Opinion ID: 2515085
Heading Depth: 4
Heading Rank: 3

Heading: Act 2 creates an illusory class.

Text: Applying the foregoing analysis to the facts of this case, we conclude that Act 2 creates a class that is logically and factually limited to a `class of one' and is, therefore, illusory. See Canister, 110 P.3d at 385. Section 1(b) of Act 2 provides: This Act adopts a new policy, and further clarifies and amends existing law, with respect to this new type of inter-island ferry service to provide that, during the period in which any required environmental review and studies, including environmental assessments or environmental impact statements, are prepared, and also following their completion: (1) A large capacity ferry vessel company and large capacity ferry vessels may operate subject to the employment of measures to mitigate significant environmental effects; (2) Agreements with respect to the operations of a large capacity ferry vessel company, including a large capacity ferry vessel company operating agreement, entered into between the State and a large capacity ferry vessel company, may be enforced as written or as executed or re-executed; and (3) Related harbor improvements may be constructed and used by the State, by a large capacity ferry vessel company, and by others, notwithstanding the fact that the non-preparation or non-completion of environmental assessments or environmental impact statements, the lack of acceptance of an environmental impact statement, or the lack of a finding of no significant impact, would otherwise have barred, delayed, been a condition precedent to, or interfered with paragraphs (1) through (3). Act 2, ง 1(b) at 6 (emphasis added). Section 1(b)(1) provides that the class of [a] large capacity ferry vessel company will be treated differently under the law pursuant to Act 2, most importantly, being once-again exempt from the requirements of HRS chapter 343. Id. For this class to be considered genuine, it must be reasonably probable that other members could enter the class in the future. See Canister, 110 P.3d at 384; Haman v. Marsh, 467 N.W.2d at 848-49; Town of Surprise, 800 P.2d at 1258-59. Such a conclusion is prevented by Act 2's repealing provision. See Act 2, ง 18 at 20-21.
Section 18 of Act 2 provides, in relevant part: This Act shall take effect upon its approval; provided that this Act shall be repealed on the earlier of: (1) The forty-fifth day, excluding Saturdays, Sundays, and holidays, following adjournment sine die of the regular session of 2009; or (2) Upon acceptance of the final environmental impact statement as provided in this Act[.] Act 2, ง 18 at 20. Article III, section 10 of the Hawai'i Constitution provides, in relevant part: The legislature shall convene annually in regular session at 10:00 o'clock a.m. on the third Wednesday in January. . . . Regular sessions shall be limited to a period of sixty days. . . . Any session may be extended a total of not more than fifteen days. . . . Each regular session shall be recessed for not less than five days at some period between the twentieth and fortieth days of the regular session. . . . Saturdays, Sundays, holidays, the days in mandatory recess and any days in recess pursuant to a concurrent resolution shall be excluded in computing the number of days of any session. Haw. Const, art. Ill, ง 10. The third Wednesday in January 2009 is January 21st. The regular session of 2009 must end within seventy-five days (excluding at least five mandatory recess days, Saturdays, Sundays, and holidays). Accordingly, sine die of the 2009 regular session will occur in approximately mid-May. Forty-five days (excluding Saturdays, Sundays, and holidays) following adjournment sine die will occur no later than the end of July. Thus, by its own language Act 2 will be repealed no later than July 31, 2009. Act 2 was enacted on November 2, 2007, and it will be repealed upon acceptance of the final environmental impact statement as provided in Act 2, or July 31, 2009, whichever occurs earlier. Consequently, Act 2 is viable for a maximum of twenty-one months. Any new company seeking to qualify under Act 2 would have to build or acquire a vessel that transports, is designed to transport, or is intended to transport per voyage at least five hundred passengers, two hundred motor vehicles, and cargo between the islands of the state. Act 2, ง 2 at 7. This new company would only be granted the right to operate and utilize State harbor improvements and facilities under Act 2 if it did so pursuant to and subject to agreements and contracts with State entities relating to the operation of a large capacity ferry vessel and the use of state harbor facilities. Act 2, ง 3(1) at 8. The company would also have to comply with all laws of general applicability, except as otherwise provided in this Act. Act 2, ง 5 at 10. Accordingly, any potential new class member under Act 2 would have no more than twenty-one months to build or acquire a qualifying vessel, enter into a qualifying agreement or contract with the State, and comply with all relevant federal and State requirements for operating a passenger service over water before it could attempt to benefit from Act 2. As discussed further below, Act 2's limited viability period of a maximum of twenty-one months effectively limited its benefits to Superferry, as no other large capacity ferry vessel company could realistically enter the market and compete with Superferry during this abbreviated time frame.
