86 Hawai'i 66, Kahana Sunset Owners Ass'n v. County of Maui, 19588

• Decision Date: 05 November 1997
• Docket Number: No. 19588,19588
• Citation: 947 P.2d 378
• Parties: 86 Hawai'i 66 The KAHANA SUNSET OWNERS ASSOCIATION, Appellant/Plaintiff-Appellant, v. The COUNTY OF MAUI; the Maui Planning Commission; Herbert Sakakihara, in his capacity as Chairperson of the Maui Planning Commission; and JGL Enterprises, Inc., Appellees/Defendants-Appellees.
• Court: Hawaii Supreme Court

Page 378

947 P.2d 378

86 Hawai'i 66

The KAHANA SUNSET OWNERS ASSOCIATION, Appellant/Plaintiff-Appellant, v. The COUNTY OF MAUI; the Maui Planning Commission; Herbert

Sakakihara, in his capacity as Chairperson of the

Maui Planning Commission; and JGL

Enterprises, Inc.,

Appellees/Defendants-Appellees.

No. 19588.

Supreme Court of Hawai'i.

Nov. 5, 1997.

Isaac Hall, Wailuku, on the briefs, for appellant/plaintiff-appellant.

William H. Dodd and Curtis L. Sano of Chun, Kerr, Dodd, Beaman & Wong, and B. Martin Luna and Randall Endo of Carlsmith Ball Wichman Case & Ichiki, on the briefs, Honolulu, for appellee/defendant-appellee JGL Enterprises, Inc.

Gary W. Zakian, Deputy Corporation Counsel, on the briefs, for appellees/defendants-appellees County of Maui; Maui Planning Commission; and Herbert Sakakihara, in his capacity as Chairperson of the Maui Planning Commission.

Before MOON, C.J., and KLEIN, LEVINSON, NAKAYAMA and RAMIL, JJ.

NAKAYAMA, Justice.

Plaintiff-appellant The Kahana Sunset Owners Association (KSOA) appeals from the ruling of the circuit court affirming the Maui Planning Commission's decision, which (1) concluded that an environmental assessment was not required for defendant-appellee JGL Enterprises, Inc.'s proposed Napilihau Villages development project and (2) granted a Special Management Area (SMA) use permit to JGL Enterprises. Because the Commission erred in holding that an environmental assessment was not required, we vacate the grant of the SMA permit and remand for further consideration after the completion of the required environmental assessment.

I. BACKGROUND

On October 12, 1992, defendant-appellee JGL Enterprises, Inc., filed an application for a SMA permit pursuant to Hawai'i Revised Statutes (HRS) Chapter 205A, preparatory to development of Napilihau Villages I, II, III and IV, a 312-unit multi-family residential development at Napili on the island of Maui. On November 23, 1993, the Maui Planning Commission held a public hearing on the SMA application and JGL's related application for a change in zoning. On December 7, 1993, the Commission granted plaintiff-appellant KSOA's ¹ petition to intervene. A contested case hearing on the granting of the SMA permit was held over the course of thirteen days, between August 22 and September 15, 1994.

On February 14, 1995, the Maui Planning Commission filed its decision and order granting the SMA permit. Two commissioners dissented from this decision. As part of the decision and order, the Commission concluded that no environmental assessment was required for the project pursuant to the Hawai'i Environmental Policy Act (HEPA), HRS Chapter 343. KSOA appealed the Commission's decision to the circuit court. By order, filed January 10, 1996, the circuit court affirmed the Commission's findings of fact, conclusions of law, decision, and order. KSOA timely appealed the circuit court's ruling.

II. DISCUSSION

A. The Commission Erred in Concluding that an Environmental Assessment was not Required

Appellate review by this court of a decision made by the circuit court upon its review of an agency's decision constitutes a secondary appeal. In a secondary appeal, the standard of review is one in which this court

must determine whether the [circuit] court was right or wrong in its decision, applying the standards set forth in HRS § 91-14(g) to the agency's decision. [This court's] review is further qualified by the principle that the [agency's] decision carries a presumption of validity and [a]ppellant has the heavy burden of making a convincing showing that the decision is invalid because it is unjust and unreasonable in its consequences.

Hardin v. Akiba, 84 Hawai'i 305, 309-10, 933 P.2d 1339, 1343-44 (1997) (quoting University of Hawai'i Professional Assembly v. Tomasu, 79 Hawai'i 154, 157, 900 P.2d 161, 164 (1995)) (citation omitted) (brackets in original).

The standard of review for the circuit court's review of the hearing officer's decision is mandated by HRS § 91-14(g) (1993), which provides in relevant part:

Upon review of the record the court may ... reverse or modify the decision and order if the substantial rights of the petitioners may have been prejudiced because the administrative findings, conclusions, decisions, or orders are:

(1) In violation of constitutional or statutory provisions; or

....

