By Christina Lizzi

Introduction

On December 12, 2016, Alexander and Baldwin (“A&B”) subsidiary Hawaiian Commercial and Sugar Company (“HC&S”) made its final cane haul on Maui, closing a long chapter of sugar plantation agriculture in Hawai‘i. Continuing, however, is the 140 year old battle over A&B’s diversion of East Maui waters to feed its fields, compromising both Native Hawaiian rights to kalo farming and native stream life.

The struggle is fueled by Act 126, known in the 2016 Legislative Session as House Bill (“H.B.”) 2501, and signed into law by Governor David Ige on June 28, 2016. The Act enables  A&B and its division East Maui Irrigation (“EMI”), with the Board of Land and Natural Resources’ (“BLNR”) approval, to continue diversions of water from four East Maui license areas to the Central Valley isthmus, side-stepping a January 2016 court ruling invalidating the corporations’ permits to do so. On December 9, 2016, just days before the final harvest, BLNR approved continued diversions with conditions.

In Hawai‘i, water has historically been, and continues to be, a public trust resource. This trust status requires the State to both protect and ensure the “maximum reasonable and beneficial” use of water. It imposes an “affirmative duty to take the public trust into account in the planning and allocation of water resources and to protect public trust uses whenever feasible.” Public trust uses take precedence over private commercial uses. As the Hawai’i Supreme Court explained, “any balancing between public and private purposes must begin with a presumption in favor of public use, access, and enjoyment.” Under the public trust doctrine, “offstream diverters who seek to use water for their private commercial use must prove both the social and economic utility of the proposed use and absence of alternative sources of water.” In practice, however, the State continues to violate the public trust doctrine by authorizing corporations’ diversions of public water for private profit. The legislature’s passage of H.B. 2501 and BLNR’s approval of continued diversions exemplify this practice.

This essay will provide a brief overview of water as a public trust, how East Maui waters came under A&B’s control, the development and passage of H.B. 2501, and its recent implementation at BLNR’s December 9, 2016 hearing granting A&B and its division EMI continued access on “holdover status” to water in four license areas.

Water as a Public Trust

“Ola i ka wai” – water is life. The first inhabitants of the Hawaiian Islands understood this well, revering rivers and streams as the physical embodiment of the god Kāneikawaiola. Belonging to the gods, water could not be “owned”; it was for the benefit of all. Ali‘i nui, chiefs, managed water resources as trustees for present and future generations. Native Hawaiians relied on water for their daily practices, most importantly, to grow the staple food crop kalo. Continuous ma uka to ma kai stream flow ensured abundant stream life and proper water quality for fishponds, which were important to the Hawaiian diet. Ancient irrigation systems facilitated kalo farming, however, “[n]o ‘auwai (irrigation ditch) was permitted to take more water than continued to flow in the stream below the dam.”

The arrival and subsequent influx of Westerners, beginning in 1778, dramatically altered native life. Accustomed to a system of private property, newcomers brought with them a sense of entitlement to the Islands’ natural resources, including water, to support their private economic pursuits. Plantation agriculture thrived, and with it grew the plantation owners’ power and influence. To minimize the resulting conflicts between competing interests, in the mid-1800s, the Kingdom of Hawai‘i began codifying its laws in writing. The early laws of the Kingdom, including the 1839 Law Respecting Water for Irrigation and the Constitution of 1840, clarified that water was for the beneficial use of all people. These laws laid the foundation for the public trust doctrine.

Under pressure, however, the government’s management of water as a public trust resource eroded. After the Māhele in 1848, and the Kuleana Act of 1850, which enabled private land ownership and established appurtenant water rights for kuleana owners, plantations acquired more land and demanded more water. The Kingdom of Hawai‘i acquiesced. Plantation owners sunk wells and built vast diversion systems, buying and selling water without respect for other users. In 1893, a group of Western businessmen overthrew the Kingdom of Hawai‘i, seeking annexation to the United States. Over time, private interests overshadowed the public interest in water.

After Statehood in 1959, public trust principles reemerged.  In 1973, the Hawai‘i Supreme Court decided the seminal case of McBryde Sugar Co. v. Robinson. In that case, the court examined the history of water as a public trust resource under Hawaiian Kingdom law, and found that the same principles applied:  water could not be privately owned. Subsequent case law reaffirmed that water is indeed a public trust resource, despite the State’s continued management of it as a commodity.

