Of Counsel: J6 NO'; 28 p 4: I 25.pdfMay 9, 2006 a notice that the Commission "will conduct a...

Of Counsel: PAUL, JOHNSON, PARK & NILES Attorneys At Law A Law Corporation

PAMELA W. BUNN 6460-0 LINDSEY KASPEROWICZ 8352-0 Suite 1300, ASB Tower 100 I Bishop Street Honolulu, Hawai> i 968 13 Telephone: 524-1212 Facsimile: 528- 1654

Attorneys for Intervenor OFFICE OF HAW AllAN AFFA IRS

J6 NO'; 28 p 4 : I ~

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BEFORE THE COMMISSION ON WATER RESOURCE MANAGEMENT

STATE OF HAWAll

In the Malter of the Contested Case ) \-I earing Concerning Complaint C04-31 ) from Earthjustice, on Behalf of \-lui 0 Na ) Wai Eha and Maui Tomon'ow Foundation, ) Inc. Regarding Waste of Surface Water ) from Ditches of Wailuku Water Company, ) LLC, Wail uku , Maui )

) )

Case No. CCH-MA-06-02

OFFICE OF HAW All AN AFFAIRS' MEMORANDUM REGARDING THE SCOPE OF THE CONTESTED CASE HEARING; CERTIFICATE OF SERVICE

OFFICE OF HAWAIIAN AFFAIRS' MEMORANDUM REGARDING THE SCOPE OF THE CONTESTED CASE HEARING

1. INTRODUCTION

Intervenor Office of Hawaiian Affairs ("OHA") subm its thi s memorandum in

connection with the request, made during the November 13,2006 prehearing conference, for

briefing from the parties regard ing the scope of Contested Case Hearing MA-06-02. OHA

respectfull y submits that, because th is contested case was initiated by the Commission on Water

Resource Management ("Comm ission" or "CWRM") specifically "to address complaint C04-

University of Hawaii School of Law Library - Jon Van Dyke Archives Collection

31, "I the scope of the contested case is necessarily defined by the allegations made and relief

sought in complaint C04-31, Hui 0 Na Wai 'Eha and Maui Tomorrow Foundation, Inc.'s

Complaint Against Wailuku Agribusiness Co., Inc. and Hawaiian Commercial & Sugar

Company and Petition for Declaratory Order to Immediately Cease Wasting Water Diverted

from Waihe'e, North & South Waiehu, 'lao, and Waikapii Streams and Their Tributaries, filed

on October 19, 2004 ("Wasting Complaint").

The Wasting Complaint alleges that Wailuku Agribusiness Co., Inc., nka Wailuku

Water Company ("WWC") and Hawaiian Commercial & Sugar Company ("HC&S", and,

collectively with WWC, the "Companies") are unlawfully wasting water diverted from Waihe'e,

North & South Waiehu, 'lao, and Waikapii Streams and their tributaries (collectively, "Na Wai

'Eha") by, among other things, withdrawing water in excess of their actual needs, and seeks "an

order directing [WWC], HC&S, and other necessary parties immediately to cease all waste and

leave all water not being put to actual, reasonable and beneficial use in their streams of origin. "

Wasting Complaint, p. 1. The Hearing Officer's comments at the November 13,2006 prehearing

conference and in Minute Order No.5 indicate a preference to depart from the Commission's

decision "to address complaint C04-31" in this contested case hearing, and instead to narrow the

scope of this proceeding by considering "waste" without reference to "reasonable and beneficial

use." To narrow the scope of this contested case by adopting an artificially restrictive definition

of "waste" that is contrary to well-settled law would amount to a sua sponte dismissal of the

Wasting Complaint which the Commission unanimously voted to address in this contested case

proceeding.

I Commission on Water Resource Management Notice of a Contested Case Hearing (CCH-MA-06-02) Concerning Complaint C04-031 From Earthjustice (EJ), on Behalf ofHui 0 Na Wai Eha and Maui Tomorrow Foundation, Inc. Regarding Waste of Surface Water From Ditches of Wailuku Water Company, LLC Wailuku, Maui.

2


II. PROCEDURAL BACKGROUND

On June 25, 2004, Hui 0 Na Wai 'Eha and Maui Tomorrow Foundation, Inc.

