the wateruned fon
Ghich itis taken {tthe ceamlasion determines that such
Transportation and use are consistent with the public interest and
the general plana end Land ase policies of the State and countles-

In Mal'ola, this court determined that even though “the
Commission did not expressly invoke HRS § 174C-49(c) . . . [it]
nevertheless made the necessary findings in the context of
determining that MR-Wai‘ola’s application satisfied the
conditions prescribed by HRS $§ 174C-49(a) (4), (5), and (6)."
103 Hawai'i at 449, 83 P.3d at 712. Me stated that the
Conmission’s “favorabl{e] consider|ation] of the impact of the
proposed use on Molokai’s econony and natural environment” was
sufficient for the Commission to find that the “proposed use was
consistent with the public interest, as required by HRS § 174C~
49(ay (4) de

OHA contends that KMI did not prove that its
traneportation and use are consistent with the public interest
because it failed to demonstrate that its uses met the
requirenents of the Safe Drinking Water Act, as argued by DHHL.

 

HRS $5 174-432) (4), (5), and (6) recite the following
requirenente: "(a) To obtain a permit pursuant to this part, the applicant
Shall establish that the proposed use of water: . .. (é) i3’consistent with
the public interest) (5) Ia consistent with state and county general plane snd
[end'use designations; (6) I consistent with county land use plans ond
policies."

 

 

   

 

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However, as discussed, supra, the SDWA and the Code are two
@istinctly separate laws. Therefore, we cannot say that
satisfying the requirements of one also satisfies the
requirenents of the other.

As in Wai‘ola, the Commission in the instant case
considered the impact that KMI’s use would have on Molokai’s
economy and the environment. OHA does not contend that the
Commission’s findings in that regard are clearly erroneous.
Moreover, OHA does not contend that the Commission erred when it
found and concluded that KMI’s uses are consistent with state and
county general plans and land use designations, see HRS § 174C-
49(a) (5), as well as county land use plans and policies. See HRS
§ 174c~49(a) (6); Consistent with Wai‘ola, “the Commission’s FOF
with respect to HRS §§ 174C-49(a) (4), (5), and (6) establish the
findings as set forth in HRS § 174C-49(c), requisite to allowing”
KMI to transport and use water from Well #17, which overlies the
Kualapu'u Aquifier system. See Mai‘ola, 103 Hawai'i at 449, 63
P.3d at 712.

2 i
impact that the cli

would have on its allocation of water to KMI.

OHA and Caparida and Kuahuia contend that the
Commission erred when it refused to consider the impact that the
closing of HMI’s hotel and golf course would have on KMI’s water
use. They assert that a hotel and golf course that has been
closed for many months with no announced reopening date does not
present 2 reasonable-beneficial use under HRS $ 174C-49, and as
defined in HRS § 174¢-3.

a3
 

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OO

‘The Commission asserts that its decision to refuse to
consider the evidence was proper in that the contested case
hearing was held to determine KMI’s past water usage from the
date of July 15, 1992, rather than at the time of the hearing.
Both KI and the Commission urge that the Commission did not err
because HRS $§ 174C-58(4)" and 174C-50(e)* (1993) permit KMT
four years to fulfill its proposed uses before the Commission may
suspend or revoke a permit.

In Wai'cla, we agreed with the Commission that HRS §
174C-58(4) “constitutes an enforcement, rather than a planning,
tool.” Was'ola, 103 Hawai'i at 446, 83 P.3d at 709. Accordingly,

wwe interpret HRS § 174C-56(4) as an enforcement mechanism by

 

which the Commission may suspend or revoke a water use permit
upon knowledge that a permitted allocation of water, which the
Commission has expected to be used within a four-year time frane,
has not been utilized.” Id. (emphasis in original).