Superferry indicated in its July 22, 2004 application to the Public Utilities Commission for a Certificate of Public Convenience and Necessity (CPCN) that it was not aware of any competing utilities providing similar service in the state of Hawaii, i.e., a roll-on/roll-off fast passenger ferry. As Superferry is the current and sole operator of this unique service in Hawai'i, we look to its experience as an example of: (1) the requirements that future ferry operators seeking to enter the class created by Act 2 would likely have to meet and (2) the time necessary to meet those requirements. Superferry's vessel which meets Act 2's transportation requirements (five hundred passengers, two hundred motor vehicles, and cargo) was built for Superferry. Construction of this vessel took approximately three years, as construction began in May 2004 and the vessel was delivered in or around July 2007. To finance the construction, Superferry applied for and received guarantees of 78% of the actual vessel construction costs from the Maritime Administration of the United States Department of Transportation under its Title XI ship financing program. For the remainder of the financing, Superferry arranged a loan from its shipbuilder, Austal USA, for 10% of the value of the shipyard contract, and expected to sell $58.3 million in preferred stocks. As a condition of financing, the Maritime Administration and Superferry's equity investors required a commitment from the State that it would build the harbor facilities necessary to accommodate the new ferry service. This commitment was confirmed on September 7, 2005 and the Maritime Administration financing closed on October 25, 2005. Prior to operating its new vessel, Superferry was required to: (1) enter an agreement with the State to use State harbor facilities, (2) construct passenger accommodations at all harbors excluding Honolulu, (3) secure various types of insurance, [10] (4) provide the State with a performance bond and a third preferred mortgage on each vessel, [11] (5) contract a marine management and crewing service, (6) apply for any relevant federal permits required to operate the ferry service, and (7) receive State approval of an operating schedule of arrival and departure times for each vessel at and from State harbors 90 days prior to commencing service. Superferry entered an operating agreement with the State on September 7, 2005, [12] approximately twenty-three months prior to commencing its commercial operations on August 26, 2007. The operating agreement was conditioned on Superferry receiving: (1) a CPCN from the Public Utilities Commission, (2) a certificate of inspection from the United States Coast Guard, and (3) evidence that the Superferry's vessels met the classification requirements of an independent classification society. In the operating agreement, Superferry and the State agreed that the construction of certain structures were required at the State harbors to accommodate the operation of Superferry's vessels. Some of these structures would be built by the State and others would be built by Superferry. The agreement acknowledged that the [State] does not have passenger accommodations at the Facilities [13] other than Honolulu. As such, the operating agreement allowed Superferry to construct, install, and use the [Superferry] Equipment for passenger accommodations and to accommodate [Superferry] security, vehicle and agricultural inspection, and other personnel at those Facilities. [Superferry] Equipment was defined in the agreement as: (1) Gangways (to the extent not provided by the [State] pursuant to Section IV.D.2), (2) furnishings, fixtures, and equipment purchased, constructed, or installed by [Superferry] at the Facilities, (3) tents for passenger accommodations (at all Facilities other than Honolulu), (4) tents for security, vehicle and agricultural inspection, and other personnel, (5) furnishings for the passenger accommodation areas, (6) portable restroom facilities (at all Facilities other than Honolulu), (7) minor improvements to existing Facilities, including, without limitation, booths, structures, and security, screening, and inspection devices or equipment, (8) utility service and connections (such as water, sewer, power, fire protection, electrical, and lighting) and all associated infrastructure and appurtenances, (9) security fencing and gates, (10) pavement and pavement striping, (11) infrastructure