Opinion ID: 2519241
Heading Depth: 4
Heading Rank: 4

Heading: The Safe Water Drinking Act

Text: DHHL avers that the Commission rejected, without explanation, uncontroverted evidence that KMI was in violation of the Safe Drinking Water Act (SDWA), codified as HRS chapter 340E. KMI initially responded that DHHL waived the argument inasmuch as the SDWA 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. Do the existing and proposed uses of water meet the criteria for the issuance of a water use permit as provided in Haw. Rev.Stat. §§ 174C-49(a) and 174C-50(b)? 2. Are the existing and proposed uses reasonable-beneficial uses as defined in Haw.Rev.Stat. § 174C-3, and allowable under the common law of the State? . . . . 3. Are the existing and proposed uses consistent with the public interest, including but not limited to, the statement of policy objectives declared to be in the public interest as set forth in Haw.Rev.Stat. § 174C-2(c). Without limiting any other factual public interest issues that the parties deem relevant at the time, the parties shall address the quantified effect, if any, of the well pumping of ground water on stream flow and nearshore ocean resources. 4. Are the existing and proposed uses allowable under the common law of the State. Without limiting any other relevant factual issues that could be present hereunder, the parties shall address whether any party has any appurtenant or riparian right under Haw.Rev.Stat. § 174C-101, or any other right to water that is equal to or has priority over the existing and proposed uses of water by Applicants. The parties shall quantify the amount of water they are 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 DHHL 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 waived. KMI additionally asserts that any violations of the SDWA were irrelevant insofar as (1) full compliance with the SDWA is not a 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 filtration that meets the criteria of HAR § 11-20-46(c) or the Surface Water Treatment Rule (SWTR) Administrative Manual, 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 them 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 KMI for the purpose of supplying water to domestic end users from a delivery system that may not comply with the provisions of the SDWA. It is clear that this jurisdiction separately regulates water allocation, see HRS chapter 174C, and drinking water standards, see HRS chapter 340E. The Code and the SDWA do not reference each other, and we can discern no legislative intent to make water use permit applications subject to compliance with the SDWA. 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 domestic users is neither reasonable, beneficial, nor in the public interest, the public interest is adequately protected by the enforcement provisions of HRS chapter 340E. See HRS § 340E-8 (Supp.1995) (authorizing civil and criminal penalties). Violations of the SDWA 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 proof on DHHL to demonstrate that pumpage at KMI's well would increase the chloride concentration at the DHHL well 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. DHHL specifically challenges the Commission's COL # 51, which states as follows: Finally, DHHL asserts that continuing the existing and permitting the proposed uses would make it impossible for DHHL to utilize its full allocation in Kualapuu by increasing the chloride concentration levels. There was no conclusive evidence presented that the proposed pumpage in Well 17 alone would increase the chloride concentration to unacceptable levels at the DHHL wells. (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 claims that the Commission allowed powerful private interests to complete their rush-to-monopolize Kualapu`u water before DHHL could utilize its own reservation. And, with cruel irony, at the same time it was allowing KMI to export water for its distant golf course in the desert, the Commission staff recommended denial of DHHL's request to use its reserved water within the boundaries of the aquifer on concerns over the vitality of Kualapu`u. (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(a), HRS, places the burden on an applicant to establish that the proposed water uses meet all the following seven criteria: a. Can be accommodated with the available water source; b. Is a reasonable-beneficial use as defined in section 174C-3; c. Will not interfere with any existing legal use of water; d. Is consistent with the public interest; e. Is consistent with state and county general plans and land use designations; f. Is consistent with county land use plans and policies; and g. Will not interfere with the rights of the department of Hawaiian home lands as provided in section 221 of the Hawaiian Homes Commission Act. 17. The applicant's burden of proof is by a preponderance of the evidence. Section 91-10(5), HRS. 18. Based on the evidence presented, the Commission concludes, for the reasons set forth below, that the water use permit application for proposed uses, as amended by this decision and order, meets all the conditions in sections 14C-49(a), HRS, by a preponderance of the evidence. KMI additionally contends that the evidence in the record suggests that increased chloride concentration in the DHHL wells was caused by pumpage in the nearby DWS well, and that the impact of pumpage in KMI's well on the DHHL wells was unknown: In this case, the two existing DHHL wells, the DWS well, and Applicant's well are all within