Of Counsel:ALSTON HLINT FLOYD & INGAttorneys At Law, A Law Corporation

JUDY A. TANAKA 5369.0PAMELA W. BUNN 6460-01001 Bishop Street, Suite 1800Honolulu, Hawai'i 96813Telephone: 524-1 800Email: pbunn@ahfi.com

Attorneys forOFFICE OF HAWAIIAN AFFAIRS

Surface Water Use Permit Applications,Integration of Appurtenant Rights andAmendments to the Interim Instream FlowStandards, Nã Wai 'Ehã Surface WaterManagement Areas of Waihe'e, Waiehu, 'Iaoand Waikapü Streams, Maui

BEFORE THE COMMISSION ON WATER RESOURCE MANAGEMENT

STATE OF HAWAII

))))))))

Case No. CCH-MAI5-01

OFFICE OF HAWAIIAN AFFAIRS'RESPONSIVE BRIEF ANd JOINDER;CERTIFICATE OF SERVICE

OFFICE OF HAWAIIAN AFFAIRS' PONSIVE BRIEF' and .IOINDER

Office of Hawaiian Affairs ("OHA") hereby submits its Responsive Brief,

pursuant to Minute Order No. 4. OHA responds herein to the opening submissions of

Hawaiian Commercial & Sugar Company ("HC&S"), Waikapu Properties, LLC ("V/aikapu

Properties" or, in citations, "WP"), MTP Operating Company, LLCI ("MTP"), and Wahi

Ho'omalu Limited Partnership ("Wahi Ho'omalu" or, in citations, "WHLP"), and also joins

t OHA notes that SWUPA No. 2203, with respect to TMK No. (2)3-6-005-007, was filedby MTP Operating Company, LLC, which is the party to these proceedings, but theparcel of land with that TMK number is owned by MTP Land Partners, LLC, which was

deeded the property in20l2 by a Grantor other than MTP Operating Company, LLC.SeeEx. OHA-I6. As far as OHA is able to determine, "MTP Operating Company, LLC"has never owned the parcel.

in the Responsive Brief filed by Hui o Nã Wai 'Eha and Maui Tomorrow Foundation, Inc

(collectively, the "Community Groups").

I. INTRODUCTION

Before responding individually to the opening submissions identified above,

there is a common characteristic shared by all of the private commercial users' submissions

that is so conspicuous it warrants separate discussion. In part because of the way these

proceedings were structured with all uses being considered together, and in part because of

the recently announced cessation of HC&S's sugarcane cultivation, which drastically upsets

the considerations that resulted in the current interim instream flow standards ("IIFSs"), the

burden on private commercial water users has been rendered virtually insurmountable; none

has met it, and most have not even tried.

The Hawai'i Supreme Court has made clear that, "insofar as the public trust,

by nature and definition, establishes use consistent with trust purposes as the norrn or

'default' condition, . . . it effectively prescribes a 'higher level of scrutiny' for private

commercial uses such as those proposed in this case. In prøctícal terms, this meøns that the

burden ultímately líes wíth those seeking or øpproving such uses to justìfy them ín light of

the purposes protected by the trust." In re Waiahole Ditch Combined Contested Case Hr'g,

94 Hawai'i 97 , 142,9 P.3d 409, 454 (2000) ("Waiahole 1') (emphasis added); see also In re

Wai'olao Moloka'i, Inc.,l03 Hawai'i 401,429,83 P.2d 664,693 (2004)("Wai'ola")

(emphasis added). Satisffing that burden requires private offstream diverters to establish that

their uses oowill not intedere with øny public trust purposesr" and "the Commission is duty

bound to hold an applicant to its burden during a contested case hearing." l(øi'ola,l03

Hawai'i at 442,83 P.3d at705 (emphasis added) (citation omitted).

2

Private offstream users cannot establish that their uses will not interfere with

any public trust purposes until the amount of water required for public trust purposes is

determined. Making that determination has two components in this case: (1) revisiting and

properly amending the IIFSs in light of the changed circumstances since 2014, when the

current IIFSs were adopted by the Commission's approval of a stipulation designed to

accommodate the demands of HC&S, the largest diverter (the "2014 Stipulation")2, and

(2) quantifying the water required to satisfy traditional and customary rights to grow kalo

("T&C rights")3 and existing appurtenant rights4 in Nã Wai 'Ehã.

The requirement for these determinations to be made before consideration of

the SWUPAs for existing and new uses of private commercial users need not delay these

proceedings. The Community Groups filed a Petition to Amend Upward the IIFSs on

March 9,2016, and moved to consolidate the IIFS Petition with these proceedings, or

conduct the proceedings in parallel, so that the Commission may, as required by law,

2 The Commission approved the2014 Stipulation inits Order Adopting: (l) HearingsOfficer's Recommendation on the Mediated Agreement Between the Parties; and(2) Stipulation re Mediator's Report of Joint Proposed Findings of Fact, Conclusions ofLaw, Decision and Order, entered on April 17,2014 in Case No. CCH-MA 06-01.

3 In this Responsive Brief; unless otherwise indicated, "T&C rights" refers specifically tothe right to grow kalo, rather than the broader range of traditional and customary rights ofahupua'a tenants identified in HRS $ 17aC-101(c).o OHA expressly preserves its objection to the recognition of appurtenant rights that,according to Reppun v. Board of l(ater Supply, 65 Haw. 531, 552, 656 P.2d 57 , 71

(1982) (cert. denied, Board of Water Supply v. Nakata,471 U.S. 1014, 105 S.Ct. 2015,85 L.Ed.2d 298 (1985)), have been extinguished by the grantor's attempt to reserve therights when conveying the property to which the rights attached. See Office of HawaiianAffairs, Hui o Na Wai 'Eha, and Maui Tomorrow Foundation, LLC's Joint Statement ofExceptions to Hearings Officer's Findings and Recommendations dated August 30, 20I 3Regarding "Provisional Recognition of Appurtenant Rights, Na Wai 'Eha Surface WaterManagement Area, l4/aihe'e, V[/aiehu, 'Iao, IlailEu Streams, Maui, Hawai'i " filed onOctober 9,2014, at 3-8.

