Administrative Law 101

Hawaii Appeals Court Sets Boundary on the Applicability of State EIS Law

The trend in Hawaii's appellate courts has been to expand the scope and applicability of Hawaii's environmental laws.  The courts have rarely deferred to agency expertise and discretion.

In Umberger v. Department of Land and Natural Resources ("DLNR"), the Hawaii Intermediate Court of Appeals defined the outer-limits of Hawaii's environmental impact statement law, commonly referred to as the Hawaii Environmental Policy Act ("HEPA").

Yellow Tangs, A Commonly Harvested Aquarium Fish

The case involved aquarium fish permits that allow permittees to collect fish for aquarium purposes from Hawaii's waters.  The Court defined the question before it as follows:

[W]hether a particular Hawaii statute, HEPA, is intended to apply so that each applicant for an aquarium fish permit must, at a minimum, prepare an EA [environmental assessment]—as well as engage in the related process of consultation, information gathering, and public review and comment—and DLNR must, with each application, undertake a HEPA review prior to issuing an aquarium fish permit.

The Court disagreed, and held as follows:

We conclude that to interpret "program or project" so sweepingly as to require individual aquarium fish permit applicants to undertake the EA process is not a "rational, sensible and practicable interpretation" of HEPA and would create an unreasonable, impractical, and absurd result. Accordingly, we hold that aquarium collection under an aquarium fish permit issued by DLNR pursuant to HRS § 188-31 is not an "applicant action" under HEPA.

Citations omitted.

Although not essential to its decision, the Court provided a rare statement of agency deference when it stated that, "There is no question that the DLNR shares Appellants' concerns about the health of Hawaii's reefs and its marine inhabitants and seeks to appropriately manage and administer the aquatic life and aquatic resources of the State in accordance with all applicable laws."  The U.S. Supreme Court recognized that judicial deference to agency expertise is one of the most important principals in administrative law, due in part to an agency's intense familiarity with the history and purposes of the legislation at issue and their practical knowledge of what will best effectuate those purposes.

Read the entire opinion at https://scholar.google.com/scholar_case?case=9667698222799409226.

The Seminar Group Presents: Transit-Oriented Development in Hawaii

One of the largest public investments in the history of the City and County of Honolulu, the Honolulu Rail Transit project will fundamentally change how we live and do business.

Transit-oriented development (TOD) will increase property values near transit stations by providing the opportunity to take advantage of frequent transit service. The project will allow an unprecedented opportunity to direct growth to Honolulu’s Urban Core (the most populated region of the state) away from agricultural, open space, and rural areas; stimulate urban renewal projects near the 21 proposed rail stations along the approximately 20-mile route; support cost-efficient, consolidated infrastructure; and increase housing affordability by reducing one of the highest costs in a Hawaii family’s budget: transportation.

This seminar will provide key insights and analysis from experts and thought leaders on policy, planning, law, and real estate market issues related to TOD.

TOD City Zoning, Permits, and Related Approval Processes from Jesse Souki

The full agenda and list of presentations and presenters can be found at http://www.theseminargroup.net/seminardetl.aspx?id=15.trAhi.  

9th Circuit Court: Conservation Efforts Outweigh Economic Impacts

The appeal in Building Industry Association v. U.S. Department of Commerce arose under the Endangered Species Act (“ESA”) and the Administrative Procedure Act (“APA”).  It required the 9th Circuit Court of Appeals to review the designation of critical habitat for a threatened species–the southern distinct population segment of green sturgeon (the “Southern DPS of green sturgeon”)–and the regulations implementing that designation.

Green Sturgeon

The context for this litigation is the impact of the designation on local property owners and on the residential construction industry in the Sacramento-San Joaquin Delta and within the Sacramento River basin of Northern California. 

In 2001, the Center for Biological Diversity (“CBD”), along with two other organizations, petitioned National Marine Fisheries Service (“NMFS”) (NMFS is a service under NOAA in the Department of Commerce) to list the green sturgeon as “threatened” or “endangered” under the ESA, and to designate critical habitat.  In 2005, NMFS published a proposed rule listing the Southern DPS as “threatened.”  In 2010, NMFS designated approximately 11,421 square miles of marine habitat, 897 square miles of estuary habitat, and hundreds of additional miles of riverine habitat in Washington, Oregon and California as critical habitat.

Under the ESA, as soon as a species has been listed as either threatened or endangered, agencies are required to consider designating critical habitat. Critical habitat is defined as “the specific areas within the geographical area occupied by the species . . . on which are found those physical or biological features (I) essential to the conservation of the species and (II) which may require special management considerations or protection.” Before designating any particular area as critical habitat, an agency must “tak[e] into consideration the economic impact, the impact on national security, and any other relevant impact,” of the designation. The agency “may exclude any area from critical habitat if [it] determines that the benefits of such exclusion outweigh the benefits of specifying such area as part of the critical habitat” unless exclusion will result in the extinction of the species. (Citations omitted.) 

Appellants’ arguments considered by the Court included the following:

• When designating critical habitat for the Southern DPS of green sturgeon, NMFS failed to balance the conservation benefits of designation against the economic benefits of exclusion from designation. 
• NMFS’s decision not to exclude certain areas from critical habitat designation is subject to judicial review and NMFS abused its discretion in not excluding those areas.
• As part of the designation process, NMFS was required to comply with the National Environmental Policy Act (“NEPA”).

