Opinion ID: 6494320
Heading Depth: 1
Heading Rank: 3

Heading: Due Process Under Article I, Section 5

Text: The notion that an individual must be accorded sufficient procedural safeguards before being deprived of a “property” interest is a cornerstone of Hawaii law. In Aguiar v. Hawaii Housing Authority, 55 Haw. 478, 522 P.2d 1255 (1974), this court explained that a claim of due process requires a two-step inquiry: “(1) is the particular interest which the claimant seeks to protect by a hearing ‘property’ within the meaning of the due process clauses of the federal and state constitutions, and (2) if the interest is ‘property,’ what specific procedures are required to protect it.” Id. at 495, 522 P.2d at 1266. In that case, the issue was “whether the plaintiffs’ interests] in continuing to receive the benefit of low cost housing and hence in not paying assertedly erroneous rent increases [are] substantial enough to require agency hearings prior to the imposition of the increases.” Id. at 495, 522 P.2d at 1267 (emphasis added). The court answered in the affirmative, reasoning that the plaintiffs’ interests in the statutory benefit of low-cost housing were so substantial that they constituted “ ‘property interest^]’ for due process purposes.” Id. at 496, 522 P.2d at 1267. In this light, the court held that (1) the plaintiffs were entitled to a hearing before the state agency could impose rent increases upon them, (2) the agency “must follow the adjudicatory procedures of the [Hawai‘i Administrative Procedure Act (HAPA) ] prior to increasing rents because of any plaintiffs alleged overincome status,” and (3) “[a]ny administrative burden [that following HAPA may] impose on the [agency] is more than offset by the substantial safeguards [it] afford[s] to low-income tenants against erroneous rent increases which may undermine those tenants’ very ability to survive.” Id. at 497-98, 522 P.2d at 1267-68. With the ratification of Article I, Section 5 of the Hawaii Constitution in 1978, due process principles were reaffirmed by the people of this State. As is relevant here, that provision declares that “[n]o person shall be deprived of life, liberty or property without due process of law.” Haw. Const, art. I, § 5 (emphasis added). This court later elaborated upon what constitutes a property interest in Sandy Beach Defense Fund v. City Council of Honolulu, 70 Haw. 361, 377, 773 P.2d 250, 260-61 (1989). In that case, the appellants challenged the issuance of a Special Management Area use permit without the agency first conducting a contested case hearing, reasoning that the procedure was violative of constitutional due process. Id. at 361, 773 P.2d at 253. This court explained that a due process claim must be grounded in a property interest. Id. at 377, 773 P.2d at 260-61. “To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.” Id. at 377, 773 P.2d at 260 (quoting Bd. of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972)). The Sandy Beach court explained that “[t]he basic elements of procedural due process of law require notice and an opportunity to be heard at a meaningful time and in a meaningful manner before governmental deprivation of a significant property interest.” Id. (emphasis added) (citing Mathews v. Eldridge, 424 U.S. 319, 333, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976); and N. Ga. Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 605-06, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975)). The court adopted the Mathews v. Eldridge framework in determining the precise procedures required to comply with constitutional due process. Id. According to the court, several factors must figure in the balancing process: “(1) the private interest which will be affected; (2) the risk of an erroneous deprivation of such interest toough the procedures actually used, and the probable value, if any, of additional or alternative procedural safeguards; and (3) the governmental interest, including the burden that additional procedural safeguards would entail.” Id. (citing Mathews, 424 U.S. at 335, 96 S.Ct. 893; and Silver v. Castle Mem’l Hosp., 53 Haw. 475, 484, 497 P.2d 564, 571 (1972)). In Pele Defense Fund v. Puna Geothermal Venture, 77 Hawai'i 64, 881 P.2d 1210 (1994), this court reaffirmed the principle that “[c]onstitutional due process protections mandate a hearing whenever the claimant seeks to protect a ‘property interest,’ in other words, a benefit to which the claimant is legitimately entitled.” Id. at 68, 881 P.2d at 1214. That ease involved an appeal from a State agency’s grant of an applicant’s permits to construct geothermal and developmental wells and a power plant. Id. at 66, 881 P.2d at 1212. This court found two instances in which a property interest is considered sufficiently substantial so as to trigger due process protections: (1) where an agency denies an applicant’s proposed property use and (2) “where the issuance of a permit implicating an applicant’s property rights adversely affects the constitutionally protected rights of other interested persons who have followed the agency’s rules governing participation in contested cases.” Id. at 68, 881 P.2d at 1214 (second emphasis added). The first avenue was not applicable because the agency approved the applicant’s proposed property use. See id. The second alternative, on the other hand, applied because both of its requirements were satisfied. See id. First, certain appellants averred or testified that they were owners of property adjacent to the area where the applicant engaged in construction activities pursuant to the permit issued by the agency and that