J

designate properly protective IIFSs "beþre it authorizes offstream diversions potentially

detrimental to public instream uses and values." [4¡aiahole 1,94 Hawai'i at 148,9 P.3d at

460 (emphasis added). Determining proper IIFSs will establish the amount of water

necessary to satisfy instream public trust purposes. Of equal priority are T&C rights and

appurtenant rights, which have been treated as ofßtream uses but are no less public trust

purposes. Scores of applicants claiming these rights, many of whom are OHA beneficiaries,

have submitted SWUPAs based on T&C and/or appurtenant rights, which must be quantified

príor to the issuance of any SWUPAs for existing or new uses of private commercial users.

The extensive record in Case No. CCH-MA 06-01 (the "IIFS Contested

Case") together with the submissions herein by the T&C and appurtenant rights holders

provide the information required to determine the amount of water needed for public trust

purposes.s Until that occurs, private commercial offstream diverters cannot meet their

burdens in these proceedings to demonstrate that their uses will not interfere with any public

trust purposes, as aptly demonstrated by the private diverters' universal failure to do so.

il. HC&S

"At a very minimum, applicants [for Surface Water Use Permits] must prove

their own actual water needs." l4/aiahole I,94Hawai'i at 161,9 P.3d at473. HC&S has

admittedly failed to satisfy even that minimal burden. It is clear from HC&S's Opening

Briefs and press releases that the degree ofconcreteness suggested by its use ofthe

capitalizedphrase "HC&S's Diversified Agriculture Plan" currently does not exist. As

Alexander & Baldwin's (ooA&B's") CEO told the media at a staged event with legislators on

t Because not all holders of T&C rights and appurtenant rights have applied for permits,and because many of the appurtenant rights holders do not at this time seek the fullamount of water to which they are entitled by their appurtenant right, a reservation forinchoate rights is necessary and appropriate.

4

April 20, 2016, "[p]lans are very much premature. . . . It's hard to say exactly how much

fwater] we need[.]" Ex. OHA-4.

HC&S's ooplan" is to cultivate bioenergy crops on its 'Iao-Waikapü and

V/aihe'e-Hopoi fields, but it has not committed to any specific bioenergy crops, and has not

yet done any large scale testing. It plans, oolater this year," to do a large-scale test to validate

"crop density, irrigation layout, per-acre yield in different soil types, water demand, and

field-scale costs," only øfter which it will be able to analyze "the economic viability of

cultivating different energy crops on HC&S lands." HC&S Opening Brief re SWUPA No.

2206 (cited as "HC&S 2206 OB"), af 3-4,6-7; HC&S Opening Brief re SV/UPA No. 2205

(cited as "HC&S 2205 OB"), at3,6.

Notwithstanding its admitted uncertainty regarding what crops it will grow,

and what the economic model will look like once the data is collected to populate it, HC&S

speculates that (1) whatever "bioenergy crop" it grows on its 'Iao-Waikapü and Waihe'e-

Hopoi Fields will need eighty percent of the water it currently uses for sugar cane; (2) there

is no practicable altemative source so it must continue to drain Nã Wai 'Ehã streams; and

(3) it will need to waste 2.15 mgd As detailed below, HC&S has not met, and cannot meet,

its burden by such unsubstantiated conjecture.

A. SWUPA 2206-'iao-WaikapüFields

HC&S states that its o'Diversified Agriculture Plan" "calls for the cultivation

of bioenergy crops on the 1,120 acres that comprise the 'Iao-Waikapu Fields." HC&S 2206

OB at 2, 5. Based on a "preliminary assessment," it o'estimates" its water requirements will

be 80% to 85Yo of the water requirement for sugarcane, and using the lower of these

"estimates," requests *4326 gad to be applied over the 1120 acres of the lao-Waikapü Fields,

or 4.84 mgd." Id at7.

5

First, the 'Ïao-Waikapü Fields are no longer 1120 acres. These are the fields

HC&S leases.6 Id. at2. As of November 2011, when the parties executed the Second

Amendment to Lease, the land covered by the lease comprised 1,129.6 acres. Ex. OHA-5

(Exhibit ('l-A)' thereto). By 2013, when the Third Amendment to Lease was executed,

portions of Fields 741,743,734,747 and749 had already been withdrawn from the Lease,

and the parties agreed that Fields 737A and737B would be withdrawn following the harvest

in September 20T3, Ex. OHA-6, T'Ji 1 (b) e @). Assuming there have been no further

withdrawals of land from the lease, and no further amendments of the lease, HC&S currently

leases 952.3 acres. Exhibit "4" to Ex. OHA-6. By October 2017, when the extended lease

termexpiresforFields 741,743,745,747,and749,HC&S's'Iao-W'aikapüFieldswill

comprise only 661.3 acres. Id. And, in the Third Amendment to Lease, the Lessor reserved

the right to withdraw additional acreage,and deleted the "Option to Extend."7 Ex. OHA-6,

ll2(a),4.