The Court held in favor of  NMFS as follows:

• When considering the economic impact of its designation, NMFS complied with section 4(b)(2) of the ESA and was not required to follow the specific balancing-of-the-benefits methodology argued for by Appellants.
• Section 4(b)(2) of the ESA establishes a discretionary process by which the agency may exclude areas from designation, but does not set standards for when areas must be excluded from designation.  An agency’s discretionary decision not to exclude an area from designation is not subject to judicial review.
• Appellants’ NEPA claim fails because NEPA does not apply to critical habitat designations. The court cited, inter alia, Douglas Cnty. v. Babbitt, 48 F.3d 1495, 1501–08 (9th Cir. 1995) (explaining that critical habitat designations are not subject to NEPA because: (1) the ESA displaced the procedural requirements of NEPA with respect to critical habitat designation; (2) NEPA does not apply to actions that do not alter the physical environment; and (3) critical habitat designation serves the purposes of NEPA by protecting the environment from harm due to human impacts).

This opinion should give landowners heartburn and Congress a lot to think about regarding potential ESA amendments.  The next step for the Appellants in this case is to request review by the U.S. Supreme Court.

 

Land Use Cases to Watch: Hawaii Supreme Court

Kilakila `O Haleakala v. Board of Land and Natural Resources, was heard by the Hawaii Supreme Court on Thursday, April 2, 2015.  This appeal arises from BLNR’s granting of a conservation district use permit (“CDUP”) to the University of Hawaii (“UH”) on December 1, 2010.  The CDUP allows the construction of the Advanced Technology Solar Telescope (“ATST”) project atop the summit of Haleakala on Maui. 

Kilakila `O Haleakala and others challenge the CDUP on several grounds.  In response, UH and BLNR argue that its findings (1) were not "clearly erroneous" (the standard of judicial review), and (2) complied with the CDUP criteria the board must consider.  UH and BLNR ask the court to affirm the ICA and circuit court’s decisions upholding the CDUP.

Questions from the court primarily related to (1) connection between impacts and proposed mitigation to address those impacts, (2) potential impact of political pressure on due process, and (3) measuring cumulative impacts.

Surfrider Foundation v. Zoning Board of Appeals, City & County of Honolulu, was heard by the Hawaii Supreme Court on Thursday, February 19, 2015.  This appeal arises from the City’s granting of a zoning variance from Revised Ordinances of Honolulu (“ROH”) § 21-9.80-4(g)(2), in 2010. 

ROH § 21-9.80-4(g)(2), provides  that “no structure shall be permitted” within 100 feet of the certified shoreline and that “[b]eyond the 100-foot line there shall be a building height setback of 1:1 (45 degrees) measured from the certified shoreline.”  The City variance allows the structure to be taller and closer to the certified shoreline based on its assessment of variance factors under the City Charter.

Sierra Club v. Castle and Cooke Homes Hawaii, will be heard by the Hawaii Supreme Court on Thursday, May 21, 2015.  This appeal arises from the State Land Use Commission’s (“LUC”) granting of a land use district boundary amendment to Castle and Cooke that would allow the Koa Ridge Makai and Waiawa commercial/residential developments.  Sierra Club argues that the reclassification violated Article XI, Section 3 of the Hawaii State Constitution, which provides that the “State shall conserve and protect agricultural lands,” and that “[t]he legislature shall provide standards and criteria,” to implement this provision.  They also argue that the Commission violated Hawaii Revised Statutes §§ 205-41 through -52, which implements said constitutional provision.

Is the Federal Government's Ambitious Proposal to Expand the Whale Sanctuary the Right Answer?

There are many iconic images of Hawaii, and near the top of that list is the endangered Humpback whale breaching in Hawaii's waters during its seasonal migration.

Source: Pacific Whale Foundation

The Hawaiian Islands Humpback Whale National Marine Sanctuary, was created by Congress in 1992, and approved by Hawaii's governor.  The purpose of the Sanctuary is to protect humpback whales in Hawaii.  It is administered by the National Oceanic and Atmospheric Administration (NOAA), under the U.S. Department of Commerce.  The Sanctuary currently encompasses 1,400 square miles, including the channel between the populated islands of Maui, Lanai, and Molokai.

The current Sanctuary model seems to be working. NOAA research finds that “Humpbacks are increasing in abundance in much of their range.”  Even with its success, the Sanctuary remains relevant.  As the population of whales increases, human-whale interactions increase.

NOAA is proposing an expansion of the Sanctuary. The proposal includes expanding the federal government’s regulatory oversight of uses and activities (e.g., fishing, energy, recreation, commerce, etc.) within the expanded Sanctuary boundaries. The proposal departs from the Sanctuary’s purpose of protecting humpback whales that seasonally migrate to Hawaii and expands to regulating all species and habitat within its boundaries.

This additional regulatory oversight would add to existing federal regulatory requirements such as the Marine Mammal Protection Act, Migratory Bird Treaty Act, Endangered Species Act, Magnuson–Stevens Fishery Conservation and Management Act, Clean Water Act, and Coastal Zone Management Act, just to name a few. The proposed expansion also contemplates including state waters, which are currently managed under existing local and state regulations administered by state agencies such as the Department of Land and Natural Resources, Office of Planning, and Department of Health.

Source: Hawaii Humpback Whale Sanctuary

Depending on the kind of activity proposed in Hawaii’s waters, additional regulation by the Bureau of Ocean Energy Management (BOEM) and the Federal Energy Regulatory Commission (FERC) might also come into play. Most all of these existing regulations require an environmental assessment, and in most cases, an environmental impact statement under the National Environmental Policy Act (NEPA) and the Hawaii Environmental Policy Act (HEPA).