one-half mile of each other. . . . . Based thereon, it was found that an upconing effect resulted as well pumpage was concentrated around the two DHHL wells and the DWS well and that chloride levels in these wells were sensitive to pumpage rates. No finding was made that Well 17 was similarly affected by increased well pumpage. We agree with DHHL that the Commission's COL # 51 is cause for concern. Although the Commission found that the increase in chloride concentration at the DHHL well site is, in large part, caused by pumpage in the nearby DWS well, it is undisputed that KMI's well is also in close proximity to the DHHL and DWS wells and its impact on the DHHL wells is unknown. Under these circumstances, rejecting DHHL's argument by simply stating that [t]here was no conclusive evidence presented that the proposed pumpage in Well 17 alone would increase the chloride concentration to unacceptable levels at the DHHL wells, gives the impression that the Commission improperly placed the burden of proof on DHHL. We 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 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.e., 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 Commission 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. 4. 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 I. DHHL argues that the Commission's decision to grant KMI's permit and reserve jurisdiction to amend it in the event of unexpected and significant adverse impacts on DHHL's wells flies in the face of the foregoing principle. DHHL highlights the following special condition imposed by the Commission's Decision and Order: C. Because the sustainable yield of the Kualapu`u Aquifer system is close to full allocation, the issuance of both permits is subject to the following special conditions: 1. If there are 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, any party may petition the Commission, or the Commission may on its own motion, order a show cause hearing as to why the permitted amounts of withdrawal of water should no be reduced along with lawful and equitable reductions in pumpage from other wells in the Kualapu`u 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 Hawaii 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 DHHL is whether the 5.0 mgd sustainable yield calculation for the Kualapu`u Aquifer is accurate. However, as previously mentioned, a permit application proceeding is an inappropriate forum for reevaluating the sustainable yield calculation. [11] Hence, it would be inappropriate for this court, in an appeal of a permit application proceeding, to nullify 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`i at 148-49, 9 P.3d at 460-61. Having done 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 Commission'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 when public benefits and risks are not capable of exact quantification. At all times, however, the Commission should not hide behind scientific uncertainty, but should confront it as systematically and judiciously as possibleconsidering every offstream use in view of the cumulative potential harm to instream uses and values and the need for meaningful studies of stream flow requirements. . . . . As a practical matter, the Commission may decide that the foregoing balance supports postponing certain uses, or holding them to a higher standard of proof, pending more conclusive evidence of instream flow requirements. . . . . Even if it tentatively decides to allow certain offstream uses to proceed, the Commission may still subject the uses to permit conditions designed to protect the public interest. See HRS § 174C-31(j). At the very least, the Commission should, as it did in this case, condition permits so as to confirm its constitutional and statutory authority to modify or revoke the permits should it later determine that present instream flows are inadequate. Id. 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 a condition to granting MR-Wai`ola a water use permit in the present matter and utilizing the K&amacr;kalahale well for such purpose.). 5. The Commission erred by considering an untimely application. DHHL next argues that the Commission violated HRS § 174C-50(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 made within a period of one year from the effective date of designation [of the water management area]. Except for appurtenant rights, failure to apply within this period creates a presumption of abandonment of the use, and the user, if the user desires to revive the use, must apply for a permit under section 174C-51. If the Commission determines that there is just cause for the failure to file, it may allow a late filing. However, the Commission may not allow a 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, 1993. DHHL concludes that KMI's application, filed on December 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 could not be excused for just cause because the just cause exception ceased to be available on May 27, 1993. [12] KMI and the Commission do not contest DHHL's assertion that late filing was statutorily precluded after May 27, 1993. Rather, they contend that the December 15, 1993 application was an amendment to an earlier application filed by Moloka`i Ranch, Kaluakoi Moloka`i, and Molokai Irrigation System on June 8, 1993. A similar situation was presented in Waiahole I. Therein, the Commission granted Pu`u Makakilo, Inc. (PMI) a .75 mgd 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 Commission designated the windward