they had been detrimentally affected by those activities. Id. at 70 & n. 14, 881 P.2d at 1216 & n. 14. Second, those appellants followed the procedures imposed by the agency in requesting contested case hearings, including those governing the submission of applications for contested cases pursuant to the rules of the agency. See id. at 69, 881 P.2d at 1215. Recently, in In re ‘Iao Ground Water Management Area High-Level Source Water Use Permit Applications (‘Iao), 128 Hawai'i 228, 287 P.3d 129 (2012), this court considered whether the exercise of traditional and customary Native Hawaiian practices is a property interest deserving of due process protections. Id. at 241, 287 P.3d at 142. This court focused its analysis on the second alternative under Puna Geothermal, which would trigger due process protections because the agency was considering the issuance of a permit that could adversely affect constitutionally protected rights of other interested parties. Id. at 240, 287 P.3d at 141. Relying on Aguiar, the court emphasized “that ‘a benefit which one is entitled to receive by statute constitutes a constitutionally-protected property interest.’” Id. at 241, 287 P.3d at 142 (emphasis added) (quoting Aguiar, 55 Haw. at 496, 522 P.2d at 1267). Proceeding from this premise, this court found that the exercise of traditional and customary Native Hawaiian rights constitutes a property interest because it has “a statutory basis in the water code.” Id. at 241-42, 287 P.3d at 142-43 (discussing HRS §§ 174C-101 and 174C-63). Hence, because the water resources implicated in the permit granted by the agency affected the property interest of the appellants in the exercise of Native Hawaiian traditional and customary practices, the court found that pursuant to constitutional due process, the agency was required to conduct a hearing. Id. at 244, 287 P.3d at 145. In this case, under Puna Geothermal, the first avenue that triggers due process protections—an agency’s denial of an applicant’s proposed use—is inapposite because the Board actually approved UH’s proposed use, and the Board’s decision did not directly adjudicate any property interest of the appellants. Cf. Aguiar, 55 Haw. at 496, 522 P.2d at 1267 (deciding whether one is entitled to the property interest of low-rent public housing). Instead, just like ‘Iao, this case falls under the second Puna Geothermal alternative for finding a property interest inasmuch as the Board’s issuance to UH of a permit would affect the appellants’ exercise of Native Hawaiian customs and traditions. See ‘Iao, 128 Hawai'i at 240, 287 P.3d at 141. The only difference between ‘Iao and this case is the venue in which Native Hawaiian customs and traditions are being exercised. Thus, just as the exercise of traditional and customary Native Hawaiian rights was found in ‘Iao to be a property interest when performed in water resources, the question in this case is whether the exercise of these customs and traditions should receive the same treatment when performed on conservation land. See id. at 241, 287 P.3d at 142. Because the exercise of Native Hawaiian customs and traditions on conservation land has a statutory source and because the appellants in this case adhered to the administrative rules for a contested case hearing imposed by the Board, the requirements of Puna Geothermal were satisfied. The statutory source of the appellants’ entitlement to exercise Native Hawaiian rights is the “Hawaiian usage exception to the adoption of the English common law” under HRS § 1-1, 11 which was intended “to avoid results inappropriate to the isles’ inhabitants by permitting the continuance of native understandings and practices which did not unreasonably interfere with the spirit of the common law.” Kalipi v. Hawaiian Trust Co., 66 Haw. 1, 10, 656 P.2d 745, 750-51 (1982). In Kalipi, this court concluded that the Hawaiian usage exception is “a vehicle for the continued existence of those customary rights which continued to be practiced and which worked no actual harm upon the recognized interests of others.” Id. at 12, 656 P.2d at 751-52. Inasmuch as the exercise of Native Hawaiian customs and traditions on the summit of Mauna Kea is statutorily supported by HRS § 1-1, it is a property interest protected by constitutional due process. See ‘Iao, 128 Hawai'i at 241-42, 287 P.3d at 142-43. The appellants in this ease also adhered to the Board’s administrative rules with respect to requesting a contested case hearing. In relevant part, Hawai'i Administrative Rules (HAR) § 13-1-28 (2009) provides, “When required by law, the board shall hold a contested case hearing upon its own motion or on a written petition of any government agency or any interested person.” Additionally, the Board’s rules provide as follows with respect to the initiation of a contested case hearing: (a) On its own motion, the board may hold a contested case hearing. Others must both request a contested case and petition the board to hold a contested case hearing. An oral or written request for a contested case hearing must be made to the board no later than the close of the board meeting at which the subject matter of the request is scheduled for board disposition. An agency or person so requesting a contested case must also file (or mail a postmarked) written petition with the board for a contested case no later than ten calendar days after the close of the board meeting at which the matter was scheduled for disposition. For good cause, the time for making the oral or written request or submitting a written petition or both may be waived. HAR § 13-1-29 (2009) (emphases