On January 18, 2011, President Obama released Executive Order 13563, Improving Regulation and Regulatory Review.  The “general principles” of the regulation sums up the policy best,

Our regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation. It must be based on the best available science. It must allow for public participation and an open exchange of ideas. It must promote predictability and reduce uncertainty. It must identify and use the best, most innovative, and least burdensome tools for achieving regulatory ends. It must take into account benefits and costs, both quantitative and qualitative. It must ensure that regulations are accessible, consistent, written in plain language, and easy to understand. It must measure, and seek to improve, the actual results of regulatory requirements.

Is the Sanctuary proposal consistent with the President’s executive order?  Some might argue that adding another layer of federal regulations over proposed ocean uses in Hawaii waters does not promote “economic growth, innovation, competitiveness, and job creation.”

Given the Sanctuary’s success and existing state and federal environmental regulations, does the Sanctuary’s expansive proposal apply the “least burdensome tools for achieving regulatory ends”?  Section 4 of the President’s Executive Order, entitled “Flexible Approaches,” provides:

Where relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, each agency shall identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public. These approaches include warnings, appropriate default rules, and disclosure requirements as well as provision of information to the public in a form that is clear and intelligible.

Besides the expanded jurisdiction and regulatory authority proposed, are there other "regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public"?

The Sanctuary’s proposal is in the last stages of the federal approval process. NOAA is accepting comments on its proposal. The deadline for public comments is June 19, 2015. Several public hearings will be scheduled in Hawaii starting on April 27, 2015. The full schedule is available at  http://www.regulations.gov/index.jsp#!documentDetail;D=NOAA-NOS-2015-0028-0002.

Ultimately, any expansion into state waters must be approved by the governor.

Slides for 2015 Hawaii Land Use Law Conference

I will reference the following slides for my panel at the 2015 Hawaii Land Use Law Conference.  

Our panel will also be discussing the recent Hawaii Supreme Court holding in DW Aina Le‘a Development, LLC v. Bridge Aina Le‘a, LLC and what it means for regulators and the regulated.

2015 Hawaii Land Use Law Conference from Jesse Souki

Guest speakers include Prof. Richard Epstein (Keynote Speaker), Laurence A. Tisch Professor of Law, New York University School of Law, and Prof. Patricia E. Salkin (Guest Ethics Speaker), Dean and Professor of Law at Touro Law Center in Central Islip, New York.

If you haven't already, signup at the Hawaii State Bar Association Web site.  

Can the State Land Use Commission Downzone Property that a Developer does not Develop in a Timely Manner?

The short answer is yes--but it depends.

In DW Aina Le‘a Development, LLC v. Bridge Aina Le‘a, LLC, the Hawaii Supreme Court considered whether the State Land Use Commission properly downzoned 1,060 acres of land slated for a residential project. 

Background.  In 1989, 1,060 acres of land on the Island of Hawaii was reclassified from agricultural to urban to allow for the development of a residential community.  The reclassification was made subject to numerous conditions, including a condition that at least 60 percent of the residential units be affordable.  The Commission granted requests to amend the affordable housing condition for the Aina Le'a project.  (Note: During this period of the Commission's history, it was not uncommon for the Commission to require a 60 percent affordable set-aside for residential developments.  Anecdotally, the Commission reduced the affordable housing requirements for these projects to a more economically feasible set-aside, upon request.)

By 2005, the condition required the landowner, Bridge Aina Le‘a, LLC (Bridge), to set aside 20 percent of the units as affordable.  Because of Bridge's perceived failure to comply with certain conditions, in December 2008, the Commission issued an order to show cause (OSC) why the land should not revert to its former agricultural land use classification.  Soon thereafter, Bridge informed the Commission that it intended to assign its interest in the land to DW Aina Le‘a Development, LLC (DW) through an installment sale. DW subsequently invested more than $20 million in developing the site.  Nevertheless, after proceedings over the course of several years, the Commission issued an order reverting the land to the agricultural use district.

Conceptual Plan
Source: http://www.ainaleaasia.com/our-current-project.html

Boundary Amendment Process and Enforcement.  Under HRS § 205-2, there are four major land use districts in which all lands in the state are placed: urban, rural, agricultural, and conservation.  The counties may further zone lands in the state urban district.  Counties have limited authority to zone in the other districts, except for conservation, where the state regulates exclusively.

Since 95 percent of lands in the state are in the conservation or agricultural district, landowners frequently desire a land use district boundary amendment to allow residential, commercial, and other uses.  HRS § 205-4 generally sets forth the procedures the Commission must follow in amending a district boundary.   The Commission is required to find by a clear preponderance of the evidence that the reclassification is reasonable, not violative of HRS § 205-2 (district classification standards), and consistent with the policies of HRS § 205-16 (compliance with the Hawaii state plan) and HRS § 205-17 (decision-making criteria).

HRS § 205-4(g) gives the Commission broad authority to impose conditions on boundary amendment petitions.  While the Commission can determine whether a condition it imposes is being violated, in general, enforcement of these conditions are left to the counties under HRS § 205-12.  However, a 1990 legislative amendment to HRS § 205-4(g) empowered the Commission "to void a boundary amendment, after giving the landowner the opportunity for a hearing, if the landowner failed to substantially commence use of the land in accordance with its representations."  In other words, under certain circumstances, the Commission may revert or downzone a property to its former state land use boundary classification (e.g., as in this case, from urban back to agricultural).