‘The Commission in the instant case authorized 871,420

Mung § 174-58(4) provides, in its entirety:

(4) fartial or total nonuse, for reasons other than
conservation, of the water allowed by the permit for a period of
four continuous years or more, The commission may permanently
evoke the permit as to the sfount of water not in use unless the
liner can prove that the User"s nonuse was doe to extreme hardship
Geused by! factors beyond the user's control.” The commission and
the permittee may enter into a written agreement that, for reasons
Satisfactory te the commission, any period of honuse may not apply
tGnarde the four-year revocation period. Any perieg of nonuse’
whieh is caused by a declaration of water shortage pursuant to
Section 174¢-62 shell not apply towards the four-year period of
forfeiture.

   

 

 

provides that "[tihe commission shall issue an
interim permit; provided that the existing use meets the conditions of
Subsection (b). Interim persits are subject to revocation under section
inacese.”

 

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gd to be allocated to KMI as an interim existing use. This
amount was based on the following “estimates of usage”: (1)
100,000 gd allocated to the hotel, and (2) 475,600 gd allocated
to the golf course.

In its final Decision and Order, the Commission issued
KUL a water use permit, authorizing it to “withdraw[] and [make]
reasonable-beneficial use of” 936,000 od from Well #17 as an
existing use pursuant to HRS § 174C-50, and 82,000 gd from the
same well as @ proposed use pursuant to HRS § 174C-49. Of the
936,000 gd authorized as an existing use, 64,000 gd was allocated
to the hotel, while 379,000 gd was allocated to the golf course.
Of the 82,000 od authorized as a proposed use, 3,000 gd was
allocated to the hotel, while 21,000 gd was allocated to the golf
course. We can discern no reasoning in the Commission’s findings
and conclusions to suggest that it took into consideration
whether and to what extent the closing of the hotel and golf
course had on its proposed use allocation decision. Indeed, the
Conmission’s position appears to be that it need not consider
this information because HRS § 174C-58(4) was “designed to
provide water use permittees with flexibility in managing their
operations.”

caparida and Kuahuia contend that HMI is required to
demonstrate whether and to what extent the closure of the hotel
and golf course has on its existing use application. However, as
discussed, supra, because we vacate the Commission’s Decision and
order to the extent that it grants HMI a permit for existing
uses, and, upon remand, hold that KMI must apply for a permit

under HRS § 174C-51 to “revive its expired uses, resolution of

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this issue is unnecessary.

OA contends that the Conmission’s and KMI’s reliance
on HRS § 174C-58(4) is misplaced, inasmuch as KMI has the burden
of establishing that its “proposed use” of water under HRS §
174¢-49 is a “reasonable-beneficial use” as defined in HRS §
174¢-3. To reiterate, HRS § 174C-3 defines a “reasonable~
beneficial use” as “the use of water in such a quantity as is
necessary for economic and efficient utilization, for a purpose,
‘and in @ manner which is both reasonable and consistent with the
state and county land use plans and the public interest.” OHA
emphasizes that the closure of the hotel and golf course does not
present a “purpose” that requires an allocation of water that is
wnecessary for economic and efficient utilization.”

This court has stated that “the Commission must not
relegate itself to the role of a mere ‘umpire passively calling
balls and strikes for adversaries appearing before it,’ but
instead must take the initiative in considering, protecting, and
advancing public rights in the resource at every stage of the
planning and decisionmaking process.” Waiahole II, 105 Hawai'i
at 16, 93 P.3d at 658 (quoting Waiahole I, 94 Hawai'i at 143, 9
P.3d at 455) (block format omitted). In this regard, the
commission must “prescribe @ higher level of scrutiny for private
commercial uses . . . . In practical terms, this means that the
burden ultimately lies with those seeking or approving such uses
to justify them in light of the purposes protected by the
[public] trust.” MNaiahole 7, 94 Hawai'i at 142, 9 P.3d at 454
(footnote, citations, and quotation marks omitted). Moreover,

‘the public trust compels the state duly to consider the cumulative

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impact of existing and pr
fo implement reasonable

josed diversions on trust purposes and
sures to mitigate this impact,

 

 

 

including Using alternative sources Yocum, the state may
Sompromise public richts in the resource sursuant only toa
Secision nage witha level of openness, diligence and foreeiant
Sommensurate with the hich priority these cients cOuand onder the

Tnws-of our-atate.
Haiahole I, 105 Hawai'i at 16, 93 P.3d at 658 (quoting Waiahole
I, 94 Hawai'i at 143, 9 P.3d at 455) (emphasis in original).

