Opinion ID: 1123021
Heading Depth: 2
Heading Rank: 1

Heading: The State Water Code and WMA Designation

Text: The State Water Code was enacted in 1987 pursuant to constitutional mandate. 1987 Haw. Sess. L. Act 45, at 74. Article XI, section 7 of the Hawai`i Constitution (1978) provides in pertinent part that: The State has an obligation to protect, control, and regulate the use of Hawaii's water resources for the benefit of its people. The legislature shall provide for a water resources agency which, as provided by law, shall set overall water conservation, quality, and use policies; define beneficial and reasonable uses; protect ground and surface water resources, watersheds and natural stream environments; establish criteria for water use priorities while assuring appurtenant rights and existing correlative and riparian uses and establish procedures for regulating all uses of Hawaii's water resources. The Code established the Commission on Water Resource Management and bestowed upon it exclusive jurisdiction and final authority in all matters relating to implementation and administration of the state water code, except as specifically provided in this chapter. HRS § 174C-7(a) (1993). The Code also provides that [t]he commission shall adopt and enforce such rules as may be necessary or convenient to administer this chapter[,] HRS § 174C-8 (1993), and that [a]ll proceedings before the commission concerning the enforcement or application of any provision of this chapter or any rule adopted pursuant thereto, or the issuance, modification, or revocation of any permit or license under this code by the commission, shall be conducted in accordance with chapter 91. HRS § 174C-9 (1993). Judicial review of rules and orders of the commission under this chapter shall be governed by chapter 91. Trial de novo is not allowed on review of commission actions under this chapter. HRS § 174C-12 (1993). The prohibition against trial de novo is consistent with the legislature's stated desire to bring all water disputes before the Commission, rather than the courts, for expeditious and inexpensive resolution of conflicts both within and outside designated [WMAs]. Hse. Conf. Comm. Rep. No. 119, in 1987 House Journal, at 1069. The central feature of the Code is a water use permitting process to insure all of the substantive water rights established under the common law and the Hawai`i Constitution. HRS chapter 174C, Part IV. The Code is unique, however, in that the permitting process does not apply statewide. The legislature apparently interpreted the constitutional mandate to protect, control, and regulate the use of Hawaii`s water resources as requiring protection only of water resources that have become threatened. The Code, as enacted, [6] establishes a twophase process for regulating water use. The first phase, WMA designation, requires the Commission to conduct scientific investigations, consider statutory criteria, consult the appropriate county mayor and water board, and conduct a public hearing upon published notice to determine whether to designate a watershed as a WMA for the purpose of establishing administrative control over the withdrawals and diversions of ground and surface waters in the area to ensure reasonable-beneficial use of the water resources in the public interest. HRS §§ 174C-41 through -45. After public hearing and any investigations deemed necessary have been completed, the chairperson, after consultation with the appropriate county council and county water board, shall make a recommendation to the commission for decision. If the commission decides to designate a water management area, it shall cause a notice of its decision to be published in a newspaper of general circulation in the appropriate county and when so published its decision shall be final unless judicially appealed. HRS § 174C-46 (emphasis added). The Commission's discretion under the designation scheme is broad. There are eight ground water criteria and three surface water criteria that the Commission shall consider in designating an area for water use regulation, HRS §§ 174C-44 and -45 (1993); [7] but, regardless of how many or how few of the criteria are applicable, the Commission shall designate an area as a WMA [w]hen it can be reasonably determined ... that the water resources in an area may be threatened by existing or proposed withdrawals or diversions of water. HRS § 174C-41(a). The statutory designation scheme thus delegates to the Commission the determination whether and when to bring an area under administrative management, within the limitations imposed by its obligation to prevent any further harm by protecting, controlling, and regulating the use of Hawaii's water resources for the benefit of its people. 