Second, not only has HC&S apparently misstated the current and near-term

future acreage of the 'Iao-Waikapü Fields, it has failed entirely to substantiate the supposed

water duty of 4,326 gad, which it estimates by calculating 80% of the 5,408 gad the

Commission (erroneously) found to be reasonable for sugarcane grown on the 'Iao-V/aikapü

Fields. In the Waiãhole case, the Commission determined that 2,500 gad is a reasonable

water duty for diversified agriculture, subject to re-evaluation based on the best available

data or field experience. See Waiahole I,94 Hawai'i at 162,9 P.3d at 474. HC&S has not

6 HC&S does not explain why it would continue to lease the lao-V/aikapu Fields after itceases sugarcane operations.7 tlC&S is not part of V/aikapu Properties' "longer term agricultural development plan,"as described in the Draft Environmental Impact Statement for the "Waikapü CountryTown" that Waikapu Properties is developing (on the same land for which it seeks waterfor agricultute, see section IlI, infra). Ex. OHA-7 atIII-34 to III-36, andFig.24.

6

even identified a crop, much less presented the best available data or field experience to

justify its request for 4,326 gad. HC&S has not demonstrated a need for any more than 1.65

mgd for the 'Ïao-Waikapü Fields (2,500 gad x 661.3 acres), and has not justified diverting

øny water from public trust pu{poses in Nã V/ai 'Ehã since it has not demonstrated the lack

of a practicable alternative water source.

HC&S's rote recitation and rejection of potential alternative sources

myopically overlooks irrigation wells drilled by its Lessor, V/aikapu Properties, as well as

A&B's own wells in V/aikapu. Waikapu Properties' Draft Environmental Impact Statement

("DEIS") for its "Waikapü Country Town" development states that, in addition to three

potable wells, it also has two non-potable wells, which are located adjacent to Waihe'e Ditch,

and "[w]ater pumped from the non-potable wells will be discharged into the Waihe'e Ditch

or lined onsite reservoirs and used for irrigation purposes for the residential lots, agricultural

farming, parks and open areas." Ex. OHA-7 at V-87 and Figure 42. Appendix H to the

DEIS provides additional detail about these non-potable wells:

Two non-potable water wells were drilled as designated as WaikapüCountry Town V/ells No. 4 (State Well No. 5130-03) and No. 5 (State

V/ell No. 5030-04). Well No. 4 was drilled at a ground elevation ofapproximately 459 feet above MSL and V/ell No. 5 was drilled at a groundelevation of approximately 482 feet above MSL. The capacity of WellNo. 4 is 500 gpm and 650 gpm for Well No. 5. Both wells had lowsalinity levels during the initial pump tests.

OHA-7, Appendix H at24. In addition, in20l4 A&B received permits for two wells - Ola

Wai 1 and Ola Wai2 - in the Waikapä aquifer sector; the Commission staff believes these

wells have already been drilled and is awaiting reports. OHA-8; personal communication,

April2l,2016. See also Exhibit 2189 WCEIC-270,at8.

On the record created here, HC&S's SWUPA No. 2206 must be denied as a

matter of law.

7

B. SWUPA Z20í-Waiheoe-Hopoi Fields

SV/UPA No. 2205 fares no better. In an Opening Brief identical in most

respects to the one it submitted for the 'Iao-Waikapu Fields, HC&S claims it will need 17.33

mgd to irrigate an unidentified bioenergy crop on the 3,650-acre Waihe'e-Hopoi Fields

(calculated, again, as 80% of the water duty for sugarcane on the same fields), and 2.15 mgd,

or more thanl2Yo, for "system losses." The total amount HC&S seeks for these flrelds is

actually more than the Commission found to be reasonable in its 2010 Decision and Order

because, although HC&S practicably used Well No. 7 as its primary source of 21 mgd for

more than half a century, and has pumped 18.5 mgd on a sustained daily basis for several

years, it now claims that the cost of pumping Well 7 is not practicable under the "Diversified

Agriculture Model"s and "would make farming the Waihe'e-Hopoi Fields uneconomical."

HC&S 2205 OB at13.

Although HC&S purports to be "relying primarily on economic factors in its

analysis of the practicability of using Well No. 7 as an alternative source to Na Wai Eha

surface water," id. at 15, its argument is fatally undermined by its admission that it has not

yet analyzed the economic viability of cultivating energy crops on its lands, id. at3,6, and

"until more data is collected to populate the economic model, HC&S would not know what

water costs can be borne," id. at 14. HC&S and the Commission have already been down

this road, and know where it leads. As the Hawai'i Supreme Court held in vacating the 2010

Decision, "the Commission erred when it made its decision regarding Well No. 7 based on

cost while explicitly acknowledging that it did not have the data needed to truly analyze

cost." In re Na lItai 'Eha Contested Case Hr'g,I28 Hawai'i 226,262,287 P.3d 129,163

I HC&S's "Diversified Agriculture Model" may or may not be the same thing as itsillusory "Diversified Agriculture Plan"-HC&S does not say, and has provided neither a

"model" nor a "plan."I

(2012).

Equally damning is that the cost of pumping that HC&S claims would make

farming "uneconomical" is 17.8 cents per thousønd gallons, arate far lower than other

farmers pay. ooAn alternative is practicable if it is available and capable of being used after

taking into consideration cost, existing technology, and logistics." In re Waiahole Ditch

CombinedContestedCase Hr'g,105 Hawai'i 1,19,93P.3d643,661 (2004)("Waiahole

11'). Given its long history of pumping Well No. 7, HC&S obviously cannot demonstrate

that Well No. 7 is unavailable or incapable of being used considering existing technology or

logistics. It relies solely on the cost of pumping V/ell No. 7, which it estimates to be "$178

(based on MECO's rate of $0.22 per kwh) to pump 1 million gallons of water from Well No.

7 tothe Waihe'e Ditch." HC&S 2205 OB at14.