Holding.  The Court set-forth the following principles for the Commission when it considers reverting a boundary designation to its former classification:

• First, the Commission must issue an Order to Show Cause, which is set-forth in the Commission's rules at HAR § 15-15-93.
• Second, the Commission must determine "whether the petitioner has substantially commenced use of the land in accordance with its representations." 
• Finally, if the answer to the above question is yes, the Commission is required to follow the procedures set forth in HRS § 205-4.  If no, the Commission may revert the land without following the procedures set forth in HRS § 205-4.

Applying the aforementioned principles to the facts of this case, the Court held that the circuit court correctly concluded that the Commission erred in reverting the property to agricultural use without complying with the requirements of HRS § 205-4, because by the time the Commission reverted the property, DW and Bridge had substantially commenced use of the land in accordance with their representations.

The Court reasoned that although there is no definition for "substantially commenced" in the statutes, the intent of the legislature was to "deter speculators who obtained favorable land-use rulings and then sat on the land for speculative purposes."  The Court relied on the circuit court's analysis of this finding, noting that the petitioner had, among other things, continued to actively proceed with preparation of plans and studies, including building plans and studies for the environmental impact statement.  In addition, sixteen townhouses were completed on the property.

Other Holdings.  Although the Court did agree with the circuit court on the substantive portion of the case, it disagreed on three other items worth noting.

First, specific documents that were not before the Commission should have been struck from the record on appeal.  HRS § 91-14 specifically confines an agency appeal to the administrative record.

Second, the Commission did not violate DW and Bridge's constitutional rights to due process and equal protection.  Both Bridge and DW had notice and a meaningful opportunity to be heard before the Commission reverted the property. And, given the circumstances, the Commission's conduct was not “arbitrary and unreasonable.”

Third, Bridge’s and DW’s equal protection rights were not violated because the record does not establish that the LUC lacked a rational basis for its decisions.

Land Use Law Update Presentation to the Hawaii State Congress of Planning Officials 2013

A survey of significant Hawaii land use and planning legislation, judicial opinions, and land use commission activities in 2013.  These materials supported a lecture on the impacts these developments in the law will have on project proponents, regulators, consultants, and the interested public.

ICA Holds that Denial of SMA Permit Assessment is Ripe for Takings Claim without First Pursuing Plan Amendment

In Leone v. County of Maui, 128 Haw. 183 (2012), cert. denied, Appellants purchased property at Palauea Beach in Makena, Maui.

Palauea Beach Facing South

The 1998 Kihei-Makena Community Plan (Community Plan) assigned the beach lots a "park" land use designation, which does not permit the construction of single-family residences.  The Palauea Beach lots are also located in a "special management area" (SMA) under the Hawaii Coastal Zone Management Act (CZMA).  See HRS § 205A-22. Consequently, prior to building Appellants' desired single-family residences, they first needed to seek a Community Plan amendment from "park" to "residential."

A Community Plan amendment is a legislative process that involves review of the proposal by the County Planning Commission and adoption by the County Council. However, the County Planning Commission refused to accept the requisite environmental assessment, which the court found was part of a “deliberate strategy to preserve the status quo.”

Appellants nevertheless filed SMA assessment applications with the County Planning Department. Predictably, the Director rejected Appellants' applications, because the proposed use was inconsistent with the properties' "park" designation in the Community Plan. Appellants then filed inverse condemnation claims under article I, § 20 of the Hawaii Constitution and the Fifth and Fourteenth Amendments to the United States Constitution, alleging that Maui County had engaged in regulatory takings by depriving their properties of any economically viable use.

The Circuit Court dismissed all claims in both cases for lack of subject matter jurisdiction on ripeness grounds. It concluded that the claims were unripe for adjudication, because Appellants failed to exhaust administrative remedies, namely: (1) appealing the Director's decision to the Planning Commission; (2) waiving assessment procedure and submitting an SMA permit application; and (3) seeking an amendment to the Community Plan to change the properties' designation from "park" to "residential."

Appellants timely filed notices of appeal to Hawaii’s Intermediate Court of Appeals (ICA). Upon review, the ICA opined the following:

• Appellants are not required to appeal the Director's decision that their assessment application could not be processed because "[t]he proposed Single-Family dwelling is inconsistent with the Community Plan." The Director's decision satisfied the finality requirement for ripeness by setting forth a definitive position regarding how Maui County will apply the regulations at issue to the particular land in question.
• Appellants are not required to seek a change in the applicable law, i.e., the Community Plan, in order to satisfy the ripeness requirement for their takings claims. Citing Williamson Cnty. Reg'l Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172, 186 (1985), the ICA reasoned that the taking was ripe in this case, because the Director reached a final decision regarding the application of the SMA regulation to the property at issue. Unlike in Williamson, the Appellants did not have a variance process to pursue.  The Court did not agree with the County's argument that an amendment to a Community Plan is like the variance process in Williamson.  In Williamson, the court held that the takings claims were unripe, because the respondent failed to seek available variances, and thus the decision was not final

In conclusion, the ICA held that the Circuit Court erred in its determination that it lacked subject matter jurisdiction, because Appellants' claims were not ripe for adjudication. The ICA vacated the Circuit Court's order and remanded the case for for further proceedings.

Hawaii Supreme Court Remands Landfill Decision to State Land Use Commission based on Unsubstantiated Closure Date Requirement

Today, the Hawaii Supreme Court handed down its decision in Department of Environmental Services (DES) v. Land Use Commission (LUC).