1987 Haw.Sess.L. Act 45, § 1 at 75. The second stage of the regulatory schemeadministrative control through water use permittingis triggered only by a WMA designation; in other words, the Commission has no authority to regulate water use through permitting in an undesignated area. Hawai`i, therefore, has a bifurcated system of water rights. In WMAs, the permitting provisions of the Code prevail; water rights in non-designated areas are governed by the common law. The legislature apparently did not contemplate that this anomaly would be a permanent feature of the Code. Act 45, section 5 of the 1987 Hawai`i Session Laws established a review commission, directly accountable to the legislature, to perform a comprehensive review of the state water code and the development of recommendations for its improvement, including water matters of fundamental importance which should be dealt with in a state water code, but which have not yet been incorporated, such as ... the institution of a comprehensive statewide permit system to regulate all types and uses of water[.] Id. § 5(a). The review commission was to begin work five years after the passage of the Code and submit its report to the legislature within two years. Id. § 5(b). The final report of the review commission was published in December 1994 and was the subject of statewide public hearings. The review commission recommended adoption of a statewide permit system to, inter alia, eliminate the two sets of water laws under which water is currently regulated in Hawaii and do away with the designation process, which is cumbersome, costly, and time-consuming. Review Commission of the State Water Code, Final Report to the Hawaii State Legislature at 10 (December 28, 1994). To date, the legislature has not taken action on the report. Therefore, the Commission is required to designate an area as a WMA before it may fulfill the State's constitutional obligation to protect, control, and regulate the use of Hawai`i's water resources for the benefit of its people. Haw. Const. art. XI, § 7. Once an area is designated as a WMA, [n]o person shall make any withdrawal, diversion, impoundment, or consumptive use of water ... without first obtaining a permit from the commission. HRS § 174C-48 (1993). The burden is on the applicant to establish that the proposed use of water: (1) Can be accommodated with the available water source; (2) Is a reasonable-beneficial use as defined in section 174C-3; (3) Will not interfere with any existing legal use of water; (4) Is consistent with the public interest; (5) Is consistent with state and county general plans and land use designations; (6) Is consistent with county land use plans and policies; and (7) Will not interfere with the rights of the department of Hawaiian home lands as provided in section 221 of the Hawaiian Homes Commission Act. HRS § 174C-49 (1993). Existing uses are given preference under the Code; that preference is lost, however, if the existing user fails to apply for a permit to continue the existing use within one year from the effective date of a WMA designation. HRS § 174C-50(c). The Commission is required to publish notice of permit applications for both existing and prospective uses, giving any person affected by the application the opportunity to object to the issuance of the permit, HRS § 174C-52 (1993), or to petition, in writing, for a contested case hearing. Hawai`i Administrative Rules (HAR) §§ 13-167-51 and -52. Where a contested case hearing is not required, the Commission is required to act on a permit application within ninety calendar days of deeming the application complete, and within one hundred eighty calendar days when a contested case hearing is required. HRS §§ 174C-50(d) and -53(b). It is undisputed that, at the permitting stage, the rights of individual water users are affected and contested case hearings, adhering to the trial-type adjudicatory procedures of HRS Chapter 91, are required. It is also explicit in the Code that judicial review of contested case hearings is by direct appeal to this court: Chapter 91 shall apply except where it conflicts with this chapter. In such a case, this chapter shall apply. Any other law to the contrary notwithstanding, including chapter 91, any contested case hearing under this section shall be appealed upon the record directly to the supreme court for final decision. HRS § 174C-60 (1993). It is not at all clear, however, whether [a] designation decision [is] the product of a contested case hearing, under HRS chapter 91, from which a direct appeal to the supreme court may be brought under HRS § 174C-60a question that we expressly left undecided in Ko`olau Ag I, 76 Hawai`i at 39 n. 3, 868 P.2d at 457, n. 3, and that we now answer in the negative. See infra section III.C. HRS § 174C-60 is another example of the inartful drafting found throughout the Code. Although it refers to any contested case hearing under this section, section 174C-60, itself, does not provide for contested case hearings. Given the placement of the section, the reference to contested case hearings under this section is probably a reference to hearings concerning the issuance, modification, or revocation of permits referred to in the sections immediately preceding HRS § 174C-60.