Sierra Club v. D.R. Horton-Schuler Homes, LLC, SCAP–13–0002266.

• Decision Date: 22 December 2015
• Docket Number: No. SCAP–13–0002266.,SCAP–13–0002266.
• Citation: 136 Hawai'i 505,364 P.3d 213
• Parties: The SIERRA CLUB and Senator Clayton Hee, Petitioners/Appellants–Appellants, v. D.R. HORTON–SCHULER HOMES, LLC, a Delaware limited liability company, d.b.a. D.R. Horton–Schuler Division; the Land Use Commission of the State of Hawai‘i; Office of Planning, State of Hawai‘i; Department of Planning and Permitting, Respondents/Appellees–Appellees.
• Court: Hawaii Supreme Court

136 Hawai'i 505

364 P.3d 213

The SIERRA CLUB and Senator Clayton Hee, Petitioners/Appellants–Appellants,

v.D.R. HORTON–SCHULER HOMES, LLC, a Delaware limited liability company, d.b.a. D.R. Horton–Schuler Division; the Land Use Commission of the State of Hawai‘i; Office of Planning, State of Hawai‘i; Department of Planning and Permitting, Respondents/Appellees–Appellees.

No. SCAP–13–0002266.

Supreme Court of Hawai‘i.

Dec. 22, 2015.

Eric A. Seitz, Della A. Belatti, and Sarah R. Devine, Honolulu, for petitioners.

Gregory W. Kugle, and Matthew T. Evans, Honolulu, for respondent D.R. Horton–Schuler Homes, LLC.

RECKTENWALD, C.J., NAKAYAMA and McKENNA, JJ., and Circuit Judge CHANG, In Place of ACOBA, J., Recused; with POLLACK, J., Dissenting.

Opinion of the Court by McKENNA, J.

I. Introduction

This appeal involves a long-standing issue in this state: balancing agricultural and urban land uses. Appellants Sierra Club and Clayton Hee challenge the Land Use Commission's ("LUC") reclassification of approximately 1525.516 acres of Appellee D.R. Horton–Schuler Homes' ("D.R. Horton–Schuler") land from the agricultural state land use district to the urban state land use district. The land is slated for development of the Ho‘opili project. On transfer from the Intermediate Court of Appeals, Appellants seek review of the Decision and Order of the Circuit Court of the First Circuit¹ ("circuit court") affirming the LUC's Findings of Fact, Conclusions of Law, and Decision and Order ("D & O") and dismissing their appeal.

Appellants argue that the reclassification violated Article XI, Section 3 of the Hawai‘i State Constitution, which provides the following:

The State shall conserve and protect agricultural lands, promote diversified agriculture, increase agricultural self-sufficiency and assure the availability of agriculturally suitable lands. The legislature shall provide standards and criteria to accomplish the foregoing.

Lands identified by the State as important agricultural lands needed to fulfill the purposes above shall not be reclassified by the State or rezoned by its political subdivisions without meeting the standards and criteria established by the legislature and approved by a two-thirds vote of the body responsible for the reclassification or rezoning action.

Appellants also argue that the reclassification violated Act 183, codified at Hawai‘i Revised Statutes ("HRS") §§ 205–41 through – 52 (Supp. 2005), and also known as Part III of HRS chapter 205 ("Part III"). Part III implements Article XI, Section 3's mandate and governs land use on important agricultural lands ("IALs"). Appellants contend that the LUC should not reclassify lands that the City and County of Honolulu could potentially designate as IALs in the future, pursuant to HRS § 205–47 (Supp.2005).

Lastly, Appellants argue that the reclassification violated Hawai‘i Administrative Rules ("HAR") § 15–15–77(a) (effective 2000–2013), which requires reclassifications to conform to the Hawai‘i State Plan. They also contend that the reclassification violated HAR § 15–15–77(b)(6) (effective 2000–2013), which requires the LUC to consider whether taking land in "intensive agricultural use for two years prior to the date of a filing of a petition [for a district boundary amendment] or lands with a high capacity for intensive agricultural use" out of the agricultural district "[w]ill not substantially impair actual or potential agricultural production in the vicinity of the subject property or in the county or State; or ... [i]s reasonably necessary for urban growth...."

Pursuant to Save Sunset Beach Coalition v. City & County of Honolulu, 102 Hawai‘i 465, 476, 78 P.3d 1, 12 (2003), Article XI, Section 3, standing alone, is not self-executing; rather, its mandate is carried out through the provisions of Part III. Therefore, the plain language of Article XI, Section 3 does not require the LUC to stay reclassification of agricultural land while the formal county-initiated IAL designation process runs its course. Pursuant to the policies underlying Part III, state and county government should consider the "compelling state interest in conserving the State's agricultural land resource base assuring the long term availability of agricultural lands for agricultural use," see HRS § 205–41 (Supp.2005) ; however, the plain language of Part III contains no provision requiring a stay. Further, the constitutional history of Article XI, Section 3, as well as the legislative history of Part III, does not reveal an intent to require the LUC to delay reclassifying agricultural land pending formal designation of IALs. Second, reliable, probative, and substantial evidence supported the LUC's finding that the reclassification of the land at issue in this case was consistent with the Hawai‘i State Plan, would not substantially impair agricultural production, and was necessary for urban growth. We therefore affirm the circuit court's decision and order, which affirmed the LUC's D & O.