This case arises from the 2008 application of DES for a special use permit (SUP) to expand the existing Waimanalo Gulch Sanitary Landfill (WGSL). The LUC approved the SUP subject to, inter alia, a condition prohibiting WGSL from accepting municipal solid waste or any other waste besides ash and residue from H-POWER after July 31, 2012.

Figure 5-1
State Land Use District Map, EISPN 2006.

The Court acknowledged the authority of the LUC to impose restrictive conditions on its approval of special use permits; however, it held that Condition 14 was inconsistent with the evidence shown in the record and not supported by substantial evidence.  Because the LUC’s approval of the SUP was expressly given “subject to” the LUC’s imposition of Condition 14 (the condition was "material to the LUC’s approval"), the Court vacated the circuit court’s judgment affirming the LUC’s approval of the SUP, and remanded the matter to the circuit court with instructions that the circuit court remand this matter to the LUC for further proceedings consistent with the opinion.

Under HRS § 205-6, the process for reviewing an SUP for activities on state designated agricultural lands greater than 15 acres is a two step process.  First, the county planning commission (PC) where the property is located takes in evidence regarding the permit, then issues a findings of fact, conclusions of law, and decision and order (D&O) granting the SUP with conditions or denying the SUP.  In this case, a D&O was issued granting the SUP with conditions.  Second, the record from the county PC is sent up to the LUC for their approval.  At the LUC, the whole process basically starts again but is primarily based on the PC's record and D&O.

In this case, the LUC expressly adopted the PC's D&O.  In the Court's opinion, however, the PC's D&O did not support the restriction in Condition 14 imposing a termination date of July 31, 2012 for the deposit of municipal solid waste at WGSL.  To the contrary, the court opined, "the Planning Commission’s Findings of Fact clearly demonstrate the continuing need to dispose of municipal solid waste at WGSL beyond July 31, 2012."

An interesting procedural question of first impression for the Court was the appropriate standard of review relating to the following issue: "whether a restrictive condition (Condition 14) imposed by decision or order of the agency (LUC) is supported by substantial evidence."  Turning to the Administrative Procedure Act, the Court cited 5 U.S.C. § 706(2)(E), which provides, in pertinent part: "The reviewing court shall . . . (2) hold unlawful and set aside agency action, findings, and conclusions found to be . . . (E) unsupported by substantial evidence[.]"  Applying this rule, the court concluded: "the relevant question is whether the LUC would have reached the same conclusion (approving SUP-2) without its imposition of Condition 14. Based on the record, we cannot so conclude. Thus, we remand to the LUC for further hearings as the LUC may deem appropriate."

State Land Use Commission Does Not Have Authority to Review County Land Use Decisions

In Kuleana Ku‘ikahi, LLC v. State, Land Use Commission, plaintiffs challenged the County of Maui's approval of a certain subdivision and subdivision uses. Plaintiffs filed a declaratory order with the State Land Use Commission (LUC), which challenged the County's compliance with state land use laws under HRS Chapter 205.

Kauaula Land Company, LLC (KLC) projects include
Pu’unoa Subdivision, Phases I & II with a total of 28 agricultural lots
ranging in size from 5 to 37 acres in west Maui.

The LUC declined to use such expansive authority and the circuit court agreed. The Intermediate Court of Appeals affirmed the circuit court's decision. In pertinent part, the court reasoned as follows:

[U]nder HRS § 205-12 (2001 Repl.) the counties, not LUC, are charged with enforcing use classification districts. HRS § 205-12 provides that "[t]he appropriate officer or agency charged with the administration of county zoning laws shall enforce within each county the use classification districts adopted by the land use commission and the restriction on use and the condition relating to agricultural districts under section 205-4.5[.]"

The counties were clearly granted the power to enforce and regulate zoning. Kuleana cites to no authority that would give LUC the power to oversee county zoning and regulations. . . . LUC simply does not have the authority to approve or condemn county actions[.]

The court further noted that for the LUC to have jurisdiction over land use issues, the matter must be before them for consideration pursuant to a permit or approval under their jurisdiction, which the court discussed as follows:

While it is true that HRS § 205-17 requires LUC to take into account the preservation or maintenance of cultural historical or natural resources, HRS § 205-17 governs LUC's review of a petition for reclassification of district boundaries. A district boundary amendment from LUC was never sought and . . . an amendment was not needed because the proposed use of the Subdivisions' lots was for agricultural purposes.

Finally, the court also addressed the LUC's authority to review County actions--In short, the LUC does not have that authority. In particular, the plaintiffs wanted the court to require the LUC to review the County's subdivision decision in light of its constitutional duty to protect native Hawaiian rights and natural resources. To this question, the court reasoned as follows:

County of Maui gave final approval for phases I and II of the Subdivisions, respectively. Any question as to the Subdivisions' effect on Native Hawaiian rights or natural resources under the constitution was impliedly answered when County of Maui approved the Subdivisions. Thus, by seeking a declaratory ruling from LUC under HRS § 91-8 as to the constitutional implications of the Subdivisions, Kuleana is essentially seeking review of County of Maui's approval of the Subdivisions.

The court explicitly held that "[w]ithout the need for a district boundary amendment, the jurisdiction to enforce use classification districts and their restrictions resides with the counties under HRS § 205-12."

