The Community Associations of Hualalai, Inc. v. Leeward Planning Commission. ( 2021 )

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Electronically Filed
Supreme Court
SCOT-XX-XXXXXXX
02-DEC-2021
09:17 AM
Dkt. 103 OP
IN THE SUPREME COURT OF THE STATE OF HAWAIʻI
---o0o---
________________________________________________________________
THE COMMUNITY ASSOCIATIONS OF HUALALAI, INC.,
Appellant,
vs.
LEEWARD PLANNING COMMISSION, COUNTY OF HAWAIʻI; and
ZENDO KERN,1 PLANNING DIRECTOR, COUNTY OF HAWAIʻI,
Appellees.
________________________________________________________________
SCOT-XX-XXXXXXX
APPEAL FROM THE LEEWARD PLANNING COMMISSION, COUNTY OF HAWAIʻI
(Agency Docket No. SPP-16-000188)
DECEMBER 2, 2021
RECKTENWALD, C.J., NAKAYAMA, McKENNA, AND WILSON, JJ.2
OPINION OF THE COURT BY WILSON, J.
1 Pursuant to Hawaiʻi Rules of Appellate Procedure Rule 43(c)(1)
(2019), Zendo Kern has been substituted as a party in place of Duane Kanuha,
the former Planning Director of the County of Hawaiʻi.
2 Associate Justice Richard W. Pollack, who was a member of the
court when the oral argument was held, retired from the bench on June 30,
2020.
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This is a direct appeal3 from a special permit
application proceeding before Appellee Leeward Planning
Commission (“LPC”) and Appellee Planning Director (“Planning
Director”) of the County of Hawaiʻi (collectively, “Appellees”)
by Appellant The Community Associations of Hualalai
(“Hualalai”), a group of Hawaiʻi County community associations.
See HRS §§ 205-19 (2017) and 91-14 (2017). The special permit
application requested approval to use an agricultural parcel of
land as an equipment base yard and security dwelling, and for
stockpiling and crushing natural materials for commercial use.
We find Appellees wrongfully denied Hualalai a hearing and
decision on its petition to intervene as a party to contest the
special permit application, and remand to the LPC for
proceedings consistent with this opinion.
I. BACKGROUND
A. Bolton’s Permit Application and Appellant/Hualalai’s
Petition to Intervene
On February 4, 2000, the Hawaiʻi County Planning
Commission4 issued Special Permit No. 1047 to Nani Kona Coffee
3 In 2016, the legislature adopted Act 48 “to provide for the
expedited judicial review of certain contested case proceedings.” Conf.
Comm. Rep. No. 67-16, in 2016 House Journal, at 1363, 2016 Senate Journal, at
789. Under Act 48, aggrieved parties may appeal from a final decision or
order in certain administrative proceedings directly to the supreme court.
Hawaiʻi Revised Statutes (“HRS”) § 205-19 (2017).
4 At the time, the County of Hawaiʻi had one planning commission for
the whole county. In 2008, the County Council passed, and the voters
(continued . . .)
2
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LLC granting construction of a “coffee visitor center” and
related improvements on a parcel of approximately 7.33 acres of
land “located on the southeast corner of the Hawaii Belt Road
and Hualalai Road intersection” within the state and county
agricultural land use districts. Approval was granted pursuant
to the Planning Commission’s authority under HRS § 205-6 to
issue special permits. Approval of Special Permit No. 1047 was
subject to conditions: Condition No. 4 required that the
“coffee visitor center and all related improvements” be
established within five years from the effective date of the
permit, and Condition No. 9 required the applicant to submit a
drainage study to the Department of Public Works and complete
all improvements required to mitigate flooding before the
issuance of any building permits. Nani Kona Coffee LLC was
subsequently granted two administrative time extensions to
comply with Condition No. 4: one in September 2004 until
February 2007, and one in 2007 until February 2010.
Some years later, in 2015 and 2016, Bolton, Inc.
(“Bolton”)5 applied for a grading permit (Permit No. 092524) and
(. . . continued)
approved, an ordinance dividing the commission into the windward and leeward
planning commissions, effective April 1, 2009. Ord. No. 08-01 (2008).
5 The record indicates that Daniel B. Bolton of Kona Coffee & Tea
Company was one of Nani Kona Coffee LLC’s points of contact regarding Special
Permit 1047 and communicated with the Planning Department between July 1998
(continued . . .)
3
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two stockpiling permits (Permit Nos. 092525 and 092529) to
complete the “Kona Coffee & Tea Co. Flood Channel Project” on
two parcels of land on “Hualalai R[oa]d [m]auka of Queen
K[aʻahumanu Highway].” The first parcel, identified by Tax Map
Key (“TMK”) number 7-5-17:31 (“Parcel 31”), is the parcel for
which Special Permit No. 1047 was issued in 2000;6 the second
parcel, identified by TMK number 7-5-17:44 (“Parcel 44”), is
adjacent to and immediately east/mauka of Parcel 31. The two
parcels are owned by Daniel B. Bolton and Janet T. Bolton of
Bolton, Inc. Bolton’s applications for grading and stockpiling
on the two parcels were approved in January 2016 by the Hawaiʻi
County Planning Department and the Department of Public Works,
with approval of the grading permit conditioned on compliance
with Condition No. 9 of Special Permit No. 1047.
Approximately one month after approval of the grading
and stockpiling permits, on February 19, 2016, Appellee/Planning
(. . . continued)
and August 2004, both in his individual capacity and in an organizational
capacity as Bolton, Inc.
6 The record from 2000 identifies the parcel for which Special
Permit No. 1047 was issued by TMK number “7-5-17:33[.]” However, the parcel
is described as being at the location of the current Parcel 31, and elsewhere
in the record, Special Permit No. 1047 is described as having been issued for
Parcel 31. This discrepancy is not explained in the record, although there
are indications that there was a “[c]orrection of TMK number” in 2001 and
that “Parcel 44 was subdivided from [Parcel] 31” at some point in time.
4
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Director7 sent Bolton a “Warning Letter” concerning activity on
the two parcels. According to the letter, the Planning
7 The Planning Director is part of the Hawaiʻi County Planning
Department, which consists of “a planning director, a windward planning
commission, a leeward planning commission and the necessary staff,” and
regulates land use within the County of Hawaiʻi. Charter of the County of
Hawaiʻi (“CCH” or the “Charter”) § 6-7.1 (2018). The Planning Director is
“the chief planning officer of the county and the administrative head of the
department[.]” CCH § 6-7.2(b). The duties and functions of the Planning
Director are set out in the Charter as follows:
The director . . . shall:
(1) Advise the mayor, the windward planning commission,
the leeward planning commission and the council on all
planning and land use matters.
(2) Prepare a general plan, implementation plans and any
amendments thereto in accordance with Section 3-15.
(3) Prepare proposed zoning and subdivision ordinances,
zoning maps and regulations and any amendments thereto.
(4) Review the lists of proposed capital improvements
contemplated by agencies of the county and recommend the
order of their priority.
(5) Administer the subdivision and zoning ordinances and
regulations adopted thereunder.
(6) Render decisions on proposed subdivision plans
pursuant to law.
(7) Make recommendations on rezoning applications, special
exceptions and other similar requests.
(8) Render decisions on proposed variances pursuant to
law, except that, if any written objections are made to the
planning director’s actions under this section, said
actions shall be subject to review by the board of appeals
in accordance with Section 6-9.2, unless otherwise provided
by law or this charter.
(9) Perform such other related duties and functions as may
be necessary or required pursuant to law and this charter.
Id. The Planning Director also enforces all provisions of the Zoning Code
pertaining to land use, other than those relating to building construction
and occupancy. Hawaiʻi County Code (“HCC”) § 25-2-1(b) (2019). “Any person
aggrieved by the decision of the director in the administration or
(continued . . .)
5
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Department had received a complaint that Bolton was operating a
quarry on the parcels and using the parcels as an equipment base
yard without an applicable special permit. A subsequent
investigation revealed that Bolton appeared to be operating a
rock crusher for commercial purposes (i.e., operating a quarry)
on Parcel 44, storing construction equipment on the parcels
(i.e., using the properties as a construction base yard), and
maintaining a junk yard on the parcels. The letter warned
Bolton that those activities potentially violated the Zoning
Code,8 and requested a response from Bolton by April 30, 2016.
The letter stated that if Bolton wanted to conduct a commercial
quarry operation, it could “submit an application for a special
permit that would allow for the creation of a (Quarry) and would
(. . . continued)
application of [the Zoning Code], may, within thirty days after the date of
the director’s written decision, appeal the decision to the board of
appeals.” HCC § 25-2-20(a) (2019). The Board of Appeals “[h]ear[s] and
determine[s] appeals from final decisions of the planning director or the
director of public works regarding matters within their respective
jurisdictions.” CCH § 6-9.2(a) (2018).