The Hawai'i Supreme Court has admonished that lump sum amounts such as

an ooannual cost" of "1.2 million" to pump 18.5 mgd from Well No. 7, íd., arc meaningless

"without evidence and analysis of the actual per-unit breakdown of those costs relative to the

costof [] otheralternatives." Waiãhole 1,94 Hawai'i at165,9P.3d at477. Brokendown

into unit costs, HC&S's estimate equates to 17.8 cents per thousand gallons, well below what

other farmers, and the Commission, have deemed practicable. The cost of pumping Well No.

7 is far less than the $O.75ithousand gallons Maui County charges for non-potable water, see

Ex. OHA-8, and other farmers, the Hawai'i Supreme Court, and this Commission have

deemed more expensive altematives to be practicable from a cost perspective. See, e.9.,

lVaiahole 1,94 Hawai'i at 165,9 P.3d at 477 (vacating permit issued to Campbell Estate

where Commission failed to address the practicability of using pumped groundwater as an

alternative to stream diversion, given that pumping costs were o'as little as 39 to 45 cents per

thousand gallons" and ooleeward farmers pay 35 cents per thousand gallons for ditch water,

9

and county rate schedules indicate that many other farmers dependant on municipal water

supplies pay anywhere from 60 cents to $2.47 per thousand gallons"); In re [(aiahole Ditch

Combined Contested Case Hr þ, Case No. CCH-O465-1, Findings of Fact, Conclusions of

Law, and Decision and Order (July 13, 2006), at 50 (observing that then-current price of

water from Waiãhole Ditch was $0.40 per thousand gallons); and at 56 (concluding that a

new well, with combined construction and operating costs of $0.74 per thousand gallons

"is a reasonable alternative to Ditch waters on the basis of cost, existing technology, and

logistics").

An applicant's inability to afford an altemative source of water, standing

alone, does not render that alternative impracticable. [4laiahole II,l05 Hawai'i at 19,93 P.3d

at 661. "Regardless of [HC&S's] financial situation, the Water Commission ois not obligated

to ensure that any particular user enjoy a subsidy or guaranteed access to less expensive

water sources when alternatives are available and public values are at stake."' 1d (quoting

l4taiahole 1,94 Hawai'i at 165,9 P.3d at 477). Indeed, the public trust doctrine precludes

such a subsidy.

Finally, HC&S has failed to justify system losses of more than twelve percent.

If Wailuku Water Company can reduce its waste to less than five percent, certainly HC&S

can.

III. WAIKAPU PROPERTIES/MTP

Waikapu Properties and MTP, related entities whose principal is Michael

Atherton, have been less than straightforward in their opening submissions. It is one thing

that these entities carelessly assert appurtenant rights that do not exist, describe their uses

differently than what actually exist, and fail to undertake any good faith alternatives analyses;

they are presumably aware of the consequences of treating their burden of proof so casually.

l0

What is more disturbing is that they failed even to mention that, on January 18, 2016, just

weeks before filing their opening submissions, they filed a DEIS for a development that

would change a significant part of their claimed agricultural use to this:

^ rrlu tm

I etr,trr.sI rürÂt tolt

I (orÄffñY toçr Nt,tlp u1Ê

I <oNvÊ*crÂt

I 9[lfgNo oPtx gÆt5 t(üóorI ¡cn¡cutrunrt uros

,+.i .l llflt

See Ex. OHA-7, Figures 1lA, 12. The anticipated start date for Phase I of the Waikapü

l1

Country Town development is next year,2017, id., Appendix ooH," at l, yet even in their

chart of "current and future uses," Waikapu Properties and MTP do not so much as mention

the development of a 500-acre mixed-use housing project, Atherton Exhibit "l."

A. \ilaikapu Properties Claims Appurtenant Rights on Land it does notOwn and Appurtenant Rights that Have Been Extinguished

Waikapu Properties has four SV/UPAs pending on three parcels, and claims

appurtenant rights on two: TMK Nos. (2) 3-6-04:03 (the"657-acre parcel") and

(2) 3-6-06:36 (the '00.72-aqe parcel").e V/P OB at2,6 (tables). Although it has obviously

done considerable work attempting to document its purported appurtenant rights, Waikapu

Properties has claimed appurtenant rights for kuleana parcels it does not own (without any

showing of consent by the rightful owners), and for appurtenant rights that have been

extinguished and are, in any event, duplicative.

1. Waikapu Properties claims appurtenant riehts for parcels excludedfrom the 657-acre parcel

As OHA and the Community Groups have previously pointed out,l0 Waikapu

Properties claimed (and the Commission has now provisionally granted) appurtenant rights

on kuleana parcels that were expressly excluded from the deed by which the 657-acre parcel

was conveyed to Mr. Atherton and his affiliates. That parcel is described in'oltem I" of the

legal description (Exhibit "A") attached to the deed, which is included in Attachment 1-A to

Ex. 2356-Waikapü-3. According to the legal description, of the 30'âpana in the Land

e Waikapu Properties originally claimed appurtenant rights on TMK No. (2) 3-6-04:06 as

well, which claims were denied without prejudice; Waikapu Properties' Opening Briefdoes not claim any appurtenant rights that were not provisionally recognized inAttachment C (revised Exhibit 7) to the Commission's Na Wai Ehø Provisional Order onClaims that Particular Parcels have Appurtenant Rights entered on December 31,2014in Case No. CCH-MAl3-02 ("Provisional Order").t0

See OHA and the Community Groups' joint Objections to Appurtenant Rights Claimsof Waikapu Properties, LLC (2356/2297N) and Hawaiian Commercial and SugarCompøny (2205) Re TMK No. (2) 3-6-04:003 filred on September 19, 2012.

