Aluli v. Lewin
828 P.2d 802, 73 Haw. 56, 1992 Haw. LEXIS 23 (1992)
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Rule of Law:
When a statute requires that an administrative agency's issuance of a permit be in compliance with agency rules, the agency cannot issue such a permit by creating ad-hoc, applicant-specific conditions in the absence of formally promulgated rules governing the regulated activity.
Facts:
- True/Mid-Pacific Geothermal Venture (True) sought to construct and operate geothermal wells along the Kilauea Middle East Rift Zone.
- The operation of these wells would result in the emission of hydrogen sulfide (H2S), a potential air pollutant, into the atmosphere.
- True submitted an application to the Hawaii State Department of Health (DOH) for a permit to construct and operate the wells.
- At the time of the application and permit issuance, the DOH had not adopted any formal administrative rules or state ambient air quality standards governing H2S emissions.
- The DOH issued an Authority to Construct permit to True that contained 26 special conditions, six of which were created specifically for this permit to regulate H2S emissions.
Procedural Posture:
- A group of appellants filed a complaint in the circuit court against True/Mid-Pacific Geothermal Venture (True) and the State Department of Health (DOH).
- The complaint sought declaratory and injunctive relief to halt the construction and operation of geothermal wells.
- Appellants argued that DOH erred by issuing an air pollution permit to True without having first promulgated rules governing hydrogen sulfide (H2S) emissions.
- The circuit court (trial court) ruled that administrative rules were unnecessary and denied the appellants' claim for relief.
- The appellants appealed the circuit court's decision to the Supreme Court of Hawaii.
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Issue:
Does a state agency, authorized by statute to issue an air pollution permit only if the proposed operation complies with the agency's rules, have the authority to issue such a permit by creating ad-hoc conditions specific to that permit when no formal rules governing the particular pollutant have been promulgated?
Opinions:
Majority - Wakatsuki, J.
No. A state agency lacks the authority to issue a permit by creating ad-hoc conditions when the governing statute requires compliance with pre-existing, formally promulgated rules. The governing statute, HRS § 342B-32, explicitly requires the DOH to refuse a permit unless the operation would comply with 'the rules of the department.' The 26 special conditions imposed on True's permit were not 'rules' adopted in accordance with the Hawaii Administrative Procedures Act; they were an improper form of ad-hoc 'rulemaking.' Allowing agencies to create standards on a case-by-case basis grants them 'unbridled discretion,' which undermines fairness, predictability, and public confidence. Matters of public concern, such as air quality standards, require public input through the formal rulemaking process, ensuring that all interested parties have an opportunity to be heard and that clear, consistent standards are established for all potential applicants.
Analysis:
This decision significantly limits administrative agency discretion by reinforcing the distinction between adjudication and rulemaking. It establishes that when a statute requires compliance with 'rules,' an agency cannot circumvent the formal, public rulemaking process by imposing case-by-case conditions in a permit proceeding. This holding protects the public's right to participate in the formulation of environmental and public health standards and ensures that regulated entities are subject to clear, predictable, and consistently applied standards. The case serves as a strong precedent against arbitrary agency action and upholds the procedural safeguards of the Administrative Procedures Act.
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