8 Under state law and Chapter 25 of the HCC (“Zoning Code”), land
within the state agricultural land use district is restricted to certain
permitted uses. See HRS § 205-4.5(a) (2017); HCC § 25-5-72(a).
“[E]nforcement of the restrictions and conditions relating to land-use-
classification districts in a county” is delegated “to the county official
charged with administering the zoning laws for that county[.]” County of
Hawaiʻi v. Ala Loop Homeowners, 123 Hawaiʻi 391, 408, 235 P.3d 1103, 1120
(2010) (quoting Pono v. Molokai Ranch, Ltd., 119 Hawaiʻi 164, 189, 194 P.3d
1126, 1151 (App. 2008)), partially abrogated on other grounds by Tax Found.
of Haw. v. State, 144 Hawaiʻi 175, 439 P.3d 127 (2019); HRS § 205-12 (2017).
In this case, the official responsible for administering the zoning laws in
Hawaiʻi County is the Planning Director, with the LPC also retaining some
authority over zoning and land use within the County.
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allow for the use of the properties as a construction base
yard,” so long as Bolton “immediately cease[d]” commercial and
unauthorized activity.9
On March 1, 2016, Bolton submitted an application
(“Special Permit Application No. SPP-16-188”) to the Planning
Department, requesting a special permit to use Parcel 44 for
“[a] baseyard/staging yard for equipment, storage of materials,
stockpiling and crushing of natural materials for commercial
use” and a “[s]ecurity dwelling[.]” Bolton stated that Special
Permit Application No. SPP-16-188 was intended to resolve the
issues raised in the February 19 warning letter and to bring
Parcel 44 into compliance with the Zoning Code.
On April 12, 2016, Bolton sent a letter to the
Planning Department disputing that it had violated the Zoning
Code, as suggested in the February 19 warning letter, but
9 Regarding rock crushing or quarrying activity, the Zoning Code
provides:
(c) The following uses may be permitted in the [county
agricultural] district, provided that a special permit is
obtained for such use if the building site is located within the
State land use agricultural district:
. . . .
(5) Excavation or removal of natural building material or
minerals, for commercial use.
HCC § 25-5-72.
7
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stating that it had filed Special Permit Application No. SPP-16-
188 “[a]s a show of good faith and cooperation[.]”
On April 22, 2016, Bolton was notified that Special
Permit Application No. SPP-16-188 was scheduled for a public
hearing before the LPC10 on May 19, 2016.11 The agenda for the
10 Appellee/LPC, like the Planning Director, see supra note 7, is
part of the Hawaiʻi County Planning Department, which regulates land use
within the County of Hawaiʻi. CCH § 6-7.1 (2018). The duties and functions
of the LPC are set out in the Charter:
(a) Both [the windward and leeward planning] commissions
shall:
(1) Advise the mayor, council and the planning
director on planning and land use matters pursuant to
law and this charter.
(2) Review the general plan, its amendments and
other plans and modifications thereof and transmit
such plans with recommendations thereon through the
mayor to the council for consideration and action.
(3) Review proposed subdivision and zoning
ordinances and amendments thereto and transmit such
ordinances with recommendations thereon through the
mayor to the council for consideration and action.
(4) Conduct public hearings in every case prior to
action on any matter upon which the commission is
required by law or this charter to act. Notice of
the time and place of the hearing shall be published
at least ten days prior to such hearing in at least
two daily newspapers of general circulation in the
county and shall also be distributed via an
electronic medium, such as the Internet.
(5) Perform such other related duties and functions
as may be necessary or required pursuant to law and
this charter.
. . . .
(c) Each planning commission shall review and take action
upon applications for land use changes and community
development plans involving only property within their
(continued . . .)
8
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LPC’s May 19 meeting gave public notice that Special Permit
Application No. SPP-16-188 would be considered as Agenda Item
No. 4. The agenda explained how a party could seek to
intervene:
Pursuant to Rule 4, Contested Case Procedure, of the County
of Hawaiʻi Planning Commission Rules of Practice and
Procedure, any person seeking to intervene as a party to a
contested case hearing on the above Agenda Items Nos. 1
through 4 is required to file a written request which must
be received in the office of the Planning Department no
later than seven (7) calendar days prior to the Planning
Commission’s first public meeting on the matter. Such
written request shall be in conformity with Rule 4, in a
form as provided by the Planning Department entitled
“Petition for Standing in a Contested Case Hearing.”
The agenda referenced County of Hawaiʻi Planning Commission Rules
of Practice and Procedure (“LPC Rules”) Rule 4 (2017), which
allows a person to request to formally intervene and be admitted
as a party to the proceeding. LPC Rule 4-6 provides, in
relevant part:
(. . . continued)
respective jurisdictions, other than those involving the
general plan.
CCH § 6-7.5 (2018). The LPC has adopted and is subject to “[a] uniform body
of rules of practice and procedure[.]” CCH § 6-7.5(b).
11 The LPC presides over special permit applications and proceedings
because it has the authority to “permit certain unusual and reasonable uses
within [the] agricultural . . . district[] other than those for which the
district is classified.” HRS § 205-6(a) (2017). A party wishing to engage
in such use, such as Bolton, “may petition the planning commission . . . for
permission to use the person’s land in the manner desired” by applying for
and obtaining a special permit from the planning commission pursuant to HRS
§ 205-6 before engaging in the “unusual” use. Id.; HCC § 25-5-72(c).
Regarding the special permit application process, the county planning
commission must “establish by rule or regulation, the time within which the
hearing and action on petition for special permit shall occur[,]” HRS § 205-
6(b), and may permit the desired use by a majority vote of the commission’s
members, HRS § 205-6(c).
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(a) In all proceedings where the Commission’s action is
directly appealable to Third Circuit Court, the applicant
and the Planning Director will be designated parties to the
action. Any other person seeking to intervene as a party
shall file a written request on a form approved by the
Planning Director and accompanied by a filing fee of $200
no later than seven calendar days, prior to the
Commission’s first meeting on the matter. If the applicant
files a request with the Commission for the deferral or
continuance of the hearing prior to the commencement of the
hearing, the next regularly scheduled meeting of the
Commission will then be considered the subsequent
rescheduled hearing date. If the request for intervention
is withdrawn in writing before the commencement of the
hearing, the filing fee shall be refunded to the person
seeking standing to intervene.
(b) Upon receipt of a written request to intervene, the
Commission, at the first meeting on the matter, shall hold
a hearing on the written request. The petitioner shall be
admitted as a party if it can demonstrate that:
(1) His or her interest is clearly distinguishable
from that of the general public; or
(2) Government agencies whose jurisdiction includes
the land involved in the subject request; or
(3) That they have some property interest in the
land or lawfully reside on the land; or
(4) That even though they do not have an interest
different than the public generally, that the
proposed action will cause them actual or threatened
injury in fact; or
(5) Persons who are descendants of native Hawaiians
who inhabited the Hawaiian Islands prior to 1778, who
practice those rights which are customarily and
traditionally exercised for subsistence, cultural or
religious purposes.
The Commission will grant or deny such written request
prior to any further action on the matter.
(c) Appeal from Denial. Any petitioner who has been
denied standing as a party may appeal such denial to the
Third Circuit Court pursuant to Section 91-14, Hawaiʻi
Revised Statutes.
(d) After establishing the parties to the proceeding, the
Commission may either proceed with the hearing, or continue
the matter to a more appropriate time and date.
LPC Rule 4-6.
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On May 9, 2016 the Planning Department issued a
background report on Special Permit Application No. SPP-16-188,
in which it noted that Special Permit No. 1047 had been approved
for Parcel 31 in 2000, that Bolton had received an extension
until 2010 to comply with Condition No. 9, and that “[a]ny
additional time extensions to comply with conditions will need
to be approved by the [LPC].” That same day, the Planning
Department also issued a recommendation to the LPC in which the
Planning Director recommended that the LPC approve Bolton’s
Special Permit Application No. SPP-16-188, with the caveat that
“[s]ince this recommendation is made without the benefit of
public testimony, the Director reserves the right to modify
and/or alter this position based upon additional information
presented at the public hearing.”12
On May 12, 2016, a week before the LPC’s scheduled
public meeting on Special Permit Application No. SPP-16-188,
Appellant/Hualalai submitted a “Petition for Standing in a
Contested Case Hearing” (hereinafter “petition to intervene” or
“petition”)13 and paid the associated $200.00 filing fee.
12 Although the Planning Department’s background report and
recommendation are not contiguous in the record, they appear to have been
filed or published together as they are formatted identically and the first
page of both documents are marked with “RBolton-SPP16-188.jwd 05-09-16” in
the upper righthand corner.
13 Hualalai submitted its petition alongside a LPC form titled,
“Petition for Standing in a Contested Case Hearing.” The form’s language
(continued . . .)