The 1978 Constitutional Convention formally established water as a public trust resource. Article XI Section 1 states, “all public natural resources are held in trust by the State for the benefit of the people.” Article XI Section 7 created the water commission to fulfill the State’s duties to “protect, control and regulate the use of Hawai‘i’s water resources for the benefit of its people.” The Constitution further requires the State to “protect all rights, customarily and traditionally exercised for subsistence, cultural and religious purposes and possessed by ahupua‘a tenants who are descendants of native Hawaiians who inhabited the Hawaiian Islands prior to 1778, subject to the right of the State to regulate such rights.” Under these laws, the Hawai‘i Supreme Court has affirmed and clarified the scope of the State’s obligation to protect Native Hawaiians’ access to water resources for the perpetuation of cultural practices.

A&B’s Water Permitting History in East Maui

Despite water’s status as a public trust resource, private companies continue to profit from it.  A&B’s website describes how two young entrepreneurial sons of missionaries, Samuel T. Alexander and Henry P. Baldwin, brought water from the wet, windward side of Maui to the dry, central plains, devising a replicable system to grow their sugar empire. In 1876, A&B joined with the Haiku Sugar Company to petition the government for access to four East Maui streams to construct the Hamakua ditch. The Kingdom of Hawai‘i subsequently granted the companies’ request to divert water from the streams through ditches to central Maui.

Although the original term of the permit was twenty years, A&B retained and expanded its control over water flowing from East Maui streams through a series of lease agreements with the government. As the long-term lease agreements began expiring in the 1970s and 80s, A&B and EMI sought another long-term, thirty-year lease. Instead, BLNR began issuing A&B and EMI annually revocable permits rather than leases. Because the permits were statutorily required to be “temporary” in nature, a single entity could not hold the same permit from year to year. Consequently, A&B and EMI annually alternated the name on the permit application, and BLNR approved it.

In 2001, A&B and EMI again petitioned BLNR for long-term access, this time in the form of a thirty-year water license, with a continuation of yearly revocable permits until such a license was granted. Nā Moku Aupuni O Ko‘olau Hui, Inc. (“Nā Moku”), a Native Hawaiian organization representing East Maui kalo farmers with counsel from the Native Hawaiian Legal Corporation, filed for a contested case hearing “to challenge the legality of the long-term license.” In the interim, BLNR continued the holdover status of A&B and EMI’s revocable permits, enabling the companies to continue diverting between 164 and 450 million gallons of water per day (“mgd”). On March 23, 2007, the Board issued Findings of Fact and Conclusions of Law on Nā Moku’s contested case over the thirty-year license. It required A&B and EMI to “decrease diversions on Waiokamilo Stream to allow for more water to flow downstream to the local taro growers.”

In December 2015, BLNR again renewed the revocable licenses in holdover status. Nā Moku filed a claim in First Circuit Court asserting that BLNR failed to comply with proper environmental review for “actions that propose the use of state or county lands.” Although Judge Nishimura held that BLNR’s issuance of the revocable permits did not constitute an “action” requiring environmental review, she found that BLNR exceeded its authority by repeatedly issuing temporary permits in holdover status for thirteen years. Consequently, she invalidated A&B and EMI’s four revocable permits. The Board, as well as A&B and EMI, appealed the decision. The court stayed the invalidation pending the appeal.

Overview of H.B. 2501/Act 126

At the beginning of the 2016 legislative session, at the behest of A&B and EMI, five Representatives introduced H.B. 2501 to amend H.R.S. § 171-58 to “allow[] a holdover permit to be issued to an applicant seeking to renew their water rights lease.” In addition, six Senators introduced a companion bill, Senate Bill 3001. Signed into law as Act 126, the measure enables BLNR to authorize holdovers on a yearly basis for up to three consecutive years where an applicant is in the process of applying for a water lease. As a compromise, the bill was amended to include language requiring that the holdover be consistent with the public trust doctrine, that it be limited to existing lease applicants, and that the bill sunset on June 30, 2019.

H.B. 2501 was hotly contested.  Approximately thirty-five organizations submitted written testimony supporting H.B. 2501, and sixty-five organizations submitted testimony in opposition.