aquifers as ground water management areas effective July 15, 1992. Id. at 166, 9 P.3d at 478. On June 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 PMI's requested uses as existing. Id. Although PMI asserted that it did not acquire title to the property in question until November 21, 1994, and that the initial failure to identify 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. Id. In the case at bar, the Commission should have strictly applied the statutory deadline for existing use permit applications as it did in Waiahole 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 15, 1993. On June 8, 1993, a timely application was filed requesting permission to withdraw ten percent of the total pumpage from 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. KMI obtained title to the land overlying Well # 17 on October 19, 1993. KMI 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 Commission's conclusion that PMI's application for existing uses was untimely. Consequently, even assuming, arguendo, that KMI's application constituted a legitimate amendment of the timely application filed by Moloka`i Ranch, Kaluakoi Moloka`i, and Moloka`i Irrigation System, Waiahole I demonstrates 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, it must apply for a permit under HRS § 174C-51 as the uses are now presumed abandoned. See HRS § 174C-50(c). 6. KMI requested both existing and new uses. DHHL 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 Commission 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. DHHL avers that the Commission thereby abused its discretion and violated established practice, its own administrative rules, and principles of procedural due process. KMI and the Commission, on the other hand, claim that KMI's application clearly indicated that the application was for existing and new uses, inasmuch as the box labeled existing & 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 same 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 Commission's statement, in COL # 7, that KMI's request was for existing uses. With respect to its first subargument, DHHL 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 statement, fairly viewed, did not waive KMI's request for new uses. The transcript adequately reveals KMI's position: A The application says 2 million gallons and we've changed it. Q So you've changed the application? A Well, what we're applying for is 1.25. That's the way it's stated in the briefs and everything else. . . . . Q . . . So I understand your testimony your application is for 1.244 for uses identified on the exhibit in the amounts identified on the exhibit, is that correct? A Yes. . . . . Q. . . . Now, if your application is limited to uses and amounts on the exhibit, then as you said, any representation for an application in excess of 1.244 is in error, is that correct? A Yes, we're applying for the 1.244. Q So when KMI applied for 2 million in its initial application of 2 million gallons per day, in its amended application that was an error? [COUNSEL FOR KMI]: I object. Objection. It's argumentative. Reasons are stated in the opening brief. I stand by my objection. We have stated in our opening brief quite simply that, you know, we don't agree that we don't have the right to 2 million as an existing use. However, for purposes of this contested case hearing in large part because we understand that pumping out more than what our historical pumpage would be is a problem given the proximity of the wells, we can't pump more from that well. We understand that's a concern for the Water Commission. That for our opening brief and for purposes of this contested case hearing we have limited ourselves to requesting as an existing use the range of 1.259 to 1.244. How often do I have to say that? HEARINGS OFFICER ADLER: I understand what your application is for, I believe. And we know there have been many different moving averages in the life of this application. You've identified what is the water that you are seeking. You ask that it be under an existing use. And I presume that in the alternative if we don't make it as an existing use you're seeking it as a new use, is that correct? [COUNSEL FOR KMI]: If that's the only way we're going to get it, sure. We obviously haven't been denied simply because we are going 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. KMI 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 Hawai`i 537, 555 n. 18, 128 P.3d 850, 868 n. 18 (2006); Fireman's Fund Ins. Co. v. AIG Hawai`i Ins. Co., Inc., 109 Hawai`i 343, 354, 126 P.3d 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 # 7, 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 was consistent with the views it expressed in the aforequoted portion of the transcript of proceedings. To wit, the Commission understood KMI's argument to be that (1) it was entitled to 1.244 to 1.259 mgd of water for uses existing at the time of the designation of Moloka`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 KMI's alternative argument. For these reasons, the arguments presented by DHHL are without merit. 7. Whether the Commission lacked authority to allocate water to KMI for existing uses not claimed in its application need not be considered. DHHL'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 failure to include certain other existing uses in its application constituted an abandonment of those uses, and as such, the Commission violated HRS § 174C-50(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.