In the Matter of the Contested Case Hearing on the Water Use Permit Application Filed by Kukui (Molokai), Inc.

Summary

The Supreme Court of Hawaiʻi reviewed consolidated appeals from the Commission on Water Resource Management’s approval of water-use permits for Kukui (Molokai), Inc. The court held that the Department of Hawaiian Home Lands’ water reservation was a public-trust purpose rather than an existing legal use, but concluded that the Commission inadequately scrutinized the proposed diversion, improperly considered an untimely application, and failed to consider the closure of KMI’s hotel and golf course. The court vacated the Commission’s final decision and order and remanded for further proceedings.

Holdings

1. DHHL's constitutional water reservation is a public-trust purpose, not an existing legal use for purposes of Hawaiʻi Revised Statutes § 174C-49(a)(3). The Commission nevertheless had to account for and protect the reservation whenever feasible.
2. The Commission failed to apply the required heightened scrutiny to KMI's proposed private commercial water use because it did not adequately explain the disparate treatment of KMI's new uses, did not evaluate practicable alternative water sources before granting the permit, and did not adequately justify its allocation in light of public-trust purposes.
3. The Commission properly relied on the established 5.0-million-gallon-per-day sustainable-yield determination and could not ad hoc revise that figure during a permit-application proceeding.
4. The Commission appeared to improperly place the burden on DHHL to produce conclusive evidence that KMI's pumpage would increase chloride concentrations at DHHL's wells. KMI, as the permit applicant, bore the burden of demonstrating that its use was reasonable-beneficial notwithstanding the potential harm.
5. The Commission's decision did not violate the precautionary principle because it applied the established sustainable-yield determination and reserved authority to modify the permits if significant or unexpected chloride increases or drawdowns occurred.
6. KMI's December 15, 1993 application was untimely as an application to continue existing uses. Because KMI was not identified as an applicant in the timely June 8, 1993 application, the later application could not preserve KMI's existing uses.
7. KMI requested both existing and proposed uses. Its primary request was for existing uses, but it alternatively sought an award of the requested amount as new uses if the Commission rejected the existing-use characterization.
8. KMI's authority to transport water from Well 17 depended on satisfying HRS § 174C-49(c), not on common-law correlative rights.
9. The Commission erred by failing to consider whether and to what extent the closure of KMI's hotel and golf course affected the proposed-use allocation.
10. The Commission impermissibly shifted the burden of proving harm to traditional and customary Native Hawaiian gathering rights onto Caparida and Kuahuia. KMI bore the burden of affirmatively establishing that its proposed use would not interfere with those public-trust rights.

Questions Presented

1. Whether DHHL's constitutional water reservation is an existing legal use or a public-trust purpose.
2. Whether the Commission adequately scrutinized KMI's proposed private commercial diversion of water.
3. Whether the Commission improperly placed the burden on DHHL to prove that KMI's pumping would harm DHHL wells and public-trust resources.
4. Whether the Commission's precautionary conditions were legally sufficient.
5. Whether the Commission erred by considering KMI's untimely existing-use application.
6. Whether KMI requested both existing and proposed uses.
7. Whether KMI could transport water from Well 17 under Hawaiʻi Revised Statutes § 174C-49(c).
8. Whether the Commission was required to consider the closure of KMI's hotel and golf course in evaluating proposed uses.
9. Whether violations of the Safe Drinking Water Act were germane to the water-allocation decision.
10. Whether the Commission improperly shifted the burden of proving harm to traditional and customary Native Hawaiian rights onto the intervenors.

Disposition

vacated