The court leaves open the question of the LUC's authority to enforce conditions of a district boundary amendment approval imposed by the LUC through the order to show cause provisions under HRS § 205-4(g).  This issue may be clarified on appeal of the Bridge Aina Lea case.  Procedural standing in that state/federal case is summarized in this pleading posted at inversecondemnation.com.

For more on Hawaii's land use law, HRS ch. 205, visit our archives.

Hot Off the Presses: 2012 OEQC Guidance Update

On February 14, 2012, the State of Hawaii, Office of Environmental Quality Control (OEQC) released its updated Guide to the Implementation and Practice of the Hawaii Environmental Policy Act 2012 Edition.

The Guide is a revision of the Guidebook for the Hawaii State Environmental Review Process published in 2004 by OEQC.  According to OEQC Director Gary Hooser, the Guide is "intended to provide a clear and comprehensive explanation of Hawaii Environmental Policy Act (HEPA), its practice, and its implementation."

The 2012 Guide includes guidelines for assessing cultural impacts, updated case law, comparisons with that National Environmental Policy Act (NEPA), and updated forms.

HEPA FLOWCHART, AGENCY ACTIONS PART 1

For more on NEPA and HEPA see the Environmental Law archive.

Our Love Affair with Streamlining

According to Merriam-Webster’s online dictionary, “streamline” is defined as “to make simpler or more efficient.”  When the economy gets tough, it’s no wonder that decision-makers look to streamline land use regulatory processes as a way to move large development projects forward to create jobs and stimulate the economy.

You must know what strings to pull, lest it unravels.

However, regulatory processes are complex, based on years of agency interpretation, permit applicant practice, legislative tweaks, and the occasional court made rule.  Changing any one part of one regulatory process can have systemic implications that roil other regulations that make up the tapestry of land use entitlements.  In their frustration, decision-makers propose wholesale exemptions.

Exemptions have consequences all their own.  The regulatory system and the area of administrative law came about to relieve the pressure on courts from dealing with myriad controversies that became more and more complex as our society advanced.  The regulatory process creates a rational, procedural based framework within which issues such as impacts from proposed developments, can be evaluated and mitigated based on the best available science.  In permitting, agencies review these facts and weigh them against criteria established by a legislative body.  The record the agency creates and the decision it makes is the basis for any challenge taken up at the judiciary by parties with standing.  Courts happily rely on agency expertise on factual issues.  A judge is learned in the law but cannot be expected to know engineering methodology or complex scientific analysis.

What would the world look like without administrative law and the regulatory process?  The courts would have no record from the agency to work from.  All facts would need to be reestablished on the record before the judge or a jury.  There would be no third party agency standing between the persistent permit applicant and the angry plaintiff.  The judge would not have the framework of a reasonable process to evaluate the facts; there would be no standards or criteria to apply to the facts.  In essence, the judge would have to rely on general principles of land use law.  For example, without a permitting process for the coastal zone, a judge in Hawaii might rely on general principles of Hawaii constitutional law and public trust doctrine.  The grey area and uncertainly in this scenario should have lawyers salivating as thoughts of billable hours dance through their heads.

Instead of wholesale exemptions to environmental laws, which are not streamlining, let’s actually think about rational, reasonable processes that are agnostic about outcomes and provide decision-makers with the information they need to make sustainable decisions that balance economic, environmental, and socio-cultural issues.

Hawaii Supreme Court Holds that Agency Decision to Deny a Contested Case Hearing May be Appealed

In Kaleikini v. Thielen, Haw. S.Ct. No. 28491, Aug. 21, 2010, the Hawaii Supreme Court ("HSCT") held, among other things, that an agency's denial of a requested contested case hearing is an appealable issue.

This case arises in the context of Hawaii's Native Hawaiian burial laws pursuant to HRS chapter 6E. Kaleikini requested a contested case hearing regarding the Oahu Island Burial Council's decision to approve a burial treatment plan submitted by developer General Growth Properties ("GGP"). The burial treatment plan involved the disinterment of Native Hawaiian burial remains discovered at GGP's project site at the Ward Village Shops. Kaleikini's request was denied by the Chairperson of the Board of Land and Natural Resources, Department of Land and Natural Resources ("DLNR").

The right to a contested case hearing is found under HRS chapter 91, Hawaii's Administrative Procedure Act. A contested case is a proceeding in which the legal rights, duties, or privileges of specific parties are required by law to be determined after an opportunity for agency hearing. If a contested case hearing is held and a person intervenes therein that person becomes a party to the proceedings.  As a party, a person may participate in the decision-making process by providing evidence on the record and having input in the agency's preparation of findings and conclusions. In addition, a party to a contested case has the right to appeal the agency's decision to the circuit court.

Kaleikini appealed DLNR's decision to the circuit court.  The circuit court ruled that it did not have subject matter jurisdiction over DLNR's decision to deny Kaleikini's request for a contested case, because there was no contested case from which Kaleikini could appeal. Kaleikini appealed the circuit court's decision to the intermediate court of appeals ("ICA"), which held that the case was moot because the remains at issue were already reinterred. Consequently, the remedy sought by Kaleikini, preservation of burials in situ, was no longer available.

Kaleikini then appealed to the HSCT, which disagreed with both courts and held as follows:

. . . (1) DLNR's denial of Kaleikini s request for a contested case hearing represented a final decision and order; (2) Kaleikini followed the applicable agency rules and, therefore, was involved in the contested case; and (3) Kaleikini s legal interests were injured --i.e., she has standing to appeal. Accordingly, we hold that the circuit court erred in dismissing Kaleikini's agency appeal for a lack of subject matter jurisdiction. Consequently, we vacate the ICA's order dismissing Kaleikini s appeal for mootness and remand the case to the circuit court for further proceedings consistent with this opinion.