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Hualalai noted in its petition that it was “a non-profit
association consisting of four community associations that
represent[ed] and act[ed] for the interest of owners of
residences and residential lots in four subdivisions” located
near Hualalai Road in North Kona, Hawaiʻi County, as well as a
limited liability company (“LLC”) with “interest in the
ownership and use of residential properties” in the same area.
Hualalai “act[ed] in a representative capacity” for the four
community associations and their members, and the LLC. Hualalai
was formally organized on May 11, 2016. In its petition,
Hualalai identified a number of ways in which its interests were
“clearly distinguishable from that of the general public,” and
would be affected if the LPC granted Special Permit Application
No. SPP-16-188. Hualalai stated that it represented property
owners who owned residential properties in the near vicinity of
Parcel 44, enjoyed the protections of the County General Plan
and the Kona Community Development Plan, and faced individual
injuries and threatened injuries to their properties from the
noise, dust, negative aesthetic effects, negative effects on
(. . . continued)
tracks LPC Rule 4-6(b), which outlines the criteria for establishing standing
to intervene in a contested case. To avoid confusion, Hualalai’s petition
will be referred to as a “petition to intervene” rather than a “petition for
standing.”
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nearby neighborhoods, diminished property values, and increased
traffic from the proposed development.
On May 19, 2016, Bolton requested a continuance of the
hearing scheduled for later that day. During the LPC meeting
that day, the LPC’s chair announced that, at Bolton’s request,
the LPC would postpone the hearing on Special Permit Application
No. SPP-16-188 until a future meeting. The chair announced that
“there would be no presentation by staff, the applicant, or the
petitioner for a contested case hearing,” but that the LPC would
permit oral testimony from members of the public. The LPC heard
testimony from members of the public, including residents of the
subdivisions whose community associations comprise Hualalai, an
attorney representing Hualalai, and the president of Hualalai.
These individuals testified that the noise, dust, traffic, and
vibrations caused by Bolton’s proposed activity would negatively
affect their health, quality of life, and property values. The
LPC received additional written testimony from individuals
opposed to Special Permit Application No. SPP-16-188 for the
same reasons.
On May 23, 2016, Bolton was notified that Special
Permit Application No. SPP-16-188 had been rescheduled, per its
request, for a public hearing on June 16, 2016. That same day,
the Planning Director notified Hualalai that its petition to
intervene had been received and would be forwarded to the LPC
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for their review. The Planning Director informed Hualalai that
its presence was required at the upcoming June 16 hearing to
answer questions from the LPC on its petition.
On June 1, 2016, Bolton requested another postponement
of the hearing for Special Permit Application No. SPP-16-188
until further notice. On June 7, 2016, the Planning Director
notified Bolton that he would “defer the application” until
Bolton requested that it be added back to the LPC agenda.
Following the Planning Director’s June 7 letter,
between June 17 and August 23, there was further communication
between Bolton and the Planning Director regarding Bolton’s use
of Parcels 31 and 44 and Special Permit Application No. SPP-16-
188. Bolton sent at least three letters to the Planning
Director, and Bolton and the Planning Director scheduled an in-
person site inspection of Bolton’s property. The correspondence
between Bolton and the Planning Director reflected substantial
fact-finding by the Planning Director. On June 30, 2016, Bolton
attended an in-person meeting with the Planning Director, and
sent a July 12 “follow up” letter that contained “specific
information” the Planning Director had “requested” at the June
30 meeting. On July 27, 2016, the Planning Director sent Bolton
a letter stating that although Bolton’s July 12 letter
“provide[d] some clarity, it d[id] not quite contain the
specific information” the Planning Director requested at the
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June 30 meeting, and made additional inquiries of Bolton. On
August 23, the Planning Director sent another letter informing
Bolton that a site inspection was required due to “apparent
contradictions between the information provided in [Bolton’s]
previous July 12, 2016 letter and [Bolton’s] latest submittal.”
The Planning Director asserted that the site inspection was
“necessary in order for us to make a final determination on the
parameters of [Bolton’s] Special Permit application.”
The Planning Department’s Zoning Inspector and
representatives from the Department of Public Works attended an
in-person site inspection. After the inspection, on September
21, 2016, the Planning Director sent Bolton an “Assessment of
Conditions Relating to Warning Letter dated February 19,
2016 . . . and Disposition of Special Permit Application No. 16-
000188[.]”14 In the September 21 letter, the Planning Director
described the communications between Bolton and himself as “a
series of letters and confirmations requested of Bolton Inc. in
an effort to determine whether or not a violation of the Zoning
Code or State Land Use Law had occurred and if so, whether or
not the Special Permit application filed by Bolton Inc. would
continue to move forward.” The September 21 letter stated that
“[a]fter further consultation and field verification,” the
14 Hualalai was copied on this letter.
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Planning Director determined that the activity conducted on
Parcel 44 fell under the grading permit and stockpiling permits
previously granted to Bolton, and did not require a special
permit under the Zoning Code.
The letter noted that a special permit was required to
run a quarry, which is the “excavation or removal of natural
building materials or minerals, for commercial use.” However,
the letter concluded that “the evidence” indicated that Bolton’s
“removal of natural building material from the subject property
is related to on-site and off-site drainage improvement
purposes[,]” and not for commercial purposes. The letter
advised Bolton that, because a special permit was not required,
“your Special Permit application will be withdrawn from further
processing[.]”
In a September 28, 2016 letter, Bolton acknowledged
receipt of the Planning Director’s September 21 letter and asked
the Planning Director to “accept this letter as our formal
request for the withdrawal of [Special Permit Application No.
SPP-16-188].” That same day, Hualalai sent a letter to the
Planning Director objecting to his “purported ‘disposition’” of
the February 19 warning letter and Special Permit Application
No. SPP-16-188. Hualalai noted that Special Permit Application
No. SPP-16-188 and its intervention petition were currently
pending before the LPC in a special permit proceeding, and
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requested that the Planning Director forward Hualalai’s letter
to the Chairperson and LPC “before [the Planning Director] d[id]
anything further on this matter.” In its letter, Hualalai
argued extensively against the issuance of Special Permit
Application No. SPP-16-188. Hualalai objected to the Planning
Director’s purported “disposition” of Special Permit Application
No. SPP-16-188, and argued that “no law gives the [LPC]’s staff
the authority to ‘dispose’ of an accepted application or to
allow an application to be ‘withdrawn’ after the [LPC] has taken
jurisdiction of the application.”
On October 4, 2016, the Planning Director notified
Bolton that, “[based] on your request and our letter dated
September 21, 2016, we will be withdrawing [Special Permit
Application No. SPP-16-188].”
On October 11, 2016, the Planning Director notified
Hualalai that although the Planning Department had “previously
acknowledged receipt” of Hualalai’s petition to intervene, he
had “recently received a request by the applicant to withdraw
[Special Permit Application No. SPP-16-188],” and notified
Hualalai that the Planning Department would be refunding
Hualalai’s $200.00 filing fee.
On October 13, 2016, Hualalai filed a new petition
with the LPC objecting to the Planning Director’s withdrawal of
Special Permit Application No. SPP-16-188. Hualalai argued that
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only the LPC had jurisdiction over the application, and that the
LPC could “dispose” of the application only after holding a
public hearing. Hualalai requested that the matter be placed on
the LPC’s agenda for an immediate public hearing. The LPC did
not take any further action.
B. Appeal to the Supreme Court
As discussed above, Bolton submitted Special Permit
Application No. SPP-16-188 pursuant to HRS § 205-6 to resolve
the potential Zoning Code violations identified by the Planning
Director, i.e., operating a quarry, and maintaining a
construction base yard and a junk yard. After the Planning
Director withdrew Special Permit Application No. SPP-16-188,
Hualalai filed a direct appeal to this court, challenging the
LPC’s failure to issue a decision on its petition to intervene
and objecting to the Planning Director’s withdrawal decision and
the LPC’s decision to treat the proceeding as a closed matter.
Hualalai presents five points of error to this court:
(1) “The Appellee [LPC] erred when it failed to rule on the
Appellant’s Petition to Intervene in the Contested Case”;
(2) “The Appellee [LPC] erred when it failed to render a
decision on [Special Permit Application No. SPP-16-188] itself”;
(3) “The Appellee Planning Director erred in exercising the
Appellee [LPC]’s adjudicatory powers when he ‘withdrew’ the
Application”; (4) “The Appellee [LPC] erred when it allowed the
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Appellee Planning Director to act for the Commission”; and
(5) “The Appellee Planning Director erred when he concluded that
the county grading permit (issued in 2015 after Special Permit
1047 had expired in 2010) ‘controlled’ and that the flood
channelization project is a permitted use in the State
Agriculture Land Use District.” Hualalai requests the following
relief:
This court should vacate the Appellee Planning Director’s
letters of September 21, 2016 . . . and October 4,
2016 . . . to the extent that they constitute an agency
order herein and should remand the contested case to the
Appellee Leeward Planning Commission with instructions that
(1) the Commission conduct a hearing on the Appellant’s
Petition for Standing in a Contested Case, (2) that the
Commission either grant or deny the petition and,
thereafter and [sic] (3) the Commission take action on the
Appellee-Applicant Bolton, Inc.’s Application, including
any request that the Appellee-Applicant might make to
withdraw the Application, giving the Appellant the
opportunity to participate in the agency proceeding on
remand if the Appellee Leeward Planning Commission votes to
admit the Appellant as a party in the contested case.
