Hawaiʻi Supreme Court Reaffirms Contested Case Rights and Public Trust Duties in Water Diversion Case

The Hawaiʻi Supreme Court’s decision in Kiaʻi Wai o Waiʻaleʻale v. Board of Land and Natural Resources, No. SCWC-23-0000383 (Haw. Sept. 30, 2025), underscores the continuing importance of due process, traditional and customary rights, and the State’s public trust obligations in the management of Hawaiʻi’s water resources.

Background 

The case arose from the Board of Land and Natural Resources’ (BLNR) annual renewal of Revocable Permit No. S-7340, which authorized the Kauaʻi Island Utility Cooperative (KIUC) to divert up to 40 million gallons of water per day from the Līhuʻe-Kōloa Forest Reserve—commonly known as the Blue Hole Diversion—for hydroelectric generation. 

Two community organizations, Kiaʻi Wai o Waiʻaleʻale and Friends of Māhāʻulepū, challenged BLNR’s renewal of the permit for calendar years 2021 and 2022. They argued that the continuations were issued without findings or conclusions addressing how the diversion served the best interests of the State, and that BLNR’s refusal to hold a contested case hearing violated their constitutional and statutory rights. 

Although the permit expired on December 31, 2022, the petitioners appealed the denials to the Environmental Court, which ruled in their favor. The Intermediate Court of Appeals (ICA) reversed, finding the case moot and rejecting the claim to a contested case hearing. 

The Hawaiʻi Supreme Court granted certiorari and reversed the ICA. Key Holdings:

• The Case Was Not Moot. Even though the permit expired, the Court held that two exceptions to mootness applied: (1) The “capable of repetition yet evading review” exception, because revocable water permits are renewed annually and typically expire before judicial review can occur, and (2) The “public interest” exception, because the dispute implicates Hawaiʻi’s public trust in water, an issue of recurring and statewide importance. See Carmichael v. BLNR, 150 Haw. 547 (2022). 
• Petitioners Had Standing. The Court reaffirmed that Native Hawaiian traditional and customary practices constitute protected property interests under article XII, section 7 of the Hawaiʻi Constitution. Declarations submitted by the petitioners showed that the water diversions impaired cultural practices such as gathering, hunting, and hula. These interests provided sufficient injury in fact and traceability to establish standing. 
• BLNR Erred in Denying a Contested Case Hearing. Because the petitioners’ traditional and customary rights were at stake, BLNR’s refusal to hold a contested case hearing violated due process under chapter 91, Hawaiʻi Revised Statutes (HRS). The Court cited Flores v. BLNR, 143 Haw. 114 (2018), explaining that where government action may affect substantial, specific property interests, the agency must afford the affected persons an opportunity for a hearing. 
• BLNR Must Issue Written Findings Under HRS § 171-58(c). The Court emphasized that BLNR has a statutory duty to issue findings of fact and conclusions of law showing how a permit or continuation “best serves the interests of the State.” Because BLNR renewed the permit without those findings, the Environmental Court properly exercised jurisdiction to review the agency’s compliance. 

Implications for Land Use and Resource Management

This decision reinforces a line of cases requiring procedural transparency and substantive accountability when the State manages public trust resources:

• Revocable permits are not perpetual. Agencies cannot avoid environmental review or contested case procedures by renewing annual permits indefinitely. 
• Traditional and customary rights have procedural weight. When cultural practices are affected, agencies must provide affected practitioners with notice and a meaningful opportunity to be heard.
• Public trust duties remain central. The State must affirmatively demonstrate—through findings, not assumptions—how its decisions protect and promote the long-term interests of the people of Hawaiʻi. 

For practitioners, the decision signals that contested case rights may attach to a wide range of discretionary land and water authorizations, particularly where traditional and customary rights or environmental interests are implicated. 

Broader Context 

The opinion arrives as Hawaiʻi continues to grapple with aging water-diversion infrastructure, competing demands between energy production and ecosystem restoration, and ongoing litigation over water use permits across the islands. 

The Court’s reasoning aligns with its decisions in In re Water Use Permit Applications (Waiāhole Ditch), 94 Haw. 97 (2000), and Carmichael, confirming that public-trust obligations apply across all forms of state land and water dispositions—including temporary, revocable ones. 

Takeaways  

Kiaʻi Wai o Waiʻaleʻale serves as another reminder that in Hawaiʻi, water is a public trust resource. When state agencies exercise discretion to authorize its use, they must do so transparently, with full regard for the rights of Native Hawaiian practitioners and the interests of future generations.