(5) Clearly erroneous in view of the reliable, probative, and substantial evidence on the record; or

(6) Arbitrary, or capricious, or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

Moreover, we have observed that:

[a]ppeals taken from findings [of fact] set forth in decisions of the Board are reviewed under the clearly erroneous standard. Thus, the court considers whether such a finding is [c]learly erroneous in view of the reliable, probative, and substantial evidence on the whole record[.] The clearly erroneous standard requires the court to sustain the Board's findings unless the court is left with a firm and definite conviction that a mistake has been made.

A conclusion of law ... is not binding on an appellate court and is freely reviewable for its correctness. Thus, the court reviews [conclusions of law] de novo, under the right/wrong standard.

Bumanglag v. Oahu Sugar Co., Ltd., 78 Hawai'i 275, 279, 892 P.2d 468, 472 (1995) (quoting Tate v. GTE Hawaiian Tel. Co., 77 Hawai'i 100, 102-03, 881 P.2d 1246, 1248-49 (1994) (brackets in original)).

KSOA claims that the Commission erred in concluding that an environmental assessment was not required for this project. The Commission's conclusions of law on this issue are that:

15. The Office of Environmental Quality Control has granted certain exemptions to [HRS Chapter 343] requested by the County of Maui. Exemption class # 6, "Construction or placement of minor structures accessory to existing facilities," includes "[i]nstallation of drains, sewers and waterlines within streets and highways."

16. At the special meeting of the Planning Commission on August 12, 1994, the Planning Director explained: ... To put a culvert under a public roadway outside of that shoreline setback area as part of a special management area permit does not trigger anything under [HRS Chapter 205A] with respect to a[n] environmental assessment.

I think the question arises here is that whether or not the work that would be required to install whatever drainage under whatever public roadway constitute a development in of itself or is contained within this entire special management area application. So I think the determination as to whether or not an environmental assessment is triggered by putting a culvert under a public roadway within public lands is going to be determined by the Department of Public Works not by this commission.

17. The Hawaii'i Administrative Rules [HAR] support the interpretation of the Planning Director. The [HAR] for environmental impact statements ("EIS") delegate authority for requiring a statement "with the agency initially receiving the request for an approval." [HAR] § 11-200-4(b). The exemptions at issue here were proposed by the County of Maui in accordance with [HAR] § 11-200-8(d) ("Each agency, through time and experience shall develop its own list of specific types of actions which fall within the exempt classes, as long as these lists are consistent with both the letter and intent expressed in these exempt classes and Chapter 343, [HRS] )." [HRS] § 343-6(a)(7)....

18. At the contested case, JGL Enterprises' consultants testified that pipes would be added to the existing drainage system along Napilihau Road that leads to the culvert on Lower Honoapi'ilani Road, which would also be improved. Brewer testified that he did not see a trigger for an environmental assessment given the scope of the project.

19. There is no agreement to make improvements to the Alaeloa drainage system and therefore there is no work in the shoreline setback area. Because there is no work in the shoreline setback area to trigger an environmental assessment under [HRS Chapter 343], the exemption applies and no environmental assessment is required due to the work in the County roadway.

KSOA claims that the Commission erroneously interpreted HEPA and its associated administrative regulations. Defendant-appellee JGL Enterprises argues that (1) the Commission's interpretation of the rules regarding whether an environmental assessment is necessary should be given deference as a matter within its area of expertise; (2) the Commission's conclusion that the project is exempt was correct; and (3) only the proposed drainage project should be considered in determining whether an environmental assessment is required. Defendant-appellee County of Maui argues that (1) this court lacks jurisdiction over the determination whether an environmental assessment is required because the judicial action challenging the agency's determination was not timely; and (2) the lack of an environmental assessment is not grounds to overturn the grant of the SMA permit because it did not prejudice KSOA's substantial rights and any procedural defect was cured by KSOA's participation in the contested case hearing. Before addressing defendants' specific arguments, it behooves us initially to revisit HEPA's structure and purpose.

1. General Overview of HEPA

HEPA was enacted in 1974. "Our legislature recorded a general policy on environmental concerns in HRS Chapter 344 and established specific action-forcing procedures for the implementation of the policy, created an environmental quality commission, and provided for the development and publication of information on environmental decisions in Chapter 343." Molokai Homesteaders Co-op. Ass'n v. Cobb, 63 Haw. 453, 463, 629 P.2d 1134, 1142 (1981). The findings and purpose of HEPA are set out in HRS § 343-1 (1993). This section states that:

The legislature finds that the quality of humanity's environment is critical to humanity's well being, that humanity's...