Hualalai contends this court has jurisdiction to
consider its appeal under HRS § 205-19, which governs appeals of
contested cases arising before the land use commission and
applies the provisions in HRS chapter 91 to such appeals.
Appellees argue that this court lacks jurisdiction over the
LPC’s “non-action,” that the issue became moot when Special
Permit Application No. SPP-16-188 was withdrawn, and that
Hualalai lacks standing. Appellees argue that this court also
lacks jurisdiction because Hualalai should appeal the Planning
Director’s decision to the Board of Appeals. Finally, Appellees
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argue that the LPC did not abuse its discretion by ending
proceedings on Special Permit Application No. SPP-16-188 once it
was voluntarily withdrawn by Bolton. Throughout its brief,
Appellees emphasize that Hualalai “got exactly what it wanted
from the LPC” because Special Permit Application No. SPP-16-188
“was never approved.”
II. STANDARD OF REVIEW
Pursuant to HRS § 205-19, this court reviews agency
decisions in contested cases under HRS § 91-14, which states, in
relevant part:
Upon review of the record, the court may affirm the
decision of the agency or remand the case with instructions
for further proceedings; or it 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;
(2) In excess of the statutory authority or
jurisdiction of the agency;
(3) Made upon unlawful procedure;
(4) Affected by other error of law;
(5) Clearly erroneous in view of the reliable,
probative, and substantial evidence on the whole
record; or
(6) Arbitrary, or capricious, or characterized by
abuse of discretion or clearly unwarranted exercise
of discretion.
HRS § 91-14(g). This court has further clarified that
[c]onclusions of law are reviewed de novo, pursuant to
subsections (1), (2) and (4); questions regarding
procedural defects are reviewable under subsection (3);
findings of fact (FOF) are reviewable under the clearly
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erroneous standard, pursuant to subsection (5), and an
agency’s exercise of discretion is reviewed under the
arbitrary and capricious standard, pursuant to subsection
(6).
Lānaʻians for Sensible Growth v. Land Use Comm’n, 146 Hawaiʻi
496, 502, 463 P.3d 1153, 1159 (2020) (quoting Kauai Springs,
Inc. v. Planning Comm’n of Kauaʻi, 133 Hawaiʻi 141, 164, 324 P.3d
951, 974 (2014)).
When interpreting agency rules, this court has stated
that “[g]eneral principles of statutory construction apply,”
which requires “look[ing] first at an administrative rule’s
language.” Liberty Dialysis-Haw., LLC v. Rainbow Dialysis, LLC,
130 Hawaiʻi 95, 103, 306 P.3d 140, 148 (2013).
If an administrative rule’s language is unambiguous, and
its literal application is neither inconsistent with the
policies of the statute the rule implements nor produces an
absurd or unjust result, courts enforce the rule’s plain
meaning. While an agency’s interpretation of its own rules
is generally entitled to deference, this court does not
defer to agency interpretations that are plainly erroneous
or inconsistent with the underlying legislative purpose.
Id. (internal citations and quotation marks omitted).
III. DISCUSSION
A. The Instant Appeal is Not Moot; This Court May Exercise
Judicial Review of Hualalai’s Appeal Pursuant to HRS
§§ 205-19 and 91-14
1. Appellees’ withdrawal of Special Permit Application
No. SPP-16-188 does not render this case moot because
Hualalai’s appeal presents a live controversy.
Appellees contend that Hualalai’s appeal is moot
because Special Permit Application No. SPP-16-188 has been
withdrawn, thus ending Hualalai’s adverse interest in the case
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and removing this court’s ability to order an effective remedy.
“This court has stated that ‘[a] case is moot if it has lost its
character as a present, live controversy of the kind that must
exist if courts are to avoid advisory opinions on abstract
propositions of law.’” In re Marn Family, 141 Hawaiʻi 1, 7, 403
P.3d 621, 627 (2016) (quoting Ala Loop Homeowners, 123 Hawaiʻi at
405, 235 P.3d at 1117). In other words, “a ‘case is moot if the
reviewing court can no longer grant effective relief.’” Id.(quoting Ala Loop Homeowners, 123 Hawaiʻi at 405, 235 P.3d at
1117).
Appellees’ withdrawal of Special Permit Application
No. SPP-16-188 does not render this case moot because, as in
Kona Old Haw. Trail Grp. v. Lyman, 69 Haw. 81, 734 P.2d 161(1987), Hualalai’s appeal presents a “live controversy” and this
court is able to “grant effective relief.” In re Marn Family,
141 Hawaiʻi at 7, 403 P.3d at 627 (internal citations and
quotation marks omitted). In Kona Old, an association of Kona
residents (“Kona Old”) appealed the Planning Director’s issuance
of a special management area minor use permit to the circuit
court under HRS § 91-14(a).15 69 Haw. at 84-89, 734 P.2d at 163-
15 HRS § 91-14(a) states, in relevant part, “Any person aggrieved by
a final decision and order in a contested case or by a preliminary ruling of
the nature that deferral of review pending entry of a subsequent final
decision would deprive appellant of adequate relief is entitled to judicial
review thereof under this chapter[.]”
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66. The permit authorized the property owner to develop the
property by consolidating his two parcels, installing utility
lines and roadways, and subdividing the property into
residential lots. Id. at 84, 734 P.2d at 163-64. The Planning
Director moved to dismiss the appeal, arguing that there was no
“contested case”16 and Kona Old was not a “person aggrieved”
within the meaning of HRS § 91-14. Id. at 86, 734 P.2d at 165.
The circuit court granted the dismissal,17 and Kona Old appealed
to this court. Id. While Kona Old’s appeal was pending, in
anticipation of a sale, the landowner procured and completed
work under a grubbing permit for the property. Id. The
landowner then argued that the appeal should be dismissed as
moot because the work under the grubbing permit had been
completed. Id. The supreme court declined to dismiss the
appeal as moot, holding that the appeal was a live controversy
and “retain[ed] vitality” because, so long as the construction
authorized under the original special management area minor use
16 In Kona Old, the Planning Director issued to the landowner a
“special management area minor use permit” as opposed to a “special
management area use permit.” Id. at 84, 734 P.2d at 164. On appeal, the
supreme court noted that the rules governing the issuance of special
management area minor use permits did not mandate a hearing preceding the
Planning Director’s issuance of such permits. Id. at 90, 734 P.2d at 167.
Thus, as a hearing was not required by statute or agency rules, there was no
contested case within the meaning of HRS § 91-14(a). Id.
17 Although the circuit court did not give a reason for dismissal,
this court stated that the circuit court dismissed the appeal “obviously on
jurisdictional grounds.” Kona Old, 69 Haw. at 89, 734 P.2d at 166.
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permit was not complete, the appeal “present[ed] an adversity of
interests and possibly afford[ed] [Kona Old] an effective
remedy.” Id. at 87, 734 P.2d at 165. This court found that
even if all work under the two permits was completed, “a basis
for the exercise of our appellate jurisdiction remain[ed]”
because the public interest exception to the mootness doctrine
would apply.18 Id.In the present case, Appellees are correct that
Special Permit Application No. SPP-16-188 was withdrawn.
However, an adversity of interests continues to render the
controversy “live” because either: the original conduct that
prompted Bolton to submit Special Permit Application No. SPP-16-
188 remains ongoing, or, if Bolton’s development project is
completed without review, similar withdrawal of permit
applications subsequent to unpermitted construction is capable
of repetition. There remains an adversity of interests here
because the Planning Director made a “final determination” that
“the evidence” showed Bolton’s construction activity was covered
by its existing permits, and Hualalai has an interest in arguing
18 The public interest exception applies “[w]hen the question
involved affects the public interest, and it is likely . . . that similar
questions arising in the future would likewise become moot before a needed
authoritative determination by an appellate court can be made[.]” Id.(quoting Johnston v. Ing, 50 Haw. 379, 381, 441 P.2d 138, 140 (1968)). This
court reasoned that the questions in Kona Old were of public concern and, if
they were to recur in the future, would likely become moot before a
determination on appeal could be made. Id. at 87-88, 734 P.2d at 165–66.
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that the evidence showed otherwise. Namely, Hualalai has an
interest in arguing that Bolton’s construction activity exceeded
the conditions of its existing grading and stockpiling permits
(Permit Nos. 092524, 092525, and 092529) and, therefore,
required an additional special permit.19
Analogous to the appeal in Kona Old, Hualalai’s appeal
also “retains vitality” because the appeal “possibly affords
[it] an effective remedy[,]” that is, remand to the LPC for a
hearing to determine whether Hualalai’s petition to intervene
should be granted or denied. Id. Thus, under the facts of this
case, Appellees’ withdrawal of Special Permit Application No.