t2

Commission Awards ("LCAs") provisionally recognizedby the Commission, 26 werc

expressly excepted and excluded from the conveyance.t' The table below shows the

provisionally recognized kuleana parcels, numbered for reference, and the alpha designation

corresponding to the exclusion on the legal description of the 657-acre parcel.

t| ::gzru x 3-6{04:003 26os r-5 x x iåiiå"ffi & s Er ro hrc and kura. ff,t ApproveApana 4 æl to hous lot. FT rêf. to W\¡,C 3

2 H åiilj;Í':iliiåîål"iiîäiî"'Ài:ä1{aro páuku. Apana 2-taro loi, Apaná 3-taro loi, Apana 4-house lot, Apana 5-

. . ætato kulax x ' Èf rei. tonp"na 6-house lot. NT ref to : oHAl 1 ' Approve

Aoane 8-sreet æta¡o mala. \ /wC 3

X X FTINT ref. to 2 preces ot kalo land and L Ol-tA: 1 Approveprece of kula Vvwc: 3

l{O X LCAdoænotappearonTMKmap. Ol-{A:1 Denyw,/oprejudiæNT/FT..eltokulaândkalo.,U4ryÇi3

X X FT rcf to Ap1-*otion of loi, Apana 2-2 lo¡. Ol-lA 1 ApproveNl ref. Apana 1la6 lând, Apana 2-2 lois. wWC:3

X X FT @f Apânâ 2-æction of 2 loi. Nf ref. Ol-lA: 1 ApprweApana 2$ taro loi. U4ryC, q

x I FT@lApanal-sælionofloi. NTref Ol-lA: 1 ApproveAollero muku. VVWC: 3

I x I g-o¡o¿:oo¡ I z¿99,1 | x I x lrircl.npãna1-$ctionofkalolånd.run lorn:t lApptouo I

I I I I I lrelApanal-taropauku. lwwco I I' X 3-ô{04:OO3 2522 X X FTælApâna1-kaloland,Apana2'3loi, Ol-lA: I ApproveApana3-kula. NlrelApa¡a1-taro VwvC:3panuku, Apena 2-3 loi, Apana 3-cultiwted

-i--- g-o¡o¿:oos zsizzad i- - x - rrlr.rrrerto¡påmzillor¡panu"a¡r 6¡1a 1-npprwã-and 2 loi. WWC: 3

Provisional Reoognilion of Appurtenant RightsNa Wai Eha Surlàce Water Mauagement Area, Waihee, Waiehu, Iao. Waikaptr Streams. Maui' H¿lvaii

J

4

-5

9F

6

7

It

I'lI

M

o

lE I I

X ¡-O¡ø:OO¡'--l'- I g-o¡o¿:oos

X 3"6{04:003

X 3-6{04:003

x 3-6{04:003

X 3-e{04:003

3224:6

i 3s2o

3546:2

: 5g5t:1,2

5774:2

23M:1

l0 G

Decembor31,2014

ll N

t2 I( (Ap l)t3' P

14a15 R

x 3-6-004:003.. X 3-6-0041003

X 3-6-004:003

X 3-6-004:003

352b:1 &2 x i

'6385:2'xx:--1046012 X X

ro¿ò1,t. n¡z x i

Apana 2-taro pãuku and kula. W\ /Cr 3FT ref. to Apana | 7 2-sct¡on ot lo¡. NT OHA: 1 Approve

VWVC: 3OHA:1 Approvo

OHA

Approve

16 R

X 3-6-004:003 10481:1, [,13 X X

\^/C: 34-section ol loi. NT rof to Apana 1-taropauku, Apana 2-houæ lot Apana 3-8 tarolor, Apana 4-taro pauku

FT ref. Apana 1-kalo and kula land, OHA: 1

Apana 2-hou* lot, Apa¡a 3'B loí, Apana WWC: 34-seciion of loi. NT ref. to Apana 1-taropauku, Apana 2-houæ lot, Apana 3-8 tarolor. Apana- 4-taro paukuFT rêf. Apana 1-kalo and kulâ lând, . OHA: 1

Apana 2-hous lot, Apana 3-8 loi, Apana , WWC: 34-sedion ol loi NT ref to

Apana 2-hou* lot,ApanaApana

1 -lâro3-8 taro

of loi NT r€f.

,-'. R .

tl-.-t8Tte s

x 3-ô'004:003 :2,3, 4

3'ô-004:003 3374:4 X Xto Apana pauku.

SuPey notes for loi €lled Nohoana

- æntained .73 acre-Grant 1711:1 doæ not appoar on fMK ' Deny*,/o prejudiæ

OHA:1WWC:3OHA:1VVWC: 3OHA:1VliVúC:3

X 3-6-0041003 Grant 2109 X

X 3-6-004:003 ' Grânt 1711 1

X 3-6-004.003 Grant 1712 X X OHA:1 Approve2o D (Ap l)

Table l

Moreover, Waikapu Properties knows it does not own the excluded kuleana

parcels. Not only is it clear on the face of its deed, but also, Waikapu Properties knows who

tt For convenience, the portion of Exhibit "A" to the deed included in Ex. 2356-Waikapu-3

that describes the 657-acre parcel is attached as Ex. OHA-10, with numbers coffesponding to

Table 1 showing the excluded parcels that have nonetheless received provisional recognition.

13

the actual owners of some of the excluded kuleana parcels are. For example, in its DEIS, it

acknowledges that LCA2499 'âpana l, for which it claims appurtenant rights (see Table l,

#8), is owned by the Mahi family. Ex. OHA-7, aII-26. And LCA 5551 'ãpana 1, which

Waikapu Properties claims is part of both the 657-acre parcel and the 0.72-acre parcel (see

WP OB, Appendices I and 2, and Table l, supra, # 5) is included in neíther. It is part of

TMK No. (2) 3-6-06:013, which Waikapu Properties does not claim to own. See Ex.