In this connection, we cannot say that the closure of
the hotel and golf course would have no impact on KMI’s proposed
uses in light of the Commission's findings and conclusions
pursuant to the “reasonable-beneficial use” standard as set forth
in HRS § 1740-49 and defined in HRS § 174C-3. Accordingly, the
Commission's and KMI’s reliance on HRS § 174C-58(4) is misplaced.
Because the Commission failed to consider whether and to what
extent the closure of the hotel and golf course would have on
kos proposed uses when it made its proposed use allocation
decision, we vacate the Conmission’s Decision and Order to the
extent that it grants KMI a permit for proposed uses, and remand
the matter for further proceedings.

3. QUAYS final point of error 1s disteaarded pursuant to

Seg SP lea oe er) ake Dacia ae CERT Ee

OHA asserts that Yvonne Y. Izu, Esq.'s “representation”
of the Commission in her capacity as a deputy attorney general

when the Commission was preparing its final Decision and ord

 

presented a conflict of interest, because her former client wa
in the process of purchasing the applicant in the instant case.
However, OHA fails to point, in either its points of error or

axgunent section of its opening brief, to where in the record it

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suggests that a conflict of interest occurred.

RAP Rule 28(b) (4) requires that

 

(elach point [of error] shall state: (i) the alleged error
connitted by the court or agency: (it) ahere in the record che
alleges error accursed; and (iii) where sn the Fecord the alzeged

Stror was cbjecred to or the manner in which the alleged error was
Brought to the attention of the court oF agency,

(Emphasis added.) HRAP Rule 28(b) (7) further requires that the
appellant’s opening brief shall contain “[t]he argument,
containing the contentions of the appellant on the points

presented and the reasons therefor, with citations to the

 

authorities, statutes and parte of the record relied on.”
(Emphasis added.)

Because OHA fails to indicate to where in the record
ite factual assertions are supported, this point of error is
disregarded. See HRAP Rule 28(b) (4) ("Points not presented in
accordance with this section will be disregarded, except that the
appellate court at its option, may notice a plain error not
presented."); HRAP Rule 26(b)(7) ("Points not argued may be
deemed waived.”); Sprague v. Cal. Pac. Bankers @ Ins. Ltd., 102
Hawai'i 189, 195, 74 P.3d 12, 18 (2003) (“It is within the
appellate court's discretion whether to recognize points not
presented in accordance with HRAP 28(b) (4).”)
©. Caparida’s and Kuahuia’s Remaining Points Of Error

fo WBS § 174C=' .

1

The Commission issued an interim water use permit to
WUT on March 14, 1995. As a preliminary issue, Caparida and
Kuahuia contend that HRS § 174C-50(g) applies and that the
Commission's December 19, 2001 decision and order constituted the

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aoaooo_l_oranaeesree eo

“£inal determination” as described in the statute." They assert
that because the “final determination” was made beyond the
mandated five-year time limit, the Commission was required to
evaluate KMI's existing use application as a proposed use under
HAS § 174C-49(a),"” rather than as an existing use under HRS §
174c-50(b) ."" However, KM and the Commission assert that the

HRS § 174C-50(g) Provides, in its entirety:

(g) Tf an interim permit is issued pending verification of the
dStual quantity of water being consumed under the existing se,
fine! eeteraination of that quantity shall be made within five
Yours of the filing of the application to continue the existing
User" Gh the final determination, the commission may increase oF
Teduce the snount initially granted the permittee.