(collectively, the "Community Groups") filed a Petition to Amend the Interim Instream Flow

Standards for Waihe'e, North & South Waiehu, 'lao, and Waikapfi Streams and Their Tributaries

("IIFS Petition"). On October 19,2004, the Community Groups filed the Wasting Complaint, in

which they requested immediate interim relief pending final resolution of the IIFS Petition. The

Status Report2 provided to the Commission almost a year later summarized the Wasting

Complaint as follows:

The citizen complaint states that [WWC] and HC&S are wasting public trust water resources because:

A. Discrepancies between diversions from Na Wai Eha and actual water needs and uses establishes waste;

B. Consistent overflows from reservoirs confirm waste; C. Poorly maintained conveyance systems are causing waste; and D. [WWC] and HC&S's failure to submit full and accurate reports of their

diversions is unacceptable.

The petition for a declaratory order urges the Commission to order [WWC] and HC&Sto:

A. Cease and desist immediately all waste; B. Leave any water not established as actually needed and used for

reasonable-beneficial purposes in Na Wai Eha; C. Provide any and all necessary information on diversions, actual needs and

uses, and system losses; and D. Pay administrative penalties for past and any further violations.

Id., pp. 1-2. According to the Status Report, CWRM's staffwas unable to determine WWC's

actual water uses or to reconcile the discrepancies between WWC's reports of water delivered to

2 The "Status Report" refers to the "Status Report on the Hui 0 Na Wai Eha and Maui Tomorrow Foundation, Inc., through Earthjustice, Citizen Complaint Against Wailuku Agribusiness Co., Inc. and Hawaiian Commercial & Sugar Company and Petition for Declaratory Order to Immediately Cease Wasting Water Diverted from Waihee, North & South Waiehu, lao, and Waikapu Streams and Their Tributaries for the Commission on Water Resource Management" dated August 17, 2005.

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HC&S and HC&S's reports of water used; to the contrary, staff found "[t]here are problems with

[WWC's] reported water use data." Id., p. 2, and, generally, pp. 2-5.

The Status Report was presented at the Commission's August 17,2005, Meeting.3

The IIFS Petition and Wasting Complaint were not discussed again at a Commission meeting

until the January 11, 2006 meeting, at which the Commission was briefed on the pending ground

water and surface water actions in the Wailuku, Maui area.4 At that meeting, the Mayor of Maui

urged the restoration of water to the streams, and counsel for the Community Groups pointed out

that it had been well over a year since the IIFS Petition and Wasting Complaint had been filed

(during which time WWC had tripled its revenues from selling diverted water) and that,

according to CWRM's staff, it had no information on WWC's end use of the water diverted from

Na Wai 'Eha. Id.

A motion to hold a combined contested case hearing for the IIFS Petition, Water

Use Permit Applications ("WUPA") and Wasting Complaint was taken up at the Commission's

February 15, 2006 meeting and, following discussion and amendment, unanimously passed. 5

After a request for clarification of that action by CWRM's staff,6 the matter was further discussed

at the Commission's March 17, 2006 meeting.7 Counsel for the Community Groups stated that

3 Minutes for the Meeting of the Commission on Water Resource Management on August 17, 2005, item E.2., pp. 11-12.

4 Minutes for the Meeting of the Commission on Water Resource Management on January 11, 2006, item G, pp. 5-9.

5 Minutes for the Meeting of the Commission on Water Resource Management on February 15, 2006, item C.3. pp. 13-16.

6 See Staff Submittal for the meeting of the Commission on Water Resource Management dated March 17,2006 requesting "clarification of the Commission's February 15,2006 action[.]"

7 Minutes for the Meeting of the Commission on Water Resource Management on March 17, 2006, item C., pp. 3-10.

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they were requesting two separate contested cases because, although there were overlapping

issues, the Community Groups did not want to hold up the interim relief requested in the

Wasting Complaint while the broader issues of the IIFS PetitionIWUPAs were decided. ld. at 5.

In response to a question by a Commissioner regarding potential overlap, counsel for HC&S

indicated that there would not necessarily be duplication in the two hearings, because the

hearings officer could incorporate the record from the first contested case hearing into the second

hearing. ld. at 7. The future Hearing Officer also acknowledged the overlap in the two

proceedings:

Commissioner Miike stated that the waste CCH goes forward and the hearings officer gives a recommendation and the Commission votes. In the second phase, they still have to look at the water that was dealt with in the first part because its going to be a file [sic - final?] determination about instream flow standards and water use permits. It may modify the first part. Commissioner Miike stated that he thinks everyone would want a resolution on the waste complaint before a normal amount of time passes. Commissioner Miike also stated that the second CCH would be taking a look at making a determination on IIFSs and WUPAs. The waste complaint right now applies to an offstream use, the second CCH would make a final determination on the off stream use so it may affect the waste complaint.