OHA-I1. According to the Provisional Order, Clayton Suzuki and his õhana, who own TMK

No. (2) 3-6-06:013, provisionally have the appurtenant rights associated with LCA 5551:1.

Provisional Order, Attachment C (revised Exhibit 7), at 41. Eassie Miller, Jr., who was

interviewed in connection with Waikapu Properties' Cultural Impact Assessment (OHA-7,

Appendix F, at 84) owTts, with others, TMKNo. (2) 3-6-05:19, which contains substantial

portions of LCA 2522 (Table I,# 9) and LCA3250 (Table l,# 4). SeeEx. OHA-12.

2. '0.have been extinguished

Waikapu Properties has no appurtenant rights on the 0.72-acre parcel, because

any such rights were extinguished when its grantor, V/aikapu Farms, LLC, purchased the

parcel in2003 from Hawai'i Land & Farming Company, Inc. The Special W'arranty Deed by

which Hawai'i Land &, Farming conveyed the 0.72-acre parcel to Waikapü Farms, LLC

expressly reserved to the Grantor "all water and water rights within or appurtenant to the

Property[.]" Ex. OHA-13, at2. The Hawai'i Supreme Court has unequivocally and

ambiguously ruled that any attempt by a grantor to reserve appurtenant rights when

conveying the property to which the rights attached has the effect of extinguishing the

appurtenant rights. Reppun v. Board of Water Supply, 65 Haw. 531,552,656P.2d 57,71

" See OIJA and the Community Groups' joint Objections to Appurtenant Rights Claimsof I(aikapu Properties, LLC (3472) Re TMK No. (2)3-6-06:036 ñled on September 19,

2012.T4

(1952) (cert. denied, Board of Ilater Supply v. Nakata,471 U.S. 1014, 105 S.Ct. 2015, 85

L.Ed.2d2e8 (198s)).

The Reppun Court reversed the trial court's ruling that an attempt to sever

appurtenant rights was ineffective. Although it agreed that "the rule posited in McBryde

prevents the effective severance or transfer of appurtenant water rights," the Reppun

Court held that the trial court "erred in holding that the plaintiffs' lands retained such

rights, inasmuch as they were effectively extínguished by the øttempted reservatìon of

such ríghts." Reppun,65 Haw. at 552,656P.2d at 7l (emphasis added). The Court

explained that,

while no appurtenant rights were effectively transferred in thiscase, the deed thøt øttempted to reserve such rights hød the effectof extínguíshing them. For while easements appurtenant may notbe utilized for other than the dominant estate, "[t]here is nothing toprevent a transferor from effectively providing that the benefit ofan easement appurtenant shall not pass to the transferee of thedominant [estate]."

There appears to be no question here that the plaintiffs' grantors, inattempting to reserve the water rights to themselves in spite of thetransfer of the lands, intended to extinguish those rights whichwould otherwise have attached to plaintiffs' lands. 'ù/hile thenature of the water rights involved necessarily precluded theformer, nothíng would preclude the giving of elþct to the løtter.

Id. (emphases added, brackets in original, citation omitted).

Thus, when Waikapu Properties purchased the parcel from Waikapu Farms in

2009, any appurtenant rights had already been extinguished six years earlier and Waikapu

Farms had no appurtenant rights to convey. Waikapu Properties was on notice that the

0.72-aqe parcel had no appurtenant rights, because it was expressly conveyed subject to

"[t]he terms and provisions contained in Special Warranty Deed dated September 24,2003,

recorded in said Bureau of Conveyances as Document No. 2003-268504," which document

"includes, but is not limited to, matters relating to water reservation." Ex. OHA-I4, Exhibit

15

ooA" thereto at 5.

Moreover, even if the water rights appurtenant to the 0.72-acre parcel had not

been extinguished as a matter of Hawai'i law, Waikapu Properties has obviously "double

counted." The 0.72-acre parcel includes a small portion of LCA 2609:l&5, and a small

portion of LCA 5774:2 (it also touches, but does not appear to include any of LCA 5551 :2).

Ex. OHA-I2. But Waikapu Properties claimed appurtenant rights for all three of these LCAs

with respect to the 657-acre parcel, with no reduction to account for the fact that the only a

portion of each (except LCA 5551:2) is withinthe 657-acre parcel. See WP OB, Appendices

I and2. As explained above, Waikapu Properties took no appurtenant rights to these kuleana

parcels by its deed to the 657-acre parcel because all three are expressly excluded from that

parcel. Table l,#s2,5, 6; Ex. OHA-10. Determining Waikapu Properties' appurtenant

rights in the 0.72-acre parcel (assuming such rights could somehow be revived following

their extinguishment by the reservation in the 2003 Special Warranty Deed), would require

calculating the portion of each LCA that is within the 0.72-acre parcel, which Waikapu

Properties has not bothered to do.