upgrades, signage, lighting, and public address and communication systems, (12) parking areas, storage areas, and other modified areas within the Facilities that will be used by [Superferry], (13) any other items described more particularly in Section VI.A.2., [14] and (14) all substitutions, replacements, modifications and alterations thereto. The agreement further stated that All [Superferry] Equipment shall be owned or controlled by [Superferry] and shall be for [Superferry's] exclusive use, except for the [Superferry] Modifications. [15] The [Superferry] Equipment shall include the [Superferry] Modifications. To the extent that any of the items listed in this Section I.V. as [Superferry] Equipment are provided by the [State] pursuant to Sections IV.D.2. or IV.D.3., the items so provided by the [State] shall be considered State Equipment and not [Superferry] Equipment or [Superferry] Modifications. (Emphasis added.) The operating agreement between Superferry and the State acknowledged that other ferry operators might enter the market during the term of the agreement and that [s]hould such situation arise, the [State] may make available to such other ferry operators, subject to the Schedule (to the extent permitted by law), use and access to Facilities subject to agreements containing general terms and conditions similar to that contained in this Agreement or with such revisions, updates, or modifications as the [State] deems necessary to meet specific conditions or circumstances that may prevail or occur at the time of the commencement of such additional, new, or competing ferry service operations. (Emphasis added.) The agreement later stated, however, that if or when a new ferry service operator desires to commence service,. . . the [State] may not be able to provide similar space to such other operator for its passenger accommodations.  (Emphasis added.) In that event, Superferry would be required to provide the new ferry service operator with a reasonable opportunity to work out a sharing arrangement with [Superferry] for the use of the [Superferry] Modifications at a fair rent or charge for such use. (Emphasis added.) However, Superferry [would] not be obligated to share [Superferry] Equipment, other than [Superferry] Modifications. (Emphasis added.) The installations planned for Kahului Harbor, including the passenger terminal and gangways, would be considered [Superferry] Equipment under Superferry's operating agreement with the State. If the State could not provide similar space to future ferry service operators for their own passenger accommodations, and Superferry would not be obligated to share its passenger accommodations, it is unclear how other ferry service operators would realistically operate at Kahului Harbor. Assuming, however, that the State was able to provide other ferry service operators with sufficient space to construct their own passenger accommodations at the neighbor island harbors, those service operators would ostensibly be subject to requirements similar to those imposed on Superferry. Prior to constructing passenger accommodations at any harbor, the operating agreement between Superferry and the State required Superferry to: (1) obtain the State's written approval of Superferry's equipment plans; (2) obtain all necessary permits and governmental approvals for Superferry's construction plans; and (3) obtain the State's written approval of Superferry's construction plans. Prior to use of these accommodations, Superferry was required to: (1) provide the State with detailed port facility and vessel security plans that had been approved by the United States Department of Homeland Security and (2) obtain the State's approval of Superferry's operational plans [16] for each harbor at 35%, 70% and 100% levels of development. Assuming that other ferry service operators, after meeting similar requirements, were allowed to construct their own passenger accommodations, those operators would need to utilize any facilities built by the State to accommodate ferry service operations at State harbors. Pursuant to the operating agreement between Superferry and the State, any structures built by the State to accommodate the new ferry service would be owned by the State and theoretically available for use by other operators. This equipment included barges and ramps necessary for the vessels to load and unload vehicles. When the State constructed this equipment, however, only