Id, p. 9. Notwithstanding the acknowledged overlap of issues between the Waste Complaint and

the IIFS PetitionlWUPAs, the Commission voted unanimously that the Waste Complaint would

be the subject of a separate contested case hearing, rather than being combined with the

contested case regarding the IIFS Petition and WUP As, and that the contested case hearing

regarding the Waste Complaint would be prioritized. Id., pp. 9-10.

By letter dated April 18, 2005 [sic - 2006] from the Chairperson of the

Commission, the Hearing Officer was appointed for the IIFS/WUP A contested case hearing

(CCH-MA06-01) and the Wasting Complaint contested case hearing (CCH-MA06-02), to

"conduct all aspects of the contested case hearings in accordance witlt the clarifications made at

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the Commission's March 17, 2006 meeting[.]n8 The Commission caused to be published on

May 9, 2006 a notice that the Commission "will conduct a contested case hearing on [sic] to

address complaint C04-31 regarding waste of surface water from ditches owned by Wailuku

Water Company, LLC (fonnerly Wailuku Agribusiness Company) in the Wailuku area.,,9

Following a standing hearing on June 19,2006, the parties to the contested case

hearing were identified and a mediator was selected. IO At its September 20, 2006 Meeting, the

Commission again expressly acknowledged the overlap between the Wasting Complaint

contested case hearing and the IIFS/wuP A contested case hearing. ]] On October 11, 2006, the

Mediator reported to the Commission that the mediation had concluded with no agreements

being reached. 12 A prehearing conference was held in CCH-MA06-02 on November 13,2006.

At that conference, an issue was raised regarding the scope of this contested case

and the definition of "waste," in response to which the Hearing Officer indicated his inclination

that issues concerning reasonable-beneficial use were relevant only to the IIFS/WUP A contested

case hearing, but not to this contested case hearing addressing the Wasting Complaint.

8 Letter dated April 18, 2005 [sic - 2006] from Peter T. Young to Mr. Lawrence H. Miike, M.D., J.D . (emphasis added).

9 Commission on Water Resource Management Notice ofa Contested Case Hearing (CCH-MA-06-02) Concerning Complaint C04-31 From Earthjustice (EJ) on Behalf of Hui 0 Na Wai Eha and Maui Tomorrow Foundation, Inc. regarding Waste of Surface Water from Ditches of Wailuku Water Company, LLC, Wailuku, Maui, dated May 4,2006.

10 See Minute Order No.2 dated June 28, 2006 in CCH-MA06-02.

11 The Commission unanimously approved correcting the August 16, 2006 minutes to state that "[w]hatever decision is made [in the Wasting Complaint contested case hearing], it will be modified when the second contested case is resolved regarding petitions and the permitting of the off-stream uses." Minutes for the Meeting of the Commission on Water Resource Management on September 20,2006, item A, p. 1.

12 See Report of the Mediator dated October 11,2006, from Peter S. Adler, Ph.D. to Commission on Water Resource Management.

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III. AS A MA ITER OF LAW, THE CONCEPT OF "WASTE" IS INSEPARABLE FROM THE CONCEPT OF "REASONABLE-BENEFICIAL USE"

As an initial matter, it is well-settled, both at common law and under the Hawai'i

Water Code, that diversion of water in excess of that needed for a reasonable-beneficial use is,

by definition, "waste." See, e.g., In re Waiahole Ditch Combined Contested Case Hearing, 94

Haw. 97, 118, 156, 9 P.3d 408, 430,468 (2000) (agreeing with the Commission that water not

actually put to reasonable-beneficial use should be kept in streams to avoid unlawful waste);

Ready Mixed Concrete Co. in Adams County v. Farmers Reservoir and Irrigation Co., 115 P.3d

638,645 n.4 (Colo. 2005) ("Wasting water by diverting it when not needed for beneficial use, or

running more water than is reasonably needed for application to beneficial use, is 'waste.''')

{citing Santa Fe Trail Ranches Prop. Owners Assn. v. Simpson, 990 P.2d 46,56 (Colo.l999));

State ex reI. Erickson v. McLean, 308 P.2d 983,987 (N.M. 1957) ("Water is too valuable to be

wasted, either through an extravagant application for the purpose appropriated or by waste by

misapplication which can be avoided by the exercise of a reasonable degree of care to prevent

loss, or loss of a volume which is greatly disproportionate to that actually consumed"); Frank E.

