Asato v. Procurement Policy Board, State of Hawaii.Â
2014 WL 594080, 322 P.3d 228, 132 Haw. 333 (2014)
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Rule of Law:
An 'interested person' under Hawaii Revised Statutes (HRS) § 91-7 has standing to challenge the validity of an administrative rule without demonstrating injury-in-fact if the challenge serves the public interest and the 'needs of justice.' An administrative rule is invalid if it exceeds the agency's statutory authority by directly contradicting a mandatory requirement in the enabling statute.
Facts:
- The Hawaii State Legislature enacted HRS § 103D-304(g), which mandates that for professional services contracts, a selection committee 'shall rank a minimum of three persons.'
- The State of Hawaii Procurement Policy Board (the Board) later promulgated Hawaii Administrative Rule (HAR) § 3-122-66.
- HAR § 3-122-66 created a procedure allowing a purchasing agency to proceed with contract negotiations even if the selection committee submitted the names of fewer than three qualified persons.
- Following the rule's enactment, the City and County of Honolulu awarded at least twenty-six professional service contracts for architects and engineers where fewer than three persons were on the list submitted for consideration.
- Lloyd Y. Asato is a taxpayer in Hawaii who became aware of these contract awards.
Procedural Posture:
- Lloyd Y. Asato filed a complaint in the circuit court of the first circuit (a state trial court) against the State of Hawaii Procurement Policy Board (the Board).
- Asato sought a declaratory judgment that HAR § 3-122-66 was invalid and an injunction against its use.
- Asato filed a motion for summary judgment, and the Board filed a cross-motion for summary judgment.
- The trial court granted Asato's motion, finding he had standing as an 'interested person' and that HAR § 3-122-66 was invalid because it conflicted with its enabling statute.
- The trial court declined Asato's request to declare all contracts issued under the rule void and later awarded him attorney's fees.
- Both the Board (appellant) and Asato (cross-appellant) appealed the trial court's judgment to the Intermediate Court of Appeals.
- The Supreme Court of Hawaii granted a discretionary transfer of the case from the Intermediate Court of Appeals before that court could rule.
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Issue:
Does Hawaii Administrative Rule § 3-122-66, which allows for the procurement of professional services with fewer than three qualified persons ranked, exceed the statutory authority of the State Procurement Policy Board under Hawaii Revised Statutes § 103D-304(g), which mandates ranking a 'minimum of three persons'?
Opinions:
Majority - Acoba, J.
Yes, HAR § 3-122-66 is invalid because it exceeds the scope of the Board's statutory authority. First, Asato has standing as an 'interested person' under HRS § 91-7 without needing to satisfy the three-part injury-in-fact test. The court overrules prior precedent requiring such a showing, reasoning that the legislative history of HRS § 91-7 intended to liberalize standing for challenges to agency rules to serve the 'needs of justice,' particularly in cases of public interest like ensuring the integrity of public procurement. On the merits, the rule is invalid because the plain language of HRS § 103D-304(g) uses the mandatory term 'shall,' making the 'minimum of three persons' requirement unambiguous and absolute. HAR § 3-122-66 directly conflicts with this statute by creating an unauthorized waiver. The legislative history further shows that the legislature specifically considered and removed language that would have permitted fewer than three submissions, reinforcing its intent to make the minimum a strict requirement. The Board cannot justify the rule under its general exemption authority, as that power is limited to specific types of goods or services, not to creating procedural exceptions to statutory mandates.
Dissenting - Recktenwald, C.J.
No, this challenge should be dismissed because the plaintiff lacks standing to bring it. The court should not reach the merits of the rule's validity. For over thirty years, this court's well-settled precedent has required a plaintiff challenging a rule under HRS § 91-7 to satisfy the three-part injury-in-fact test. The majority abandons this precedent without compelling justification, effectively granting standing to any person willing to file a lawsuit. Asato failed to allege a distinct and palpable injury; his interest is purely ideological and an undifferentiated injury common to all members of the public. Furthermore, Asato does not have taxpayer standing because he failed to demonstrate that the rule increased his tax burden, and the special circumstances that might presume harm are not present here. Because Asato has failed to carry his burden of demonstrating standing, the case should be dismissed for lack of jurisdiction.
Analysis:
This decision significantly liberalizes Hawaii's standing doctrine for administrative law, allowing 'interested persons' to challenge agency rules on public interest grounds without proving direct personal harm. By removing the injury-in-fact requirement for such claims, the court lowers a major barrier to judicial review and empowers citizens to act as private attorneys general to ensure agency compliance with legislative mandates. The ruling also strongly reaffirms the foundational administrative law principle that an agency's rulemaking authority is strictly limited by its enabling statute. Agencies may not create rules, even for practical reasons, that contradict the clear and mandatory terms set by the legislature.
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