HRS § 174C-49(a) provides, in its entirety:

(a) To obtain a permit pursuant to this part, the applicant shall
SSLaE1sSh thee" she proposed use of water:
(G) Gan be accommodated with the
(2) fsa reasonable-beneficial u
piroen
(2) Will not interfere with any existing legal use of watery
(2) Te consistent with the public interests
(3) 1s consistent with atate and county general plans and
land use Gesignetions:
(é) 1s consistent with county land use plans and policies;
and
(3) WiLL not interfere with the right
fowatian home lands as provided in
Heuaisan Homes Comission Act.

wvailable water source:
8 defined in section

  

 

of the department of
fetlon 221 of the

 

RS § 174C-50(B) provides, in its entirety:

(b) After publication aa provided in section 174c-52, the
comission shall issue 2 perait for the continuation of ¢ use in
Guistence on July 1, 1967; if the exiteria in subsection (a) are
Ret sng the existing use ie reasonable and beneficial.

Whether the existing Use ia a rearoneble-beneficial use and
is ellousble under the common law of the State shall be determined
by the commission after a hearing provided that the commission
Biy‘hexe such a determination without a nearing, if the quantity
fiwater applied for does not exceed an snount per month
ataslished by rule or if the quantity of water applied for
Skeeeds an andunt per month established by rule, but no objection
{o°the epplication ia filed by any person having standing to file
5h Gblection. dn determining whether an application does not

(Continued...)

 

 

 

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statute's absence of consequences for failing to comply with the
time requirement should be construed as requiring neither a
denial of KMI’s application, nor different statutory criteria to
be applied to the application after the five-year deadline.

As discussed, supra, because we vacate the Commission’ s
Decision and Order to the extent that it grants KMI a permit for
existing uses, and, upon remand, hold that KMI must apply for a
permit under HRS § 174C-51 to “revive” its expired uses,
resolution of this point of error is unnecessary:

2. ission i sibly shifted the burden of
‘proving harm from KMI to Caparida and Kuahuia.

rt that the Commission err

 

Caparida and Kuahuia as:

 

because it impermissibly shifted the burden of proving harm to
those claiming a right to exercise a traditional and customary
native Hawaiian practice. K¥I asserts that it satisfied its
burden of proof through the testimony of its expert witnesses.
The Commission entered, based on this testimony, the following
FOF No. 163:

Aetuning a1 other things being constant, if there is no increase

in the amount of water being punped by Well 17, there will be no

Gecrease in the amount of water that discharges into the marine

Guvironsent as # result of the continued punpage of Well 17 at

Status quo levels. Hence, there would be ne impact on the marine

environment a9 it now exists az a result of Hil'a continued
Bumpage of Well 17 s© status quo Levels.

 

   

 

Article XII, section 7 of the Hawai'i Constitution

provide:

 

The State reaffirms and shall protect all rights, customarily and
traditionally exereised for subsistence, coleursl and religicus

 

 

cont inued)
excead the snount per month established by rule, the comission
Shall consider an sverage of water use over the three-month period
Imediately preceding the filing of the application,

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Eutive fawolinne she inhabited. the Wewaiian Telands price to 177,
abject to the right of she State to regulate such rights.
The protection of traditional and customary native

Hawaiian rights is also provided for in the Code under HRS §§
174C-2(c) and 174¢-101(c) and (4) (1993)."" Additionally, this
court has upheld “the exercise of Native Hawaiian and traditional
and customary rights as a public trust purpose.” Majahole I, 94
Hawai'i at 137, 9 P.3d at 449 (citing Haw. Const. art. XII, $77
Public Access Shoreline Hawai'i v, County Planning Commission
(“PASH”), 79 Hawai'i 425, 903 P.2d 1246 (1995), cert. denied, 517
U.S. 1163 (1996); Kalipi v, Hawaiian Trust Co., 66 Haw. 1, 656
P.2d 745 (1982). Although “the state water resources trust

acknowledges that private use for economic development may

 

uns § 274c-2(e) provides, in its entirety!