Before arriving at its ultimate holding, the HSCT decided two threshold issues. First, although Kaleikini 's appeal was moot (i.e., burials were already reinterred), it fell within the public interest exception to the mootness doctrine. In that regard, the HSCT agreed with Kaleikini that "the availability of judicial review of [a] decision relating to the removal of Native Hawaiian burial sites -- is of great public importance."

Second, the court held that a contested case hearing was "required by law, and would have determined the rights, duties, and privileges of specific parties had it been granted." (Emphasis added.) The "would have" language here is significant in that the HSCT "creates different standards for determining whether an agency action is a contested case[,]" as pointed out by the concurring opinion. Future cases will tell whether this new standard will open up the courts to more appeals in the absence of an agency contested case.

See Administrative Law and Historic Preservation for more on these and related issues.

Historic Decision at the Land Use Commission; First IAL Designation

On March 9, 2009, the State Land Use Commission (Commission) granted Alexander & Baldwin its request to designate 3,773.1 acres of land on the island of Kauai to important agricultural lands (IAL). See Petition For Declaratory Order To Designate Important Agricultural Lands.

Agricultural Lands on the Island of Hawaii

The IAL is an additional state designation within the state land use framework that divides the state into four land use districts: urban, rural, agricultural, and conservation.  Approximately 95 percent of land in the state is designated conservation and agricultural, about equally split between the two.  Less than 5 percent and less than 1/2 a percent of land in the state are designated urban and rural, respectively.  Counties may zone land within its boundaries subject these state land use designations. The urban designation is regulated entirely by the counties through zoning. Counties have limited zoning authority in the rural and agricultural districts. Conservation districts are regulated by the state through the Department of Land and Natural Resources. See Hawaii Land Use Regulatory System.

The agricultural district restricts uses and structures to those enumerated under HRS §§ 205-2, 205-4.5, and 205-4.6. In particular, "[a]ctivities or uses as characterized by the cultivation of crops, crops for bioenergy, orchards, forage, and forestry" are allowed. See HRS § 205-2(d)(1). Non-agricultural uses are also allowed in the agricultural district, for example, wind farms and open area recreational facilities. Farm dwellings and employee housing are also allowed within the agricultural district.

The IAL designation is the state's attempt to preserve agricultural land above and beyond land already in the agricultural district.  IAL is governed by HRS § 205-41, et seq. The purpose of the statute is to fulfill the promise of Article XI, § 3 of the Hawaii Constitution, which provides as follows:

Section 3. The State shall conserve and protect agricultural lands, promote diversified agriculture, increase agricultural self-sufficiency and assure the availability of agriculturally suitable lands. The legislature shall provide standards and criteria to accomplish the foregoing.

Lands identified by the State as important agricultural lands needed to fulfill the purposes above shall not be reclassified by the State or rezoned by its political subdivisions without meeting the standards and criteria established by the legislature and approved by a two-thirds vote of the body responsible for the reclassification or rezoning action.

Before the Commission can designate land as IAL, it must consider eight criteria, which is above and beyond the criteria considered for the agricultural district. These criteria are enumerated under HRS § 205-44 as follows:

1. Land currently used for agricultural production;
2. Land with soil qualities and growing conditions that support agricultural production of food, fiber, or fuel- and energy-producing crops;
3. Land identified under agricultural productivity rating systems, such as the agricultural lands of importance to the State of Hawaii (ALISH) system adopted by the board of agriculture on January 28, 1977;
4. Land types associated with traditional native Hawaiian agricultural uses, such as taro cultivation, or unique agricultural crops and uses, such as coffee, vineyards, aquaculture, and energy production;
5. Land with sufficient quantities of water to support viable agricultural production;
6. Land whose designation as important agricultural lands is consistent with general, development, and community plans of the county;
7. Land that contributes to maintaining a critical land mass important to agricultural operating productivity; and
8. Land with or near support infrastructure conducive to agricultural productivity, such as transportation to markets, water, or power.

The legislature sets out specific criteria for when a farm dwelling or employee housing is allowed on IAL.  IAL dwellings or housing must meet several specific statutory requirements under HRS § 205-45.5, including the following: (1) the dwelling or housing must be used exclusively by farmers and their immediate family members who actively and currently farm on the parcel; (2) it cannot take up more than 5 percent of the total acreage of the parcel; (3) an owner of IAL cannot plan or develop a residential subdivision for the parcel; and (4) the construction of dwellings or housing must be supported by agricultural plans that are approved by the Department of Agriculture, State of Hawaii. State law also specifically circumscribes the sale of IAL parcels "solely for residential occupancy." See HRS § 205-51.

There are two processes by which the Commission designates IAL.  The first is voluntary by landowners, and the second is through maps prepared by the counties   There are incentives for seeking a voluntary IAL designation for private landowners, which include the following:

• Fast-tracked approval process for the designation of IAL 
• Simultaneous fast-tracked urban designation if 85 percent of the land in a petition is designated as IAL.  This is commonly referred to as the "85/15 incentive."
• Tax credits on investments in IAL infrastructure.  
• Voluntary designation allows landowners to select which or their lands will be designated IAL.   HRS § 205-49 provides that "if the majority of landowners' landholdings is already designated as important agricultural lands . . . the commission shall not designate any additional lands of that landowner as important agricultural."

