In Re Kukui (Molokai), Inc.
2007 Haw. LEXIS 381, 174 P.3d 320, 116 Haw. 481 (2007)
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Rule of Law:
Under Hawaii's public trust doctrine and State Water Code, an applicant for a water use permit for private commercial purposes bears the burden of proving the use is reasonable and beneficial, will not harm public trust purposes, and that no practicable alternative water sources exist before a permit may be granted.
Facts:
- On May 13, 1992, the Commission on Water Resource Management designated the island of Moloka'i a Water Management Area, requiring users to apply for permits for existing water uses by July 15, 1993.
- On June 8, 1993, Moloka'i Ranch, the owner of land overlying Well #17, filed a timely joint application for a water use permit.
- On October 19, 1993, Kukui (Moloka'i), Inc. (KMI) acquired ownership of the land containing Well #17 from Moloka'i Ranch.
- On December 15, 1993, five months after the statutory deadline, KMI submitted its own application seeking a permit to use water from Well #17 to support its Kaluako'i Resort, which included a hotel and golf course.
- The Department of Hawaiian Home Lands (DHHL) holds a constitutionally protected reservation of water from the same Kualapu'u aquifer to serve current and future Hawaiian homesteaders.
- Judy Caparida and Georgina Kuahuia, who are Native Hawaiian, exercise traditional and customary gathering rights for subsistence purposes in the nearshore marine environment, which could be affected by groundwater withdrawal from the aquifer.
- During the course of the administrative proceedings, KMI's hotel and golf course, the primary purposes for the requested water use, were closed.
Procedural Posture:
- Kukui (Moloka'i), Inc. (KMI) applied to the Commission on Water Resource Management ('the Commission') for a water use permit.
- The Department of Hawaiian Home Lands (DHHL), the Office of Hawaiian Affairs (OHA), Judy Caparida, and Georgina Kuahuia intervened in the administrative proceedings to oppose the application.
- After contested case proceedings, the Commission filed its Final Decision and Order on December 19, 2001, granting KMI permits for both 'existing' and 'proposed' water uses.
- DHHL, OHA, Caparida, and Kuahuia (Appellants) appealed the Commission's final decision directly to the Supreme Court of Hawai'i.
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Issue:
Did the Commission on Water Resource Management violate its public trust duties and the State Water Code by granting water use permits to a private commercial entity without requiring the applicant to prove the absence of harm to public trust resources and the lack of practicable alternative water sources?
Opinions:
Majority - Nakayama, J.
Yes, the Commission on Water Resource Management violated its public trust duties and the State Water Code. The court held that the Commission committed several critical errors by failing to apply the high level of scrutiny required for private commercial uses of public trust resources. First, the Commission improperly shifted the burden of proof, requiring public trust beneficiaries like DHHL and Native Hawaiians to present 'conclusive evidence' of harm, rather than requiring the applicant, KMI, to justify its proposed use by demonstrating the absence of harm. Second, the Commission failed to require KMI to demonstrate the absence of practicable alternative water sources before granting the permit, instead improperly deferring that analysis as a post-permit condition. Third, the Commission erred by treating KMI's untimely application as a valid request for 'existing uses.' Finally, the Commission failed to consider the closure of KMI's hotel and golf course in determining whether the requested water allocation constituted a 'reasonable-beneficial use.' The court vacated the Commission's decision and remanded for further proceedings.
Analysis:
This decision significantly reinforces the public trust doctrine as a cornerstone of Hawaii water law, building upon the precedent set in Waiahole I. The court clarified that the burden of proof is unequivocally on the applicant seeking to divert public water for private commercial use, strengthening the position of public trust beneficiaries like DHHL and those exercising traditional Native Hawaiian rights. By mandating that the feasibility of alternative sources be considered before a permit is issued, the ruling prevents agencies from rubber-stamping applications and deferring critical public trust analysis. This case serves as a strong precedent for holding administrative agencies to a high standard of diligence and scrutiny when allocating scarce public resources.