(©) The state water code shall be Liberally interpreted to
obtain maximum beneficisl use of the waters of the Seate for
Porpones such as domestic uses, aquaculture uses, irrigation and
Sther agricultural uses, power development, and Connereial. and
Sndustrsal uses. However, adequate provision shell be made for
the protection of traditional and customary Hawaiian rights, the
protection and procreation of fish and wildlife, the maintenance
bf proper ecslogical balance and scenic vaes, public recreation,
public water supply, agriculture, and navigation. Such ebjectives
Ste deciared to be in the public interest.

 

 

 

 

 

 

HRS § 174C-101(c} and (a) provides, in its entirety

{c) Traditional and customary rights of ahupua's tenants who
are descendants of native Hawailans who inhabited the Hewal len
‘elands price to 1772 shail not be abridged or denies by this
chapter. Such traditional and custonary rights shall include, but
not be limited to, the cultivation of propogetion of tare on one’s
Own kuleana and the gathering of hihiwal, opse, copy, Lima,
thateh, ti leat, aho cord, ond medicinal plants for subsistence,
cultural, and religious purposes.

{a} The appurtenant water rights of kuleana and taro land
along with those traditional and customary rights assured in his
fection, shall not be dininished or extinguished by s failure to
apply for or to receive a perait under this chapter.

 

 

   

  

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produce important public benefits and that such benefits must
figure into any balancing of competing interests in water, it
stops short of enbracing private conmercial use as a protected
trust purpose.” Id, at 138, 9 P.3d at 450. Therefore, to the
extent that “the public trust . . . establishes use consistent
with trust purposes as the norm or ‘default’ condition, . . . it
effectively prescribes a ‘higher level of scrutiny’ for private
commercial uses.” Id, at 142, 9 P.3d at 454 (footnote omitted).
In thie regard, “the burden ultimately lies with those seeking or
approving such uses to justify them in light of the purposes
protected by the trust.” Id.

The Commission found and concluded in its Decision and
order that “(t]he gathering of crab, fish, limu, and octopus are
traditional and customary practices that have persisted on
Moloka‘i for generations.” The population of the island of
Moloka'i consists primarily of Hawaiians, many of whom “rely on
the natural resources of the land and ocean{]” for such
“subsistence activities” that include “gathering of marine
resources including fish, shellfish, ‘ula, he'e and lim to feed
their ‘ohana (extended fanily).”

The Commission also found and concluded that
groundwater is a source of nutrients for such plants as the limu,
and fresh water is a “necessary and integral part of the live

food pyramid” for certain fish species that feed on

 

phytoplankton. Additionally, there are springs located
throughout the shoreline that “create a nursery habitat of

indeterminate size.” However, the Commission concluded that it
“is impossible to determine what the precise effect will be if

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the freshwater is reduced by a certain amount, because you don’t
know which springs the reduction is going to affect{,]" and “it
is difficult to determine the exact percentage of freshwater
required to create and maintain a viable and healthy nursery
habitat.” Possibly, “(s]mall nursery habitats may spring up
wherever freshwater comes up fron the ground, and collectively
form a lazge nursery habitat.”

Caparida and Kuahuia contended before the Commission,
as they do here, that a reduction of marine life, if severe
enough, will diminish their ability to practice their traditional
and customary native Hawaiian gathering rights even if access is
not impaired by KMI’s proposed use. In response, however, the
Conmission merely observed that the “(potential adverse impacts
of the current level of ground water pumpage on the ground water
flux at the coastline in support of [the] natural habitat should
already be visible.” As such, the “[e]vidence does not show that
nearshore resources are in decline, that ground water flux has
changed over the course of historic pumpage, or that any such
change should be considered anything more than one of a number of
potentially causative factors if the biological resources do
indeed decline.” Indeed, in its COL #40, the Commission
concluded that

no evidence was presented that the use of water from Well 17 would
Sdversely affect the exercise of traditional and custonary native
Havelian rights. Nor does the Comission conclude that any
Gvidence was presented that the existing or proposed uses would
Ruversely affect any access to the shoreline or the nearshore
freas., fherefore, the Commission concludes that the allocation
Shit not in any way diminish access for traditional and custonary
Rative Heweitan practices in the project area, shoreline, oF