Superferry's vessel design and specifications were available for the State to consult. Moreover, the operating agreement acknowledged that the State require[d] specific information on the design and operation of [Superferry's] ferry vessels in order to properly plan, engineer, design, procure, acquire, construct, and install the State Equipment. The agreement further stated that Superferry and the State shall work together to refine the plans, specifications, and drawings for the State Equipment, including providing information to and requesting information from Austal to the extent necessary to refine the design of the State Equipment. Despite the availability of the State's barges and ramps for other ferry service operators, unless those operators used vessels nearly identical to Superferry's vessels, it is unclear how realistic it would be for them to utilize the State's equipment. As in Haman v. Marsh , a highly improbable set of events would have to occur in order for another ferry vessel company to enter Act 2's class of large capacity ferry vessel company within the twenty-one month viability of Act 2. See, 467 N.W.2d at 848-49. First, the new company would have to build or acquire a vessel capable of transporting at least five hundred passengers, two hundred motor vehicles, and cargo between the islands of the state. Act 2, ง 2 at 7. There is no evidence in the record that any such vessel (other than Superferry's vessel) is in existence and could be acquired. The new company would thus have to build such a vessel, a process which ostensibly would be similar to Superferry's three years of construction. In addition, to utilize the State-built barges and ramps, the new vessel's dimensions and design would have to be nearly identical to Superferry's vessels. The new company would likely have to apply for and receive a CPCN from the Public Utilities Commission. Further, it would have to negotiate and finalize an operating agreement with the State. If space was available at the neighbor island harbors, the new company would have to construct its own passenger accommodations, subject to conditions similar to those imposed on Superferry. If space was not available for the construction of new passenger accommodations, the new company would have to negotiate and finalize an agreement with its competitor, Superferry, to share Superferry's existing passenger accommodations. If such an agreement could not be reached, however, it is unclear what options the new company would have. This entire set of events would have to begin and end in less than twenty-one months to allow the new company to operate during the life of Act 2. In sum, there is nothing in the record to support the theoretical possibility of this scenario occurring in reality. [17] Indeed, at oral argument on December 18, 2008, almost fourteen months after the enactment of Act 2 and seven months before its maximum expiration date, counsel for the State and Superferry could not represent to the court that any other large capacity ferry vessel company had expressed any interest in coming within the benefits of Act 2. Like the Glendale Bill considered in In re Senate Bill No. 95 of the Forty-Third General Assembly, once Act 2 accomplished its purpose of allowing Superferry to operate without meeting the requirements of HRS chapter 343, Act 2 will die before another large capacity ferry vessel company could come within its benefits. See 361 P.2d at 354 (Once having accomplished [its] particular purpose the act would die before it could possibly accomplish a like purpose in any other place.).
Section 1(b)(2) of Act 2 provides, in relevant part, that: Agreements with respect to the operations of a large capacity ferry vessel company, including a large capacity ferry vessel company operating agreement, entered into between the State and a large capacity ferry vessel company, may be enforced as written or as executed or re-executed[.] Act 2, ง 1(b)(2) at 6. The record in this case shows that only Superferry has an operating agreement with the State. Also, at oral argument on December 18, 2008, counsel for the State and Superferry could not represent to this court that any other large capacity ferry vessel company had an operating agreement with the State. The benefits provided by Act 2 to a large capacity ferry vessel company were clearly intended to benefit only Superferry, as only Superferry has an operating agreement with the State.