B. MTP's Appurtenant Rights Have Been Extinguishedl3

Like Waikapü Properties, MTP has claimed appurtenant rights that have been

extinguished as a matter of Hawai'i law. The legal description of the property attached as

Exhibit'oA" to the 1983 Deed by and between V/ailuku Sugar Company, as "Grantot," aÍrd

The Hawaii Tropical Plantation, as ooGrantee," expressly "exceptfs] from this deed, all

surface waters and ground waters and water rights including any applicable riparian or other

appurtenant or prescriptive rights as may now or hereafter exist with respect to the property

t3 5"" OHA and the Community Groups' joint Objections to Appurtenant Rights Claimsof MTP Operating Company, LLC, dba Maui Tropical Plantation, filed on September 19,

2012.t6

or any part thereof[,]" Ex. OHA-I5, Exhibit "4" thereto at 7, which were reserved oounto the

Grantor and its successors and assigns," id. at 6. The 2006 Limited Warranty Deed by which

The Hawaii Tropical Plantation conveyed TMK No. (2) 3-6-005-007 to persons and entities

affiliated with Mr. Atherton quoted the reservation of water rights in favor of Wailuku Sugar

Company, Ex. OHA-16, Exhibit "A" thereto at16-17, as did the2012 Warranty Deed by

which the parcel was conveyed to MTP Land Partners, LLC, Ex. OHA-17, Exhibit'oA"

thereto at pages hand-numbered 13-14. Accordingly, the Property no longer has appurtenant

rights, those rights having been reserved by Wailuku Sugar Company.

Even if the water rights appurtenant to kuleana lands within, or partially

within, TMK No. (2) 3-6-005:007 had not been extinguished, MTP has grossly overstated the

quantity of water it would be entitled to. The most glaring effor is MTP's claim that it is

entitled to 248,430 gpd for 3 5 acres of sugar cane grown on LCA 455:2 at the time of the

Mãhele. See MTP OB, Table l. Not only did MTP use a water duty for sugar cane that

exceeds the amount the Commission found to be reasonable beneficial, see MTB OB, Table

1,14 the more egregious error is that LCA 455:2 ís only 1.8 øcres.

As MTP's translation of LCA 455 shows, LCA 455 has two 'ãpana;'ãpana I

is33.2 acres, ando-apana2 is 1.8 acres. See Exhibit2203-MTP-2,atpdf page 153-154.

Figure 1, below, is a highlighted enlargement from Ex. OHA-11,P.2, showing the two

'ãpana.

to MTP claims it is entitled to 7,098 gad for LCA 455:2 based on HC&S's average use of7,098 gad. See MTP OB, Table 1, fn. 3. Even if HC&S's grossly excessive use had some

bearing on the amount of water used at the time of the Mãhele, the Commission has

determined that the "reasonable-beneficial" use for sugar cane on these fields is 5,408gad. 2010 Decision, COL 91.

T7

A.

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Figure I

Only 'ãpana 2 is within TMK (2) 3-6-05:007, as shown in Figure 2, below, an enlarged

portion of the TMK Map for Zone 3, Section 6,Plat 5, showing parcel 7. LCA 455,'apana

2, is highlighted in green, and clearly marked *L.C. Aw.455:2." The 33.2-acre LCA 455:1

is not within TMK (2) 3-6-05:007.

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18

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Therefore, even if the rights appurtenant to LCA 455:2 had not been extinguished, MTP

would be entitled only to 9,734 gpd (1.8 acres x 5,408 gad), not 248,430 gpd, for use on this

kuleana.

MTP (and Waikapu Properties) made a similar error with respect to LCA

236-I, which also has two 'ãpana. 'Ãpana 2,the size of which is shown on the LCA only as

'04 chains, 49 fathoms, 43 square feet,"ls is highlighted at the top of a portion of the 1887

Monsarrat Map of Waikapü Kuleana Map, Ex. OHA-18, p. 1, and is in Waikapu Properties'

657-acre parcel. Although the size of 'ãpana 2 is not clear from the description, it appears to

be similar in size to the next kuleana downstream, also highlighted, which is 'ãpana 6 to

Opunui (LCA 3224:6). See Id. Waikapu Properties claims LCA3224:6 to Opunuiis .27

acres. V/P OB, Ex.o'F," #3.

'Ãpana 1 of LCA 236-l is highlighted in yellow on Figure 2, above. It

contains 16.5 acres (see translated LCA, fn. 15), only a portion of which are within TMK

(2) 3-6-005;007, see Figure 2. The only reference to water use on LCA236-I is a reference

in the Native Testimony to 14 loi and a po'alima, but it is not clear from the testimony which

of the two 'ãpana those were on. Both MTP and Waikapu Properties claim appurtenant

rights based on the 14 loi and põ'alima, see MTP OB, Table 1; WP OB Table 1, even though

the translated testimony is clear that the loi and põ'alima referred to were all on the same

parcel, see Exhibit 2203-MTP-2 atpdf page96; Exhibit 2356-Waikapü-3 at pdf page 65.

And the Commission provisionally recognized both MTP and Waikapu Properties as having

appurtenant rights based on 14 loi and a põ'alima. See MTP OB, ExhibitooC"; V/P OB,

Exhibit o'H," P.1.

ts See translated LCA in Exhibit 2356-Waikapü-3 at pdf pages 60-61, and in Exhibit

2203-MTP-2 at pdf pages 90-91 .

I9

If the l4loi and the põ'alima were on LCA 236-I:2, then Waikapu Properties is

entitled to the appurtenant rights associated with that '-apaÍra, but not in the amount it claims

because o-apana 2 clearly is not 0.514 acres. See WP Opening Brief, Table I . If the 1 4 loi

and the põ'alima were on LCA236-I:1, 16 then they have been extinguished as a matter of

Hawai'i law. Even had those appurtenant rights not been extinguished, such rights would

entitle MTP only to an amount of water proportional to the area of LC A236-l-I that is

within TMK No. (2) 3-6-05:007.