SPP-16-188 does not render moot Hualalai’s appeal to this court.
2. Pursuant to HRS §§ 205-19 and 91-14, this court may
exercise judicial review because Hualalai is aggrieved
by a final decision in a contested case, participated
in the contested case, followed LPC Rules, and has
established standing.
Appellees argue that this court lacks jurisdiction
over Hualalai’s appeal pursuant to HRS §§ 205-19 and 91-14
because the LPC did not issue a final decision in a contested
case hearing and Hualalai was not injured by the LPC’s failure
to issue a decision on Hualalai’s petition or the LPC’s
withdrawal of Special Permit Application No. SPP-16-18. HRS
19 For example, evidence showing that Bolton’s excavation and
removal of natural building material from the property was, in fact, for
commercial purposes, as prohibited by HCC § 25-5-72(c) without a special
permit.
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§§ 205-19 and 91-14 provide the requirements for judicial review
of direct appeals of contested cases to this court; HRS § 205-
19(a) applies the requirements of chapter 91 to contested cases
before the LPC:
Chapter 91 shall apply to every contested case arising
under this chapter except where chapter 91 conflicts with
this chapter, in which case this chapter shall apply. Any
other law to the contrary notwithstanding, including
chapter 91, any contested case under this chapter shall be
appealed from a final decision and order or a preliminary
ruling that is of the nature defined by section 91-14(a)
upon the record directly to the supreme court for final
decision.
HRS § 205-19(a). This case arises under chapter 205 because it
involves a special permit application to the LPC, an agency20
that possesses authority to rule on such applications pursuant
to HRS § 205-6.21 HRS § 91-14(a) further provides, “Any person
20 The LPC is an agency because it is a “county . . .
commission . . . authorized by law to make rules or to adjudicate contested
cases.” HRS § 91-1 (2017).
21 HRS § 205-6 provides in relevant part:
(a) Subject to this section, the county planning
commission may permit certain unusual and reasonable uses
within agricultural and rural districts other than those
for which the district is classified. Any person who
desires to use the person’s land within an agricultural or
rural district other than for an agricultural or rural use,
as the case may be, may petition the planning commission of
the county within which the person’s land is located for
permission to use the person’s land in the manner
desired. . . .
(b) The planning commission, upon consultation with the
central coordinating agency, except in counties where the
planning commission is advisory only in which case the
central coordinating agency, shall establish by rule or
regulation, the time within which the hearing and action on
petition for special permit shall occur. The county
planning commission shall notify the land use commission
(continued . . .)
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aggrieved by a final decision and order in a contested case or
by a preliminary ruling of the nature that deferral of review
pending entry of a subsequent final decision would deprive
appellant of adequate relief is entitled to judicial review
thereof under this chapter[.]”22 In Pub. Access Shoreline Haw.
v. Haw. Cnty Planning Comm’n (PASH), this court identified the
“necessary inquiry” to determine whether a court may review an
agency appeal under HRS § 91-14(a): (1) there must have been a
contested case hearing; (2) “the agency’s action must represent
a final decision and order, or a preliminary ruling such that
deferral of review would deprive the claimant of adequate
relief;” (3) “the claimant must have followed the applicable
agency rules and, therefore, have been involved in the contested
case;” and (4) “the claimant’s legal interests must have been
injured” such that the claimant has “standing to appeal.” 79
(. . . continued)
and such persons and agencies that may have an interest in
the subject matter of the time and place of the hearing.
(c) The county planning commission may, under such
protective restrictions as may be deemed necessary, permit
the desired use, but only when the use would promote the
effectiveness and objectives of this chapter; provided that
a use proposed for designated important agricultural lands
shall not conflict with any part of this chapter. A
decision in favor of the applicant shall require a majority
vote of the total membership of the county planning
commission.
22 Hualalai is a “person,” as used in “person aggrieved,” because it
is an association or organization as defined by HRS § 91-1.
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Hawaiʻi 425, 431, 903 P.2d 1246, 1252 (1995) (internal quotation
marks omitted). “In other words, there are four requirements
for judicial review over an agency appeal: a contested case
hearing, finality, compliance with agency rule, and standing.”
In re Maui Elec. Co., Ltd. (MECO), 141 Hawaiʻi 249, 258, 408 P.3d
1, 10 (2017). This court may exercise judicial review of this
appeal pursuant to HRS §§ 205-19 and 91-14 because Hualalai is
aggrieved by a final decision in a contested case in which it
has participated and followed agency rules, and has established
standing.
a. The proceeding for Special Permit Application No.
SPP-16-188 was a “contested case.”
The first requirement for judicial review under HRS
§ 91-14 is that the appeal be from a contested case proceeding.
PASH, 79 Hawaiʻi at 431, 903 P.2d at 1252. A “contested case” is
“a proceeding in which the legal rights, duties, or privileges
of specific parties are required by law to be determined after
an opportunity for agency hearing.” HRS § 91-1. For an agency
hearing to be “required by law” it must be required by agency
rule, statute, or constitutional due process. See MECO, 141
Hawaiʻi at 258, 408 P.3d at 10. This court has found that “a
public hearing, conducted pursuant to published notice, was a
‘contested case’ within the meaning of HRS [§] 91-1.” In re
Haw. Elec. Co., 56 Haw. 260, 264, 535 P.2d 1102, 1105 (1975)
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(citing E. Diamond Head Ass’n v. Zoning Bd. of Appeals, 52 Haw.
518, 524 479 P.2d 796, 799 (1971)). A case in which no formal
contested case hearing is held can be considered a “contested
case” within the meaning of chapter 91. In Kilakila ʻO Haleakalā
v. Bd. of Land & Nat. Res., where administrative rules required
a hearing by law but no contested case hearing was actually
held, this court considered “whether a formal hearing would have
determined--or whether the proceedings that did take place
determined--the ‘rights, duties, or privileges of specific
parties.’” 131 Hawaiʻi 193, 202, 317 P.3d 27, 36 (2013)
(emphasis added) (finding a contested case where the proceedings
that took place determined the agency’s rights, duties, and
privileges, even though a formal hearing was never held). Thus,
absence of a formal contested case hearing does not preclude a
finding that the proceeding was a contested case.
The proceeding for Special Permit Application No. SPP-
16-188 was a contested case because an agency hearing was
required by the LPC rules and statutes relevant to the issuance
of special permits, LPC Rule 4, 6; HRS §§ 91-9, 205-6
(referenced by HCC § 25-2-61(c)), and such a hearing would have
determined the “legal rights, duties, or privileges of specific
parties[,]” HRS § 91-1. Bolton submitted Special Permit
Application No. SPP-16-188 pursuant to LPC Rule 6, which
requires that the LPC hold a public hearing as part of the
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special permit application process. LPC Rule 6-6(a) (“Upon
acceptance of a Special Permit application, the Commission,
through the Department, shall fix a date for the public
hearing.”). Hualalai submitted its petition to intervene
pursuant to LPC Rule 4-6, which requires a hearing upon receipt
of such petitions.23 LPC Rule 4-6(b) (“Upon receipt of a written
request to intervene, the Commission, at the first meeting on
the matter, shall hold a hearing on the written request.”).
Neither LPC Rule 4 nor Rule 6 grant the LPC discretion to decide
whether or not to hold a hearing; a hearing is mandatory under
both Rules. HRS § 91-9 also mandates that “in any contested
case, all parties shall be afforded an opportunity for hearing
after reasonable notice.”24 HRS § 91-9(a) (emphasis added).
23 The LPC also expressly referenced LPC Rule 4 when it gave public
notice of the hearing on Special Permit Application No. SPP-16-188. The
LPC’s public agenda for the hearing on Special Permit Application No. SPP-16-
188 stated:
Pursuant to Rule 4, Contested Case Procedure, of the County
of Hawaiʻi Planning Commission Rules of Practice and
Procedure, any person seeking to intervene as a party to a
contested case hearing on the above Agenda Items Nos. 1
through 4 is required to file a written request which must
be received in the office of the Planning Department no
later than seven (7) calendar days prior to the Planning
Commission’s first public meeting on the matter. Such
written request shall be in conformity with Rule 4, in a
form as provided by the Planning Department entitled
“Petition for Standing in a Contested Case Hearing.”
24 Additionally, HRS § 205-6, which governs the Land Use Commission
and establishes criteria related to special permits, uses mandatory language
in reference to scheduling and conducting special permit hearings, stating
that the Land Use Commission “shall establish by rule or regulation, the time
within which the hearing and action on petition for special permit shall
(continued . . .)