added). During the February 25, 2011 public hearing for the permit, the appellants made oral requests for a contested case hearing. At the conclusion of that public hearing, the Board decided to hold a contested case hearing that would involve parties who made either an oral or written request followed by the submission of a petition and the payment of a filing fee within the timeframe provided by the Board’s administrative rules. The appellants thereafter filed their respective written petitions within the ten-day period following the close of the February 25, 2011 public hearing. Thus, the appellants “followed the agency’s rules governing participation in contested cases.” Puna Geothermal, 77 Hawai'i at 68, 881 P.2d at 1214; see HAR § 13-1-29; ‘Iao, 128 Hawaii at 234-35, 287 P.3d at 135-36 (stating that several attendees at a public hearing requested a contested ease hearing and filed written petitions to that effect); see also Kilakila ‘O Haleakala v. Bd. of Land & Nat. Res., 131 Hawai'i 193, 211, 317 P.3d 27, 45 (2013) (Acoba, J., concurring) (discussing how tire appellant in that case satisfied the same administrative rules involved in this case by making an oral request for a contested case hearing before the close of a public hearing followed by the submission of a written petition within the ten-day period imposed by the rules). In view of the fact that the appellants’ exercise of Native Hawaiian traditional and customary practices on the summit of Mauna Kea is a property interest under the constitutional due process framework, and because that property interest could be adversely affected by UH’s proposed action, the appellants were entitled to a contested case hearing prior to being deprived of their property interest. Cf. Aguiar, 55 Haw. at 495-96, 522 P.2d at 1267 (holding that the plaintiffs’ interest in low-cost housing was a property interest “substantial enough to require agency hearings prior to the imposition of [rent] increases” (emphasis added)). The same conclusion is reached under the Mathews three-factor balancing test, as adopted by this court in Sandy Beach. The interest involved, which is the first Mathews factor, Sandy Beach, 70 Haw. at 378, 773 P.2d at 261, is the property interest of the appellants of Native Hawaiian ancestry to practice Native Hawaiian customs and traditions on the summit area of Mauna Kea. The risk of erroneous deprivation of this property interest by virtue of the procedures followed by the Board—the second factor, id.—was high because the merits of UH’s application were summarily decided without a process ensuring the proper presentation of evidence and a thoughtful deliberation. The procedure that the Board used simply failed to assess the appellants’ property interest in light of countervailing considerations relevant to the permitting process. Additionally, the fact that the Board’s administrative rules do not appear to provide a procedural vehicle for the Board to reverse its grant of a permit, if it were later found that the permit was improperly granted, elevated the risk of erroneous deprivation. Also to be considered under the second factor is the probable value of additional or alternative procedures. Id. An alternative procedure that was available to the Board was to conduct a contested case hearing pri- or to granting the permit to UH. This procedure would have allowed the Board to receive evidence, including testimony adduced by the parties, weigh the probative value of such evidence, consider arguments, engage in thorough deliberation, and thereafter make thoughtful findings of fact and conclusions of law based on the evidence. The “probable value” of this alternative procedure is considerable, especially under the facts of this case, where the property interest at stake is as profound as the exercise of Native Hawaiian customs and traditions. That is, as compared to the procedure that the Board actually followed, this alternative procedure substantially lessens the risk of erroneous deprivation. 12 Finally, the burden that the alternative procedure places on the Board—the final Mathews factor, id.—is minimal, especially in view of the fact that the property interest implicated in this case has constitutional underpinnings. See Haw. Const, art. XII, § 7. 13 It also cannot be reasonably argued that it would have been burdensome for the Board to hold a contested case hearing before issuing the permit since the Board actually conducted such a hearing after the issuance of the permit. In any event, whatever burden the Board must bear because of a pre-issuance contested case hearing is more than outweighed by the protections such procedure provides to the appellants’ constitutionally rooted interest in exercising Native Hawaiian customs and traditions. Cf. Aguiar, 55 Haw. at 498, 522 P.2d at 1268 (burden imposed on the agency by the procedures that they must follow “is more than offset by the substantial safeguards they afford to low-income tenants against erroneous rent increases which may undermine those tenants’ very ability to survive”). Accordingly, the Board should not have granted the permit before holding a contested case hearing because that procedure is inconsistent with the procedural safeguards contemplated by Article I, Section 5 of the Hawai'i Constitution. By deciding UH’s application on the merits without the benefit of a contested case hearing, the Board failed to provide the procedural safeguards to which the appellants were constitutionally entitled prior to being deprived of a protected property interest, violating Article I, Section 5 of the Hawai'i Constitution.