Opinion ID: 6493113
Heading Depth: 3
Heading Rank: 4

Heading: The Commission Erred In Its Treatment Of Some Of The Diverters’ System Losses.

Text: Hui/MTF also argues that the Commission erred in failing to hold HC & S and WWC to their burdens of proof regarding losses. Hui/MTF contends that diverting parties bear a burden of justifying losses and adopting practicable mitigation. WWC argues that there is no burden of proof on diverting parties in an IIFS proceeding; WWC also notes that “[n]othing within HRS § 174C-71(2) mandates that the Commission consider or not consider system losses. Likewise nothing within the public trust doctrine mandates that the Commission consider or not consider system losses.” HC & S responds that “some system loss, such as evaporation from open ditches and reservoirs, is unavoidable and not unreasonable,” and that the Commission’s determination of system losses is reasonable and not clearly erroneous. With regard to losses, the Commission found: 375. The great majority of WWC’s ditches are open and unlined. All of WWC’s reservoirs are unlined. 376. WWC did not address the feasibility of minimizing the losses from its system except to state that it “may ... in the future” have plans to line the unlined portions of their system. [...] 423. HC & S estimates that it loses 6-8 mgd through seepage from the Waiale reservoir, depending on the level of the reservoir. Seepage throughout the rest of the HC & S ditch and reservoir system is estimated to be 3-4 mgd. [ ... ] 425. HC & S acknowledges that “high density polyethylene lining could negate much of the seepage, not all of it” and that concrete lining “is obviously another option.” HC & S has no estimates of the cost to line Waiale Reservoir or the other reservoirs and ditches and has undertaken no engineering or financial analysis of what it would take to reduce the losses. The Commission concluded that WWC and HC & S have “not established the lack of practicable mitigating measures to address these losses.” The Commission then “as-sum[ed]” that “losses could be halved” by lining most of WWC’s reservoirs, and concluded that WWC’s reasonable losses are 2.0 mgd. The Commission also deemed HC & S’s reasonable losses to be 2.0 mgd, after estimating that HC & S could line the Waiale Reservoir to prevent 6-8 mgd, and, like WWC, could halve remaining losses. First, in considering these losses, it is necessary to recognize the magnitude of the losses. If the Commission’s estimates are correct and system losses run between 13-16 mgd 21 , then the minimal estimation of that loss is approximately twice the 6.84 mgd the Commission estimated for deliveries to all kuleana system users in Ná Wai ‘Ehá. The lowest estimation of losses, 13 mgd, is higher than the total volume that the final IIFS restore to the Waihe'e and Waiehu Streams. 22 Briefly stated, losses in the water system of Ná Wai ‘Ehá are massive. The Commission’s order that HC & S line the Waiale Reservoir to prevent a large portion of these losses is commendable and shows the “diligence” and “foresight” expected of the Commission in its management of the public trust. Second, WWC contends that the Commission, when setting an IIFS, does not have to consider system losses. The Commission does not respond to the argument in its answering brief, but the water code indicates that a diverter’s system losses may factor into the Commission’s estimations of nonin-stream uses when it sets an IIFS. The statute articulating the IIFS standards mandates that the Commission “weigh the importance of the present or potential instream values with the importance of the present or potential uses of water for noninstream purposes, including the economic impact of restricting such uses[J” HRS § 174C-71(2)(D). The plain meaning of the word “importance” requires the Commission to judge the value of a party’s noninstream use against the other present or potential uses. The value of diverting water, only to lose the water due to avoidable or unreasonable circumstances is unlikely to outweigh the value of retaining the water for instream uses. Therefore, the Commission did not err in considering losses. However, it appears that the Commission erred in its articulation of the burden of proof regarding losses. The Commission’s FOF/COL D & 0 twice cites Waiahole I and Waiahole II for authority that “[o]ffstream users have the burden to prove that any system losses are reasonable-beneficial by establishing the lack of practicable mitigation measures, including repairs, maintenance, and lining of ditches and reservoirs.” The Commission erred placing the burden of proof on the parties in the IIFS proceeding, as the authorities cited by the Commission apply in the context of a WUPA. In Waiahole I, the cited discussion of losses considered Waiahole Irrigation Company’s (“WIC”) request for 2.0 mgd to compensate for the losses of its ditch system. 94 Hawai'i at 118, 9 P.3d at 430. There, the Commission denied WIC’s request, but suggested that WIC could draw “non-regulated” surface water to cover the losses; on appeal, this court concluded that the Commission’s suggestion was erroneous for several reasons, and held that the Commission must consider the 2.0 mgd as a “‘use’ pursuant to the permitting process.” 94 Hawai'i at 118, 173, 9 P.3d at 430, 485. On remand, the Commission found that “Operational losses are a normal component of any water delivery system” and therefore issued a permit to WIC’s successor in interest, Agribusiness Development Corporation (“ADC”), to cover the losses. Wa iāhole II, 105 Hawai'i at 27, 93 P.3d at 669. When that decision returned to this court on further appeal, this court held that the Commission’s decision was incomplete because it did not include findings that ADC met its burden as a permit holder pursuant to HRS § 174C-49(a) 23 . Id. This burden is articulated in the WUPA statute, but is absent from the statutes governing IIFS. The Commission erred when it imposed a WUPA burden on the diverting parties in the IIFS CCH. As noted above, the burden in setting an IIFS is on the Commission to “protect instream values to the extent practicable.” Waiāhole II, 105 Hawai'i at 11, 93 P.3d at 653; HRS § 174C-71(2)(A). The court concludes that the Commission did not meet this burden when it “as-sum[ed]” that WWC’s and HC & S’s losses could be halved. As discussed above, the court has held that, due to the fact that the Commission must articulate an IIFS at an “early planning stage,” the Commission “need only reasonably estimate instream and offstream demands.” Waiāhole I, 94 Hawai'i at 155 n. 60, 9 P.3d at 467 n. 60. Though reasonable estimates are permitted at this stage, the Commission did not provide any analysis on how it reached that figure to show that it had “reasonably estimate[d]” that half of the losses could be eliminated. In choosing a number that appears to be arbitrary, the Commission could have significantly over- or underestimated the potential for mitigation of losses in HC & S’s and WWC’s water systems. On remand, the Commission must “reasonably estimate” losses, mindful of its duty to “protect instream values to the extent practicable.”