II. Background

A. Land Use Commission Proceedings

1. D.R. Horton–Schuler's Petition for Land Use District Boundary Amendment

On January 24, 2007, D.R. Horton–Schuler filed a Petition for Land Use District Boundary Amendment ("Petition") before the LUC. D.R. Horton–Schuler described the Ho‘opili project as follows:

Petitioner is currently proposing the development of a mixed-use, transit-ready community, including residential, business, and commercial areas, transit stops, schools, parks and open space. Petitioner is proposing to develop approximately 11,750 residential units (including affordable units) ranging from an estimated $200,000 to $700,000 based upon 2006 market prices, a minimum of five (5) school sites (subject to continued negotiations with the Department of Education), approximately two hundred ten (210) acres for parks and open space, and approximately one hundred forty-five (145) acres for business and commercial spaces that would sell for approximately $35 to $45 per sq. ft. in today's market. Both the residential and commercial space selling prices are estimates and are subject to change according to fluctuating market conditions, as well as unanticipated costs incurred during construction. The Proposed Project is being designed as a mixed-use community ready to provide high-capacity transit stops to further encourage walking/bicycling and the use of public transportation to supplement that which already underpins Ho‘opili's traditional neighborhood design. Infrastructure facilities to be expanded or improved include access and circulation roadways, drainage systems, water distribution and wastewater collection lines, and electrical/communication systems.

The Ho‘opili project is scheduled to be developed in two ten-year phases, the first phase from 2013–2020, and the second phase from 2020–2030.²

The Petition stated that the land was "currently leased for agricultural purposes," including "diversified agriculture; pasturage; grazing for livestock; cultivation of seed corn and other agricultural crops; and agricultural research." The Final Environmental Impact Statement ("FEIS") prepared in conjunction with the Petition represented that D.R. Horton–Schuler would be relocating the agricultural tenants onto replacement lands.

The FEIS also noted that the proposed project conformed to the Hawai‘i State Plan. The FEIS pointed out that the Petition lands were "located within (and makai of) the Urban Growth Boundary of the Ewa Development Plan Urban Land Use Map." The FEIS represented that the project "is consistent with the State's goal to insure [sic] economic stability, diversity, and growth for present and future generations," because the project "will provide various housing and employment opportunities for the rapidly growing ‘Ewa region, which will in turn, relieve development pressures from other areas of O‘ahu, particularly the Primary Urban Center, and rural areas such as Wai‘anae, North Shore, Ko‘olau Loa and Ko‘olau Poko." The FEIS noted, "The agricultural policies [of the Hawai‘i State Plan] are predominantly not applicable to the Ho‘opili project."

2. Intervenors and Other Parties to the Petition Proceedings and Their Positions

When an "[a]mendment[ ] to district boundaries involving land areas greater than fifteen acres" is filed with the LUC, the State Office of Planning ("OP") and the county planning department, here the City and County of Honolulu's Department of Planning and Permitting ("DPP"), must appear as parties and "make recommendations relative to the proposed boundary change." HRS § 205–4(e)(1) (2001). The DPP supported the Petition because it found the project to be consistent with the City's General Plan, which "encourages development and growth and directs economic activity within the secondary urban center and urban fringe area in Ewa." The DPP noted that the project is located within the Urban Growth Boundary of the ‘Ewa Development Plan, where urban development is "allowed and consistent with the long-range vision, policies, principles and guidelines in the Ewa Development Plan regarding land use and the plan's vision of building master planned residential communities that allow residents to live and work in the Ewa region." The OP generally supported the orderly development of Kapolei as Oahu's second city but did not initially take a position on the Petition, citing insufficient information. Four years into the Petition proceedings, the Sierra Club and Clayton Hee, in his individual capacity only, were permitted to intervene. Both opposed the Petition, arguing it proposed inap propriate uses for productive agricultural land.

3. Evidentiary Hearings

The LUC held evidentiary hearings on the Petition on March 19, 2009; March 20, 2009; May 15, 2009; June 25, 2009; June 26, 2009; October 20, 2011; October 21, 2011; November 17, 2011; November 18, 2011; January 5, 2012; January 19, 2012; March 1, 2012; March 2, 2012; March 15, 2012; and March 16, 2012.

a. Evidence and Testimony on...