Maloney et al., Florida's "Reaonsable Beneficial" Water Use Standard: Have East and West

Met?, 31 U. Fla. L. Rev. 253, 266 (1979) ("Courts have uniformly held that an extravagant or

wasteful application of water is not a beneficial use").

The Hawai'i Water Code reinforces the connection between reasonable-beneficial

use and waste, by defining the former as "use of water in such quantity as is necessary for

economic and efficient utilization, for a purpose, and in a manner which is both reasonable and

consistent with ... the public interest." HRS' § 174C-3 (emphasis added). This definition

derives from the Model Water Code, the commentary to which explains that "[t]he reasonable-

beneficial use standard is intended to protect other water users and the general public from

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wasteful uses of water." A Model Water Code, ch. 2 commentary at 170 (Frank E. Maloney et

al. eds., 1972). The Commission's implementing regulations are even more explicit in defining

reasonable-beneficial use by reference to its converse, waste: "'[r]easonable-beneficial use'

means the use of water in such a quantity as is necessary for economic and efficient utilization,

for a purpose, and in a manner that is not wasteful .... " HAR 13-170-1 (1988) (emphasis

added).

Waste is the flip-side of reasonable-beneficial use; diverted water that is not being

put to reasonable-beneficial use is, by definition, wasted. 13 To consider waste without reference

to reasonable-beneficial use is simply nonsensical.

IV. THE SCOPE OF THIS CONTESTED CASE HEARING IS NECESSARILY COEXTENSIVE WITH THE SCOPE OF THE WASTING COMPLAINT

This contested case hearing was initiated by the Commission, on its own

(unanimously approved) motion, for the purpose of addressing the Wasting Complaint. The

scope of the hearing is therefore necessarily coextensive with the allegations made in, and relief

requested by, the Wasting Complaint.

The Wasting Complaint specifically alleges that the Companies are wasting water

by, among other things, diverting water in excess of their actual needs (and even in excess of

what was diverted at the height of sugar cultivation, notwithstanding the sharp decrease in the

number of acres being irrigated with the diverted water). Wasting Complaint, pp. 4-7.

Recognizing that the IIFS Petition could take years to resolve, and that continued waste of public

trust resources during that period is unacceptable, the Community Groups requested (more than

two years ago) that, "as a minimum interim measure pending the resolution of the petition to

13 Such waste would include, for example, water that is applied to crops in excess of the quantity that is necessary for efficient and economic utilization, or water being put to such unreasonable uses as twenty-four hour a day sprinkler irrigation of out-of-watershed scrub land.

8


amend Nil Wai 'Eha's IIFS, [the Companies] must leave any water not established as actually

needed and used for reasonable-beneficial purposes in the streams. II Wasting Complaint, p. 15.

There can be no question that the extent to which the Companies' use of the

diverted water is reasonable-beneficial is at the heart of the Wasting Complaint, and thus well

within the scope of this proceeding. The fact that the same issue may also require consideration

in the IIFSIWUPA contested case hearing14 does not justify further delay in protecting public

trust resources, and the Commission clearly did not intend any such delay. The Commissioners,

having presumably reviewed the Status Report (if not the entire Wasting Complaint), were well

aware that reasonable-beneficial use would be an issue in this proceeding, and recognized the

potential overlap between this proceeding and the IIFS/WUP A proceeding, before unanimously

voting to initiate and prioritize this separate contested case hearing to address the Wasting

Complaint.

Deferring consideration of the issue until the IIFSIWUP A contested case hearing

would obviously defeat the very purpose of the Wasting Complaint, which is to obtain interim

relief pending the resolution of the IIFS proceeding. The extent to which the Companies' actual

uses of the diverted water are reasonable-beneficial uses is an issue that is factually distinct from

the other, more complex scientific issues in the IIFS proceeding, and there is no reason it should

not be determined in this contested case hearing, as it must be in order to address the Wasting

Complaint. As the Hearing Officer explained at the March 17, 2006 Commission meeting, it is

almost inevitable that the interim restoration ordered in response to the Wasting Complaint will

have to be revisited and potentially revised after the IIFS has been established. Thus, while the

14 OHA notes, however, that although a permit applicant must demonstrate that its proposed use is reasonable-beneficial, the WUP As at issue in CCH MA06-01 apply to only a small portion of the water diverted from Na Wai 'Eha, the bulk of which is not subject to pennitting requirements.

9


Commission obviously contemplated the possible modification of any interim restoration, it

clearly did not intend that the issue effectively be deferred until after the lIFS had been

established. Had that been the Commission's intent, there would have been no need to initiate

this separate contested case hearing to address the Wasting Complaint or to direct the Hearing

Officer to conduct all aspects of the contested case hearings in accordance with the clarifications

made at the March 17, 2006 Commission meeting, one of which conferred priority status on this

proceeding.