In Wai'ola, this court reviewed @ similar decision made

   

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by the Commission.” Therein, we held that “an applicant for a
water use permit bears the burden of establishing that the
proposed use will not interfere with any public trust purposes;
Likewise, the Commission is duty bound to hold an applicant to
its burden during a contested-case hearing.” 103 Hawai'i at 441,
83 P.3d at 704. This obligates the applicant

to demonstrate affirmatively that the proposed well would not

afsect ative Hawaiian’s rights: in other words, the absence of

‘that the proposed use would affect native Havailan’s
Fights sab ineutticient to ect the burden imposed upon (the

spplicent) by the public trust doctrine, the Hawai't Constitution,
sha the Code,

 

 

 

 

Ida at 442, 83 P.3d at 705 (emphases added and omitted). Through
the foregoing, we determined that the Commission's conclusion of
law ‘was unsupported by any clearly articulated FOF and
erroneously placed the burden on the Intervenors to establish
that the proposed use would abridge or deny their traditional and
customary gathering rights.” Id.

Similarly, the Commission’ s FOF #163 and COL #40 in the
instant case are insufficiently clear when read with its FOF #154
and #155, which found the following:

15¢, ‘Tere 2 9 statistical curve which these in fisheries refer

toa the maximum sustainable yield. This is a general
curve which could be used to show overall productivity for

 

specifically, in Mai‘ola, the Commission concluded in ite “COL No.

 

‘that no evidence was presented that the drilling of the well would
Affect the exercise of traditional and customary native Hawaiian
Lights. Nor does the Commission find that any evidence was
presented that the proposed use will affect any acces

‘shore areas. Therefore, the Commi.

        
  
 

 

 

Fights in the project area, shoreline, er nearshore
103 Hamas's at 442, 63 P.3¢ at 705.

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Fish, rather than a specific species of fish. The object is
fo stay Just below the curve so that the resource 4s
Continuowely being naturally replenishes. If you are below
The curve, Jou could increage the enount of freshwater being
taken our of tne aquifer, But if you are above (the) carve
oF the maxinum sustainable yield, the result will be a
Change in the habitat. the difficulty is determining where
ne is on the curve, One way to determine this io
onitoring. A decrease of abundance wil signal @ change of

 

 

 

habitat.
ass.
Eithout negative effects Could pe batt
Baseline information does not currently exist.
(Emphasis added.) Furthermore, the Commission's conclusion that

‘no evidence was presented” to suggest that the rights of native
Hawaiians would be adversely affected erroneously shifted the
burden of proof to Caparida and Kuahuia. See Wai'ola, 103 Hawai'i
at 442, 83 P.3¢ at 705. Accordingly, we hold that the Commission
failed to adhere to the proper burden of proof standard to
maintain the protection of native Hawaiians’ traditional and
customary gathering rights in discharging its public trust

obligation. See id, at 443, 83 P.3d at 706.

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IV. CONCLUSION
Based upon the foregoing analysis, we vacate the
Comnission’s final decision and order filed on December 19, 2001,

and remand for further proceedings consistent with this opinion.

on the briefs:

Jon M. Van Dyke, for Intervenor~
Appellant Office of Hawaiian

aeeairs

Clayton Lee Crowell, Deputy Rie harem

Attorney General, for Intervenor-

Appellant Department of Hawaiian 8
Home Lands le Or ouatenyare~

Haia, III of Native Hawaiian ASE S

Appellants Judy L. Caparida and
Georgina Kuahuia

 

Jean Polhamus Creadick, Deputy
Attorney General, for Appellee
Commission on Water Resource
Management

Alan M. Oshima, Randall K.
Ishkawa and Scott 7. Miyasato
of Oshima Chun Fong & Chung,
LLP for Applicant-Appellee
Kaluakoi Land, LLC

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