In addition to the voluntary process described above, there is also a mandatory county designation process.  HRS § 205-47 requires that each county must develop maps of potential lands to be considered for designation as IAL. These maps must be adopted by a county council resolution and submitted to the Commission no later than 60 months from the date of county receipt of state funds appropriated for the identification process (so far, only the County of Kauai has received such funds). Upon receipt of the IAL map by the Commission, the Department of Agriculture and the Office of Planning will review the IAL map. See HRS § 205-48. Finally, the Commission will designate the IAL based on the IAL map. See HRS § 205-49.

No Private Right of Action to Enforce Hawaii's Land Use Law or Community Plans

Pono v. Molokai Ranch, Ltd., 119 Haw. 164 (2008).  Concurring Opinion by J. Foley.  ICA Order Denying Motion for Reconsideration, filed 11/06/2008.  Application for Writ of Certiorari (Haw. S. Ct.), filed 11/20/2008.

Background.  This appeal arises from a proposed development by Molokai Ranch, Ltd. of fifteen commercial overnight campgrounds on lands within the state designated agricultural district boundary on the island of Molokai, County of Maui.

In June 1995, the Ranch wrote to Linda Crockett Lingle (then-mayor of the County of Maui) and other County officials to inquire whether the campgrounds could be developed on agricultural lands and to determine what regulatory permits would be needed for the campgrounds.  The County responded to the Ranch by letter that the campground was a permitted use on non-prime agricultural lands and that the only permits required for the campgrounds were building permits for the camping facilities to be constructed as part of the campgrounds. The Ranch obtained necessary building permits, began construction of camping facilities at different campgrounds, and began marketing the various campgrounds to prospective visitors to the island of Molokai.

Procedural Background.  Pono, an unincorporated association, and several individuals who were members of Pono, began their challenge of the Project by filing a petition for a declaratory ruling or order with the state land use commission (“LUC”) on February 27, 1997.  The LUC held in favor of Pono on the grounds “that overnight campgrounds are not permitted uses on agricultural lands rated C, D, E, or U.”  However, the LUC’s order was subsequently found to be “void and of no legal effect” by the Circuit Court because the LUC failed to comply with the state’s Sunshine Law (HRS chapter 92).

On June 25, 1997, Pono brought an action for declaratory judgment and injunctive relief against the Ranch in Circuit Court, challenging the campgrounds on multiple grounds including whether the permits granted by the County were in violation of HRS Chapter 205, Hawaii’s land use law.  The Circuit Court ruled in the County’s favor and Pono appealed the following issues to the ICA:

Appellants maintain that: (1) the circuit court erred in concluding that it lacked jurisdiction to determine whether [the Ranch's] Project on agricultural land violates HRS chapter 205; (2) [the Ranch's] Project on agricultural land violates HRS chapter 205 as a matter of law; and (3) [the Ranch's] Project violates the [Molokai Community Plan] as a matter of law.

Holding.  Pono did not have authority to privately enforce HRS chapter 205 or the Molokai Community Plan against the Ranch and, therefore, lacked standing to invoke the circuit court's jurisdiction to determine their HRS chapter 205 and Molokai Community Plan claims.

Haw. SCT Vacates ICA Decision in E & J Lounge Operating Co. v. Liquor Comm’n of the City & County of Honolulu

This case started with the Application for Liquor License by the Petitioner to the Commission for a General Dispenser License.  

The subject ICA opinion, which was discussed in Hawaii’s Intermediate Court of Appeals (“ICA”) Expands Administrative Review Powers under HRS § 91-14, was vacated by the Hawaii SCT decision E & J Lounge Operating Company, Inc. v. Liquor Commission of the City and County of Honolulu, 118 Haw. 320 (2008), as follows:

[W]e vacate the ICA's judgment, affirm the court's decision and order . . . and remand the case to the court with instructions to (1) vacate the Commission's decision and order and (2) remand the application to the Commission for decision-making in compliance with the court's order and this opinion, specifically, (a) to determine whether the notices sent by Petitioner complied with HRS § 281-57 and, if so, (b) to rule on the application after all voting commissioners have reviewed the entire agency record in accordance with HRS § 91-11.

The court held:

We hold that (1) public hearings on liquor license applications held by the liquor commission are contested case hearings such that Hawai‘i Revised Statutes (HRS) § 91-11 (1993) requires any commissioner who is not present at any stage of the public hearing to become familiar with the record before voting on a liquor license application, unless the application is automatically rejected pursuant to HRS § 281-59(a) (2007), (2) Respondent/Appellee-Appellant/Cross-Appellee Liquor Commission of the City & County of Honolulu (the Commission) did not comply with HRS § 91-11 in this case, (3) HRS § 91-13.5 (Supp. 2004) does not require automatic approval of Petitioner's liquor license application, and (4) the court's finding, that it is unclear from the present state of the record whether the Commission complied with the notice requirements of HRS § 281-57 (Supp. 2006), because it was not challenged on secondary appeal to the ICA or this court, is affirmed. 

Want to learn about the Commission on Water Resource Management?

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Corky Trinidad Paints a Picture of DLNR's New Beach Wedding Fee

The Honolulu Star Bulletin's editorial cartoonist Corky Trinidad illustrated the DLNR's new position regarding beach wedding fees, which I discussed in DLNR to Streamline Permitting for Commercial Wedding Operations on State Beaches.  

See, Corky's Hawaii, at starbulletin.com/2008/07/21/news/corky.html.