In sum, the scope of this proceeding is necessarily coextensive with the scope of

the Wasting Complaint, which seeks the interim restoration to Na Wai 'Eha, pending resolution

of the IIFS Petition, of any water not established as being put to reasonable-beneficial use. To

defer consideration of reasonable-beneficial use until the IIFS/WUP A contested case hearing

would be, in effect, a dismissal of the Waste Complaint. Such a dismissal would appear to be

contrary to the intent of the Commission in initiating this proceeding and would likely cause the

Commission to be in derogation of its statutory and public trust duty to investigate and take

appropriate action in response to wasting of water. HRS § 174C-13.

v. CONCLUSION

OHA respectfully submits that, by initiating this contested case hearing to address

the Wasting Complaint, the Commission necessarily defined the scope of the proceeding as

being coextensive with the scope of the Wasting Complaint. Because the Wasting Complaint

seeks restoration of diverted water that is not being put to actual reasonable-beneficial use, as

such water is, by definition, being wasted, this proceeding must address the issue of waste by

determining the extent to which the diverted water is actually being put to reasonable-beneficial

use.

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DATED: Honolulu, Hawai'i, November 28, 2006.

P LA W.BUNN LINDSEY KASPEROWICZ Attorneys for Intervenor OFFICE OF HAWAIIAN AFFAIRS

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BEFORE THE COMMISSION ON WATER RESOURCE MANAGEMENT

STATE OF HAWAI' I

In the Matter of the Contested Case Hearing ) Case No. CCH-MA06-02 Concerning Complaint C04-31 from ) Earthjustice, on Behalf ofHui 0 Na Wai 'Eha) CERTIFICATE OF SERVICE and Maui Tomorrow Foundation, Inc. ) Regarding Waste of Surface Water from ) Ditches of Wailuku Water Company, LLC, ) Wailuku, Maui )

----------------------------~) CERTIFICATE OF SERVICE

The undersigned hereby certifies that on this date a true and correct copy of the

foregoing was served on the following parties bye-mail attachment, receipt confirmed by

recipient, followed by U.S. mail, postage prepaid, addressed as set forth below:

Via E-Mail

DR. LAWRENCE H. MIlKE x Hearing Officer ([email protected]) State of Hawaii Department of Land and Natural Resources Commission on Water Resource Management P~O. Box 621 Honolulu, HI 96809

MARK J. BENNETT Attorney General JULIE CHINA

X [email protected])

Deputy Attorney General State of Hawaii Department of the Attorney General 425 Queen Street Honolulu, HI 96813

YVONNE Y. IZU x Morihara Lau & Fong LLP ([email protected]) 841 Bishop Street, Suite 400 Honolulu, HI 96813

Attorney for Hawaiian Commercial & Sugar Company (HC&S)

Via U.S. Mail

x

x

x


ViaE-Mail Via u.s. Mail

DA VID SCHULMEISTER X X Cades Schutte LLP ( [email protected]) 1000 Bishop Street, Suite 1200 Honolulu, HI 96813

Attorney for Hawaiian Commercial & Sugar Company (HC&S)

GILBERT S.C. KEITH-AGARAN X X Takitani & Agaran ([email protected]) 24 N. Church Street, Suite 409 Wailuku, HI 96793

Attorney for Wailuku Water CompanyLLC

PAUL R. MANCINI X X Mancini Welch & Geiger ([email protected]) 33 Lono Avenue, Suite 470 Kahului, HI 96732

Attorney for Wailuku Water CompanyLLC

BRIAN T. MOTO X X Corporation Counsel [email protected]) JANE E. LOVELL Deputy Corporation Counsel County of Maui 200 South High Street Wailuku, HI 96793

Attorney for County of Maui, Department of Water Supply

JON M. VAN DYKE X X Special Deputy Corporation Counsel, [email protected]) County of Maui

2515 Dole Street Honolulu, HI 96822

Attorney for County of Maui, Department of Water Supply

D. KAPUA SPROAT X X ISAAC H. MORIW AKE ([email protected]) Earthjustice ([email protected]) 223 S. King Street, Suite 400 Honolulu, HI 96813

Attorneys for Hui 0 Na Wai Eha

2


DATED: Honolulu, Hawaii, November 28, 2006.

LINDSEY KASPEROWICZ Attorneys for Intervenor OFFICE OF HAWAIIAN AFFAIRS

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