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The proceedings following Bolton’s submission of
Special Permit Application No. SPP-16-188 constituted a
contested case within the meaning of HRS § 91-14(a) and PASH
because, although no agency hearing occurred, a hearing was
required by LPC Rules 4 and 6 and HRS § 91-9 to determine
Bolton’s and Hualalai’s respective legal rights and duties.
b. The Planning Director’s withdrawal of Special
Permit Application No. SPP-16-188 constituted a
“final decision.”
The second requirement for judicial review under HRS
§ 91-14 is that the appeal is from a final decision made by the
agency. PASH, 79 Hawaiʻi at 431, 903 P.2d at 1252. A final
decision or order is one that “end[s] the proceedings, leaving
nothing further to be accomplished.” Gealon v. Keala, 60 Haw.
513, 520, 591 P.2d 621, 626 (1979). Such a decision can take
the form of an agency’s formal denial of a party’s request for a
contested case hearing, see, e.g., Kaleikini v. Thielen, 124
Hawaiʻi 1, 26, 237 P.3d 1067, 1092 (2010), or an agency’s denial
of a party’s request to intervene in a contested case, see,
e.g., PASH, 79 Hawaiʻi at 433–34, 903 P.2d at 1254–55. An
agency’s failure to deny or grant a party’s request for a
(. . . continued)
occur[,]” and “shall notify the land use commission and such persons and
agencies that may have an interest in the subject matter of the time and
place of the hearing.” § 205-6(b).
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contested case hearing followed by agency action that
effectively ends the proceeding may also constitute a final
decision. See, e.g., Kilakila, 131 Hawaiʻi at 202–03, 317 P.3d
at 36–37.
The LPC rendered a final decision when it ended the
contested case proceeding without first disposing of Hualalai’s
petition to intervene. When a party submits a petition to
intervene, LPC Rule 4-6(b) states, “The Commission will grant or
deny such written request prior to any further action on the
matter.” (emphasis added). Appellees failed to follow this
rule and as a consequence Hualalai did not receive a grant or
denial of its petition to intervene. This court has not yet
considered a HRS § 91-14 appeal arising from an agency’s failure
to deny or grant a party’s request to intervene. However, the
facts of Kilakila and PASH compel the conclusion that an
agency’s failure to act on a party’s formal petition to
intervene constitutes a final decision within the meaning of HRS
§ 91-14(a).
A person may satisfy HRS § 91-14(a)’s “final decision”
requirement and appeal an agency’s decision, even if the agency
neither granted nor denied their request for a contested case
hearing. For example, in Kilakila, this court reviewed the
Board of Land and Natural Resources (“BLNR”)’s decision to grant
a permit for the construction of a telescope on the summit of
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Haleakalā without granting or denying Kilakila ʻO Haleakalā
(“KOH”)’s formal request for a contested case hearing. 131
Hawaiʻi at 195–96, 317 P.3d at 29–30. The circuit court and ICA
dismissed the appeal for lack of jurisdiction because a
contested case hearing was not held. Id. at 196, 317 P.3d at
30. This court, however, held that “the absence of a formal
denial is not dispositive of the issue[,]” and found that
“failure to either grant or deny KOH’s requests for a contested
case hearing became an effective denial when BLNR proceeded to
render a final decision by voting to grant the permit[.]” Id.
at 203, 317 P.3d at 37 (emphasis added).
A person may satisfy HRS § 91-14(a)’s “final decision”
requirement and appeal an agency’s decision, even if their
request to intervene was denied by the agency. For example, in
PASH, this court reviewed the Hawaiʻi County Planning Commission
(“HCPC”)’s decision to grant a permit for the construction of a
resort complex on the Big Island. 79 Hawaiʻi at 429–30, 903 P.2d
at 1250–51. PASH, a “public interest membership organization,”
submitted a request to the HCPC to participate in the proceeding
and to implement contested case procedures. Id. at 429, 433,
903 P.2d at 1250, 1254. The HCPC denied PASH’s request on the
basis that PASH did not have standing. Id. at 429, 903 P.2d at
1250. Though PASH’s request to intervene in the permit
proceeding was denied, the circuit court properly exercised
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judicial review of PASH’s appeal under HRS § 91-14(a), and
affirmed the ICA’s decision affirming the circuit court’s order
remanding to the HCPC to hold a contested case hearing in which
PASH would be allowed to participate. Id. at 433, 903 P.2d at
1254.
In both Kilakila and PASH, this court found there was
a final decision within the meaning of HRS § 91-14(a), despite
lack of party status before the agency by PASH (whose request to
intervene was denied) and KOH (who received no ruling on its
request for a contested case hearing). Thus, in the present
case, where the LPC failed to rule on Hualalai’s petition to
intervene and the Planning Director withdrew Special Permit
Application No. SPP-16-188--action that effectively ended the
contested case proceeding--it follows that there was a “final
decision” by the LPC within the meaning of HRS § 91-14(a).
Appellees’ contend there was “non-action” in this case
and that there was no final decision because “the hearing . . .
never happened.” However, Appellees concede that they “elected
to let [Special Permit Application No. SPP-16-188] lie as a
closed matter.” “Electing” to let a proceeding “lie as a closed
matter” is reviewable agency action given that it had the
consequence of effectively ending the proceeding for Special
Permit Application No. SPP-16-188. Appellees also argue that
the LPC took no “affirmative action” that “stripp[ed]” any
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aggrieved party of its rights because “the determinative action
on SP 16-188 was taken by [Bolton], not the agency.” However,
the record--specifically, the Planning Director’s September 21,
2016 letter to Bolton--indicates that Appellees, not Bolton,
initiated the withdrawal of Special Permit Application No. SPP-
16-188. Additionally, the Planning Director’s August 23, 2016
letter to Bolton stated that a site inspection was “necessary in
order for us to make a final determination on the parameters of
[Bolton’s] Special Permit application.”25 The Planning Director
thus acknowledges that his actions constituted a “final
determination” on Special Permit Application No. SPP-16-188.
Even if Bolton, and not the Planning Director, had initiated the
withdrawal process, the LPC still would have “elected” to let
the proceeding for Special Permit Application No. SPP-16-188
“lie as a closed matter,” an action that constitutes a final
decision.
The LPC’s failure to deny or grant Hualalai’s petition
to intervene in the contested case and the Planning Director’s
termination of the proceedings by withdrawing Special Permit
Application No. SPP-16-188 constituted a final decision within
the meaning of HRS § 91-14(a) and PASH.
25 A site inspection occurred pursuant to the Planning Director’s
August 23, 2016 letter.
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c. Hualalai followed LPC rules and participated in
the contested case.
The third requirement for judicial review under HRS
§ 91-14 is that the claimant follow agency rules and be involved
in the contested case. PASH, 79 Hawaiʻi at 431, 903 P.2d at
1252. This court has clarified that “[a]lthough an aggrieved
person must have participated in a contested case in order to
invoke judicial intervention,” standing to appeal an agency
decision is not “conditioned . . . upon formal intervention in
the agency proceeding.” In re Haw. Elec. Light Co. (HELCO), 145
Hawaiʻi 1, 22, 445 P.3d 673, 694 (2019) (internal quotation marks
omitted) (quoting Mahuiki v. Planning Comm’n of Kauaʻi, 65 Haw.
506, 515, 654 P.2d 874, 880 (1982). In other words, “adversary
participation need not be confined to formal proceedings before
the agency.” In re Haw. Elec. Co., 56 Haw. at 264, 535 P.2d at
1105.
Hualalai followed LPC Rule 4-6(a) and participated in
the proceeding by submitting a petition to intervene and paying
the requisite filing fee. Hualalai also participated before the
LPC through oral testimony from residents of the subdivisions
whose community associations comprise Hualalai, an attorney
representing Hualalai, and the president of Hualalai. The LPC’s
failure to grant Hualalai’s petition to intervene does not
preclude this court from finding that Hualalai clearly
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participated and followed LPC Rules in the contested case
proceeding for Special Permit Application No. SPP-16-188, as
required by PASH for judicial review pursuant to HRS § 91-14(a).
d. Hualalai has established standing.
The final requirement for judicial review under HRS
§ 91-14 is that the claimant show its legal interests were
injured such that it has standing to appeal. PASH, 79 Hawaiʻi at
431, 903 P.2d at 1252; see also HELCO, 145 Hawaiʻi at 21, 445
P.3d at 693 (the claimant must be “specially, personally, and
adversely affected” by the final decision). This court
“evaluate[s] standing using the ‘injury in fact’ test requiring:
(1) an actual or threatened injury, which, (2) is traceable to
the challenged action, and (3) is likely to be remedied by
favorable judicial action.” Kilakila, 131 Hawaiʻi at 204, 317
P.3d at 38 (internal quotation marks omitted). As we have
noted, however, “where the interests at stake are in the realm
of environmental concerns[,] we have not been inclined to
foreclose challenges to administrative determinations through
restrictive applications of standing requirements.” Id. at 204-
05, 317 P.3d at 38-39 (internal quotation marks omitted)
(quoting Citizens for the Prot. of the N. Kohala Coastline v.