Section 8 of Act 2 restricts the benefits of Act 2's alternative environmental review process to considering the impacts of operating a single large capacity ferry vessel company. Section 8 of Act 2 provides that: The department of transportation shall prepare or contract to prepare an environmental impact statement for the improvements made or to be made to commercial harbors throughout the state that require the expenditure of public funds to accommodate the use thereof by a large capacity ferry vessel company and the secondary effects of those operations on the state's environment, including the operation of the large capacity ferry vessel company. Act 2, ง 8 at 12 (emphases added). There is no indication in section 8 that the required environmental impact statement must consider the impacts of operating more than one large capacity ferry vessel company. Id. Additionally, section 8 directs the preparation of only one environmental impact statement. Id. Upon the acceptance of this final environmental impact statement by the Office of Environmental Quality Control (OEQC), the Act and its alternative environmental review process will be repealed. See Act 2 ง 12 at 17, ง 18 at 20. Based on the language of section 8, if future members attempted to join the class of a large capacity ferry vessel company during the twenty-one-month life of Act 2, the environmental impact statement prepared by DOT, which considered the impacts of only one company using State harbor facilities, ostensibly Superferry as it is the only large capacity ferry vessel company presently operating, would be inadequate even under Act 2's alternative review process. See Act 2, ง 9(d) at 12 (The environmental impact statement shall contain an explanation of the environmental consequences of the action. The contents shall fully declare the environmental implications of the action and shall discuss all relevant and feasible consequences of the action.). In that case, an environmental impact statement for the additional large capacity ferry vessel company would likely be required. If an environmental impact statement became necessary to properly consider the impacts of an additional company using State harbor facilities, that statement would not be governed by the process provided by Act 2. The OEQC's acceptance of the first environmental impact statement would trigger the automatic repeal of Act 2. As such, any future class members attempting to use State harbor facilities would be subject to an environmental review process governed by the more rigorous requirements of HRS chapter 343. See HRS ง 343-5(b) (1993 & Supp. 2008) (Acceptance of a required final statement shall be a condition precedent to implementation of the proposed action. (emphasis added)). Accordingly, future members of the class created by Act 2 would not have the right to operate during the environmental review process, a right granted to Superferry, the only qualifying class member at the time Act 2 was enacted. Therefore, even if other companies attempted to enter the class of a large capacity ferry vessel company during the twenty-one-month existence of Act 2, those future members would not receive the same rights and benefits granted to Superferry, the single member in existence at the time of enactment. As such, the class created by Act 2 is logically and factually limited to a `class of one,' and thus is illusory. Canister, 110 P.3d at 385.
Section 13 of Act 2 also makes it clear that the addition of future members to the large capacity ferry vessel company class is not reasonably probable. Act 2, ง 13 at 18-19. Section 13 establishes a temporary Hawaii inter-island ferry oversight task force [18] and mandates that the thirteen-member task force shall include: (1) The director of transportation, or the director's designee; (2) The chairperson of the board of agriculture, or the chair's designee; (3) The chairperson of the board of land and natural resources, or the chairperson's designee; (4) The attorney general, or the attorney general's designee; (5) The president of a large capacity ferry vessel company, or the president's designee; (6) One representative from each of the four major counties, including at least one representative from the environmental community, one representative who is active or knowledgeable in native Hawaiian cultural practices, and one representative from the general business community; provided that each such representative shall be appointed by the speaker of the house of representatives; and (7) One representative from each of the four major counties, including at least one representative from the environmental community, one representative who is active or knowledgeable in native Hawaiian cultural practices, and one representative from the general business community; provided that each such representative shall be appointed by the president of the senate. Act 2, ง 13(b) at 18-19. (emphases added). The Act's description of these members makes clear that future members could not be added to the large capacity ferry vessel company class. Four of the mandatory members of the task force are designated by title, as they are official positions that may be occupied by only one person at a time (e.g. the director of transportation, the chairperson of the board of agriculture, the chairperson of the board of land and natural resources, the attorney general). Id. Eight of the other mandatory members are described as representative[s] of specific designated groups, which logically include more than one member. Act 2, ง 13(b)(6)-(7) at 19. For these representative members, Act 2 provides a method for selecting each representative (i.e., appointment by the speaker of the house, ง 13(b)(6), or by the president of the senate, ง 13(b)(7)). Significantly, the task force member related to a large capacity ferry vessel company is designated by title,  [t]he president of a large capacity ferry vessel company. Act 2, ง 13(b)(5) at 19 (emphasis added). Unlike the members of the task force that represent a group with multiple members, the president of a large capacity ferry vessel company is not described as a representative. More importantly, Act 2 does not provide a selection process to determine how this member would be selected in the event that more than one eligible person existed. See Act 2 ง 13(b)(5). Section 13, therefore, makes it clear that Act 2's class of a large capacity ferry vessel company did not anticipate the addition of future class members and was conceived, cut, [and] tailored for Superferry. In re Senate Bill No. 95, 361 P.2d at 354.