Proponents included politically and economically powerful players such as A&B and its subsidiary EMI, Monsanto, Syngenta, the State Department of Agriculture, and the Office of the Mayor of Maui County. A number of farmers and ranchers, businesses, and water-dependent power utilities also rallied to support A&B. Their message was consistent:  without A&B and EMI’s continued East Maui water diversions, agriculture, the economy, and Upcountry Maui residents would be in peril. A&B testified, “[f]or over 100 years, it has been the state’s East Maui waters that have enabled the Central Maui isthmus to be in productive agriculture.  And it is these waters that will enable it to remain in agriculture, after sugar.” They blamed Circuit Court Judge Nishimura’s ruling for creating “limbo” by leaving revocable water permit holders on unstable ground, which in turn caused great concern among farmers and ranchers.

On the other side, organizations such as the Sierra Club of Hawai‘i (“Sierra Club”), Nā Moku, the Native Hawaiian Legal Corporation (“NHLC”), and the Office of Hawaiian Affairs (“OHA”) representing kalo farmers, environmentalists, and members of the Native Hawaiian community united.   Their testimony focused on the over 140-year history of diversions harming Native Hawaiians, taxpayers, and native stream-life. They decried the injustice of special treatment for A&B, reiterating water’s public trust status and explained the range of alternatives available to provide water for diversified agriculture and Upcountry Maui residents.

Ultimately, the proponents’ messaging carried the day.  H.B. 2501 was passed, and Governor David Ige signed it into law on June 28, 2016.

Implementing Act 126: BLNR Approves Continued Holdovers

In December 2016, A&B and EMI again applied to BLNR for renewal of their permits in holdover status, this time, under Act 126. Despite the closure of HC&S, the corporation argued that it needed access in order to transition to diversified agriculture. Department staff recommended BLNR approve the holdover request. Without grounding in water law, staff further recommended BLNR find issuance of the holdover consistent with the public trust doctrine because of the importance of agriculture to the state, and A&B’s need to maintain its ditch system which their diversified agriculture plans allegedly depended upon.

On December 9, 2016, BLNR considered the request.  After hours of public testimony echoing the same concerns voiced during the legislature’s consideration of H.B. 2051, BLNR Member Christopher Yuen moved to grant A&B’s request with conditions. In a four to two vote, with member Jimmy Gomes recusing himself, BLNR approved the motion and granted the corporation another year to divert East Maui water from four license areas, Honomanu, Huelo, Ke‘anae, and Nahiko.

Concerns

Similar to the debate over H.B. 2501, vocal opponents included kalo farmers, environmentalists, and native Hawaiians generally. At the beginning of the meeting, NHLC requested a contested case for its client. It argued that with the closure of its sugar operations, A&B no longer required access to the water. Further, because A&B has both decreased needs for water and access to other ample water sources from its own wells and properties, it should not be granted continued use of East Maui streams for seemingly pure economic reasons. NHLC also argued that the staff recommendation incorrectly characterized A&B and EMI’s licenses an “authorized disposition of water rights” – a requirement to qualify for a holdover under Act 126. Judge Nishimura’s January 2016, NHLC argued, invalidated the licenses, removing them from the gambit of Act 126. Others, such as Maui Tomorrow Foundation, argued that A&B and EMI should not be allowed to divert an unlimited amount of water for unspecified, future farming plans.

Conditions

In response to the many concerns raised, Member Yuen proposed and the Board approved multiple conditions to its holdover approval. First, Yuen incorporated the Commission on Water Resource Management’s requirement from a related contested case proceeding for A&B and EMI to restore fourteen taro streams. Second, he required the restoration of Honomanu stream, which the Division of Aquatic Resources identified as a priority stream. Third, the corporation may only divert up to 80 mgd, but may return to the Board for approval to increase the amount. In accordance with a request from Board member Stanley Roehrig, the applicant was also ordered to exchange phone numbers with opposition in order to informally resolve some of the issues raised during the hearing.

Conclusion

Water in Hawai‘i is held in the public trust.  The state’s plantation history, however, has often dictated a different treatment for the resource.  Although A&B has not unveiled detailed plans for diversified agriculture in the Central Valley, it is able to continue diverting public trust waters to the detriment of kalo farmers and stream life reliant on the diverted streams.  As Wayne Tanaka from OHA noted at the December 9, 2016 hearing, “it is important to keep in mind that it’s been ‘just one more year’ for 30 years.” That does not take into account the long history preceding the issuance of yearly revocable permits.  With a new chapter of “diversified agriculture” supplanting the sugar and a legislature willing to accommodate A&B’s demands, “just one more year” may continue for years to come.