County of Hawaiʻi, 91 Hawaiʻi 94, 100–01, 979 P.2d 1120, 1126–27
(1999)).
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Hualalai alleges an injury in fact to the property and
environmental and aesthetic interests of area property owners
who claim that Bolton’s development negatively affects their
properties through noise, dust, negative aesthetic effects,
diminished property values, and increased traffic. These claims
amount to a legally cognizable injury. Our decision in Life of
the Land, Inc. v. Land Use Comm’n, 61 Haw. 3, 594 P.2d 1079(1979), is instructive. In Life of the Land, an environmental
nonprofit appealed the Land Use Commission’s reclassification of
property from agricultural to urban. Id. at 4, 594 P.2d at
1080. To show that it was personally and adversely affected by
the Commission’s reclassification, and, thus, had standing under
HRS § 91-14, the nonprofit submitted statements from its members
who were residents in the vicinity of the reclassified lands,
who used the lands for recreational activities such as swimming,
hiking, and camping, as well as for “aesthetic, conservational,
occupational, professional and academic pursuits[.]” Id. at 8,
594 P.2d at 1082. The nonprofit contended that “future
urbanization w[ould] destroy beaches and open space now enjoyed
by” these residents such that “pursuits presently enjoyed
[would] be irrevocably lost[,]” and that development of the land
would “have an adverse effect on its members and on the
environment.” Id. This court found this to be a legally
cognizable injury sufficient to establish the nonprofit’s
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standing under HRS § 91-14, recognizing “the importance of
aesthetic and environmental interests” where a claimant’s
interests are “‘personal’ and ‘special’, or where a property
interest is also affected.” Id. In another appeal brought
under HRS § 91-14, Pele Def. Fund v. Puna Geothermal Venture,
residents challenged the Department of Health’s decision to
issue permits for geothermal wells and power plants, arguing
that they were injured by “potential harm including diminished
property values, deterioration of air quality, odor nuisance,
and possible physical injury resulting from the permitted
operations.” 77 Hawaiʻi 64, 70, 881 P.2d 1210, 1216 (1994).
This court, again, found that the residents had “clearly
demonstrated” an injury in fact. Id.Recognizing that the injuries asserted by the Hualalai
landowners to their property, environmental, and aesthetic
interests in the present case are comparable to those recognized
by this court in Life of the Land and Pele Def. Fund, we hold
that Hualalai has alleged a legally cognizable injury.
Hualalai has also satisfied the causation and
redressability prongs of standing, as required by PASH and HRS
§ 91-14(a). Hualalai’s alleged injury is traceable to the
challenged action: Hualalai alleges that by failing to follow
the contested case procedure set forth in the LPC Rules,
Appellees have improperly enabled development by Bolton that
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resulted in the property, environmental, and aesthetic injuries
Hualalai identified in its petition to intervene. And finally,
Hualalai’s injury is likely to be remedied by the favorable
judicial action it seeks: a hearing before the LPC.26 In light
of this court’s lenient threshold for standing in cases that are
“in the realm of environmental concerns,” Kilakila, 131 Hawaiʻi
at 204, 317 P.3d at 38, Hualalai has shown that it has standing,
as required by PASH for judicial review pursuant to HRS § 91-
14(a).
Accordingly, pursuant to the requirements for judicial
review of agency decisions under HRS § 91-14(a), we hold that
the proceeding for Special Permit Application No. SPP-16-188 was
a contested case because a hearing--that would have determined
the rights of both Bolton (as a permit applicant) and Hualalai
(as an adverse party)--was required by LPC rules and statute.
We also hold that Appellees’ failure to act on Hualalai’s
petition followed by its withdrawal of Bolton’s application
constituted a final decision within the meaning of HRS § 91-
14(a). We also hold that Hualalai participated and followed LPC
26 Appellees repeatedly contend that the court cannot fashion a
remedy for Hualalai because Hualalai “got exactly what it wanted” as Special
Permit Application No. SPP-16-188 was never approved. While it is true that
Hualalai initially sought the denial of Special Permit Application No. SPP-
16-188, Hualalai, in substance, objects to Bolton’s actions and contends that
Bolton exceeded the scope of the grading and stockpiling permits that it had
previously been issued. Moreover, Appellees’ withdrawal of the application
had the same practical effect as if Special Permit Application No. SPP-16-188
were granted.
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Rules in the proceeding for Special Permit Application No. SPP-
16-188 and has standing to allege its legally cognizable
property, environmental, and aesthetic injuries. Therefore,
pursuant to HRS §§ 205-19 and 91-14, and PASH, 79 Hawaiʻi at 431,
903 P.2d at 1252, this court may exercise judicial review of
Hualalai’s appeal.
B. Appellees’ Decisions were Made Upon Unlawful Procedure and
Constituted Abuses of Discretion
Under HRS § 91-14(g), upon reviewing the record, this
court may “remand the case with instructions for further
proceedings . . . if the substantial rights of the petitioner[]
may have been prejudiced because the administrative findings,
conclusions, decisions, or orders are: . . . [m]ade upon
unlawful procedure; . . . or [a]rbitrary, or capricious, or
characterized by abuse of discretion or clearly unwarranted
exercise of discretion.” HRS § 91-14(g)(3), (6).
The Planning Director’s decision to withdraw Special
Permit Application No. SPP-16-188 and to end the contested case
proceeding without the LPC first issuing a decision on
Hualalai’s petition to intervene relied upon “unlawful
procedure” and constituted an “abuse of discretion,” which may
have prejudiced Hualalai’s substantial rights.
The LPC’s failure to grant or deny Hualalai’s petition
to intervene and the Planning Director’s subsequent decision to
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withdraw Special Permit Application No. SPP-16-188 was based
upon unlawful procedure because, under LPC Rule 4-6’s
unambiguous language, Hualalai was entitled to a ruling on its
petition to intervene before any other action was taken in the
contested case. General principles of statutory construction
apply when interpreting administrative rules. See Liberty
Dialysis-Haw., 130 Hawaiʻi at 103, 306 P.3d at 148. If the
agency rule is “unambiguous, and its literal application is
neither inconsistent with the policies of the statute the rule
implements nor produces an absurd or unjust result,” this court
should “enforce the rule’s plain meaning.” Id. Although “an
agency’s interpretation of its own rules is generally entitled
to deference, this court does not defer to agency
interpretations that are plainly erroneous or inconsistent with
the underlying legislative purpose.” Id. (internal quotation
marks omitted).
LPC Rule 4-6(b) states, “Upon receipt of a written
request to intervene, the Commission, at the first meeting on
the matter, shall hold a hearing on the written request. . . .
The Commission will grant or deny such written request prior to
any further action on the matter.” (emphasis added). LPC 4-
6(d) continues, “[a]fter establishing the parties to the
proceeding, the Commission may either proceed with the hearing,
or continue the matter to a more appropriate time and date.”
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(emphasis added). The language of LPC Rule 4-6 is unambiguous:
the LPC must issue a decision on a petition to intervene and
establish the parties before taking further action in a
contested case. This interpretation of LPC Rule 4-6 is
consistent with HRS chapter 91, which contains provisions
ensuring all parties are afforded a full and fair opportunity to
be heard and to develop the record throughout the proceeding;
chapter 91 enumerates the rights afforded parties in a contested
case proceeding.27
Once a person files a petition to intervene, LPC Rule
4-6(b) clearly requires that the LPC hold a hearing “on the
first meeting on the matter” to determine whether to grant or
deny that petition before it may take any further action in the
27 For example, HRS § 91-9--which governs contested cases, notice,
hearings, and records--states that “in any contested case, all parties shall
be afforded an opportunity for hearing after reasonable notice.” HRS § 91-
9(a) (emphasis added). The statute continues, “[o]pportunities shall be
afforded all parties to present evidence and argument on all issues
involved.” HRS § 91-9(c) (emphasis added). HRS § 91-10(3) states, “[e]very
party shall have the right to conduct such cross-examination as may be
required for a full and true disclosure of the facts, and shall have the
right to submit rebuttal evidence[.]” (emphasis added). An agency is
prohibited from considering “matters outside the record . . . in making its
decision.” HRS § 91-9(g) (emphasis added). HRS § 91-13 similarly precludes
an “official of an agency who renders a decision in a contested case” from
“consult[ing] any person on any issue of fact except upon notice and
opportunity for all parties to participate, save to the extent required for
the disposition of ex parte matters authorized by law.” (emphasis added).
LPC Rules establish additional rights afforded to parties in a
contested case proceeding. See LPC Rule 4-6 (requiring a hearing on a
petition to intervene and stating that “[t]he [LPC] will grant or deny such
written request prior to any further action on the matter,” and all requiring
one “good faith” mediation between all parties); Rule 4-7 (allowing the
parties to hold a conference with the presiding officer); Rule 4-12 (giving
each party the right to cross-examine witnesses and present rebuttal
evidence); Rule 4-13 (allowing parties to request issuance of a subpoena).
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contested case. In the present case, although the original
hearing on Special Permit Application No. SPP-16-188 was
continued at Bolton’s request, Special Permit Application No.
SPP-16-188 remained a live agenda item on which the LPC received
oral testimony at the LPC’s May 19, 2016 meeting.28 Under LPC
Rule 4-6(b), the LPC’s May 19 meeting was the “first meeting” on
Special Permit Application No. SPP-16-188 and Hualalai’s
petition should have been resolved at that time. It was
“plainly erroneous” for the LPC to disregard the procedures in
LPC Rule 4-6 and continue with proceedings for Special Permit
Application No. SPP-16-188 while leaving Hualalai’s petition
pending. Liberty Dialysis-Haw., 130 Hawaiʻi at 103, 306 P.3d at
148. By failing to follow LPC Rule 4-6, Appellees may have
prejudiced Hualalai’s substantial rights--the rights it would
have had as a party to the proceeding.29 Thus, because the LPC
28 The LPC heard oral testimony from concerned members of the
public, including from several individuals associated with Hualalai.
29 See supra note 27 and accompanying text. Had Hualalai been
approved by the LPC as a party, it would have been privy to the rights
afforded to parties by HRS chapter 91 and LPC Rules. Moreover, HRS § 91-1
and LPC Rule 1-3(m) define “party” as any person “named or admitted as a
party, or properly seeking and entitled as of right to be admitted as a
party” in any court or agency proceeding. (emphasis added). LPC Rule 4-6(b)
establishes the criteria for an intervening party, which includes a person
who can show “that the proposed action will cause them actual or threatened
injury in fact.” LPC Rule 4-6(b)(4). Here, Hualalai qualifies as a
“person . . . properly seeking and entitled as of right to be admitted as a
party” under HRS § 91-1 and LPC Rule 1-3(m) because it followed the proper
intervention procedures set forth in LPC Rule 4-6(a) and has established it
will suffer actual or threatened injury in fact, see supra section III.A.2.d,
as required by LPC Rule 4-6(b)(4). Although it is not a necessary holding to
(continued . . .)
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used unlawful procedure here, remand is appropriate under HRS
§ 91-14(g)(3).
Remand is also appropriate under HRS § 91-14(g)(6)
because the LPC and Planning Director made decisions that were
“characterized by abuse of discretion.” The Planning Director
abused his discretion when he withdrew Bolton’s Special Permit
Application No. SPP-16-188 after extensive nonpublic
communication and fact-finding with only one party, Bolton, in
the contested case. This court has held that such ex parte
arguments in a contested case violate HRS chapter 91. In Town
v. Land Use Comm’n, this court considered the Land Use
Commission’s approval of a landowner’s petition to change his
district’s designation from agricultural to rural. 55 Haw. 538,
539, 524 P.2d 84, 85 (1974). Town, an adjoining landowner, had
appeared at a public hearing and opposed the petition. Id., 524
P.2d at 86. Two meetings--one of which Town attended--were
scheduled to render a final decision on the petition, but both
meetings were deferred at the petitioner’s request. Id. A
third meeting was scheduled; Town did not attend the meeting,
but wrote to the Commission and objected “to the taking of any
testimony or further evidence from the petitioner.” Id. at 540,
(. . . continued)
the disposition of this appeal, Hualalai qualifies as a “party” within the
meaning of HRS chapter 91 and was privy to the rights enumerated therein.
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524 P.2d at 86. At this meeting, the petitioner, despite being
told he was prohibited from introducing new evidence, submitted
documents for the Commission’s consideration, argued in favor of
his petition, and rebutted all statements made in opposition to
his petition. Id. The Commission approved the petition, and
Town appealed to the circuit court, which granted summary
judgment in favor of the Commission. Id. We reversed the
circuit court’s grant of summary judgment, and held that the
Commission committed “prejudicial error.” Id. at 549, 524 P.2d
at 92. We reasoned that Town “was not given the opportunity to
present argument or rebuttal evidence of his own to counter the
ex parte arguments presented by [the] petitioner,” nor did he
have “the opportunity to cross-examine [the] petitioner[.]” Id.
at 549, 524 P.2d at 91–92. Town demonstrates a commitment to a
core principle of contested case proceedings: ensuring that all
parties have a full and fair opportunity to develop the record
before the agency renders a decision on the petition. See HRS
§§ 91-9(a), (c), (g), 91-10(3), 91-13.30
30 HRS § 91-9 provides that “in any contested case, all parties
shall be afforded an opportunity for hearing after reasonable notice[,]” HRS
§ 91-9(a), “[o]pportunities shall be afforded all parties to present evidence
and argument on all issues involved[,]” HRS § 91-9(c), and “[n]o matters
outside the record shall be considered by the agency in making its decision
except as provided herein[,]” HRS § 91-9(g).
HRS § 91-10(3) states, “Every party shall have the right to
conduct such cross-examination as may be required for a full and true
disclosure of the facts, and shall have the right to submit rebuttal
evidence.”
(continued . . .)
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In the present case, the Planning Director’s actions--
his unilateral, nonpublic communication with Bolton, without the
knowledge or input of Hualalai, a party that he knew had already
formally requested to intervene in the proceeding--did not
facilitate a “full and true disclosure of the facts” before a
final decision was rendered on Special Permit Application No.
SPP-16-188, as chapter 91 requires. HRS § 91-10(3). Although
the Planning Director necessarily exercises some discretion in
performing his duties under the general grant of authority by
the Hawaiʻi County Charter, the Zoning Code, and state law to
“administer” and “enforce” the zoning laws, ordinances, and
regulations,31 he exceeded the boundaries of this discretion by
precluding Hualalai from participating in a contested case
proceeding for Special Permit Application No. SPP-16-188.
Appellees contend that the LPC did not abuse its
discretion when it “elected to let [the proceeding] lie as a
closed matter” because “[Bolton] voluntarily abandoned its
(. . . continued)
HRS § 91-13 prohibits an “official of an agency who renders a
decision in a contested case” from “consult[ing] any person on any issue of
fact except upon notice and opportunity for all parties to participate.”
31 See CCH § 6-7.2(b)(5) (“The [planning] director shall . . .
[a]dminister the subdivision and zoning ordinances and regulations adopted
thereunder.”); HCC § 25-2-1(b) (“The [planning] director shall enforce all
other provisions of this chapter pertaining to land use.”). The Planning
Director is also responsible for “enforc[ing] . . . the use classification
districts adopted by the land use commission and the restriction on use and
the condition relating to agricultural districts[.]” HRS § 205-12.
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pursuit of a special use permit[.]” This mischaracterizes the
facts: the Planning Director’s September 21, 2016 letter to
Bolton advised, “your Special Permit application will be
withdrawn from further processing[.]” The Planning Director’s
September 21 letter is the first time withdrawal of Special
Permit Application No. SPP-16-188 is mentioned. Bolton did not
initiate the withdrawal by “voluntarily abandon[ing]” its
application; the Planning Director was the initiator. There is
no LPC Rule specifying who can withdraw a special permit
application, or when a withdrawal can occur. However, LPC Rule
4-6 sets forth a procedure that requires the LPC to
“establish[]” the parties and resolve any petitions to intervene
“prior to any further action” in the contested case proceeding.
Hualalai was therefore entitled to a decision on its petition
before Appellees took any further action--such as withdrawing
the application--in the proceeding. LPC Rule 4-6 unambiguously
states that the LPC “will grant or deny [a] written request [to
intervene] prior to any further action on the matter.” Thus,
the LPC’s failure to grant or deny Hualalai’s petition was
arbitrary and capricious, and constituted an abuse of
discretion.
IV. CONCLUSION
Appellees’ aforementioned actions in this case--the
Planning Director’s extensive ex parte communication with Bolton
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that culminated in his decision to withdraw Special Permit
Application No. SPP-16-188, and the LPC’s failure to issue a
decision on Hualalai’s petition and its decision to treat the
proceeding for Special Permit Application No. SPP-16-188 as a
closed matter--were made upon unlawful procedure in violation of
HRS § 91-14(g)(3) and constituted abuses of discretion in
violation of HRS § 91-14(g)(3)(6). Therefore, pursuant to HRS
§ 91-14(g), remand is appropriate. Accordingly, this case is
remanded to the LPC for further proceedings consistent with this
opinion.
Michael J. Matsukawa /s/ Mark E. Recktenwald
for appellant
/s/ Paula A. Nakayama
D. Kaena Horowitz,
(Molly A. Stebbins and /s/ Sabrina S. McKenna
Angelic M. Ho on the briefs)
for appellees /s/ Michael D. Wilson
J. Porter DeVries
for applicant Bolton, Inc.
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