C. Appurtenant Rights May Only Be Used on the Dominant Parcel

V/aikapu Properties and MTP apparently believe that, to the extent they

actually have any appurtenant rights, the water associated with those rights may be used

anywhere, even well outside the footprint of the kuleana parcel. They posit that:

Once an appurtenant right is recognized and quantified, current use

is not limited to its specific use at the time of the Mahele. Rather,when aparty has the right of water, he can use it for any pu{pose,although different from the original use, and in a different place, ifthe change does not affect injuriously the rights of others. Peck v.

Bailey, S Haw. 658, 665 (1867).

WP OB at 3; MTP OB at 2-3. Waikapu Properties and MTP are correct to the extent that

water appurtenant to a kuleana parcel may be used to grow crops other than the crop that was

grown at the time of the Mãhele, but obviously the volume that is "reasonable-beneficial"

will not be the same. A kuleana parcel that had half an acre of kalo lo'i in cultivation at the

time of the Mãhele is not be entitled to receive 100,000 to 150,000 gad (based on the water

requirements of kalo) if it is currently used to grow herbs, because 100,000 to 200,000 gad,

for growing half an acre of herbs, is not'onecessary for economic utilization" and is therefore

not "reasonable-beneficial." HRS $ l74C-3.

16 If Waikapu Properties and MTP are correct that "1,600 square feet for lo'i was thesmallest dimension of a lo'i," WP OB at 12; MTP OB at 10, then the 14 lo'i couldonlyhave been on'ãpana 1.

20

Waikapu Properties and MTP imagine that, if they have a kuleana parcel

which had half an acre of loi, they are entitled to the amount of water required for half an

acre of kalo, which they may then apply to fifty acres of herbs. What Waikapu Properties

and MTP imagine, however, is contrary to Hawai'i law. In McBryde Sugar Co. v. Robinson,

54 Haw. 174, 504 P.2d 1330 (1973), subsequent history omitted, the Court explained:

There is no question that appurtenant water right to taro land attachedto the land when title was confirmed by the Land Commission Awardand title conveyed by the issuance of Royal Patent. . . . As the use ofthe word 'appurtenant' indicates, it is water rights which pertain to orannexed to that particular parcel of land conveyed by the original grantfrom the King or Hawaiian government. Peck v. Bailey, S Haw. 658,

661 (1867); Wraìluku Sugar Co. v. Widemann,6 Haw. 185 (1876);Haw. Com. & Sugar Co. v. Wailuku Sugar Co.,15 Haw.675,69I(1e04).

ll/e hold that the ríght to the use of wøter øcquíred as appurtenantrights may only be used in connectíon wíth thøt pørticulør pørcel oflønd to whích the right ís øppurtenant and øny contrary indícationsin our case law are ovenuled.

Id., 54 Haw. at 190-91 , 504 P.2d at l34l (emphasis added).

The Reppun Court reaffirmed this holding: ooln McBryde v. Robinson, supra,

we ruled that the appurtenant nature of these rights precluded the transfer of such waters. We

said '[t]he use of the water acquired as appurtenant rights may only be used in connection

with that particular parcel of land to which the right is appurtenant', ovemlling 'any contrary

indications in our caselaw."' Reppun, supra,65 Haw. at 551,656P.2d at 71 (quoting

McBryde). Indeed, "the rule posited in McBryde fthat] prevents the effective severance or

transfer of appurtenant water rights" was the starting point for fhe Reppun Court's holding

that appurtenant rights "were effectively extinguished by the attempted reservation of such

rights." 1d.,65 Haw. at 552,656P.2dat71.

2l

D. Waikapu Properties and MTP's SrilUPAs are Inaccurate

1. SV/UPA 2356

Waikapu Properties' SWUPA 2356, V/P OB, Exhibit "A," claims an existing

use of 516,714 gpd for coffee on the 61.l-acre Field 735, which is shown on the drawing

attached to SWUPA 2356:

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Tnrþ) g 't'ùiÍ:og t6?" 2#¡c*If, indeed, Field 735 was planted in coffee in the twelve months prior to April

30, 2008, as indicated on SWUPA2356 atpage 4, it was inconsistent with Mr. Atherton's

February 21,2008 testimony in the IIFS Contested Case, and with Wailuku Water

Company's Exhibit D-95 in that proceeding (which Mr. Atherton sponsored), which showed

the future use contemplated for Field 735 was sugarcane, and the future use of a dffirent

portion of the 657-acre parcel would be coffee:

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EXHIBIf f}95

(See also D-94.)..4s of March 9,2011, the date of the GoogleEarth image below, Field 735

was still planted in sugarcane:

23

It appears that SV/UP A 2356 is mistaken, and the average of 516,714 gpd

being used on Field 735 in the twelve months prior to April 30, 2008 was actually HC&S's

profligately excessive use of 8,457 gad on its sugarcane.

Contrary to Waikapu Properties' assertion, Exhibit "I" to its Opening Brief

provides no support for its claim that8,457 gad "is consistent with generally accepted water

duties for irrigation of coffee trees." WP OB at7. To the contrary, according to Exhibit "I,"

coffee farmers in Hawai'i generally do not even irrigate in areas with rainfall over 60 inches

ayear, id. at lT,less than half the 130 inches per year that Mr. Atherton testif,red in the IIFS

Contested Case was the water duty for coffee in Hawai'i. See Transcript 212112008 at

169-170. Based on its findings regarding the lack of support for Mr. Atherton's claimed

10,000 gad water duty for coffee, and his ability to grow coffee profitably on Molokai with

2,739 gad or less, 2010 Decision, FOFs 389, 390, the Commission concluded 2,730 gad was

a reasonable water duty for Waikapu Properties' coffee cultivation, id., COL 64.

The water duty for coffee is ultimately irrelevant to SWUPA 2356 inany

event; regardless of whether the existing use at the time of designation was coffee or

sugarcane, V/aikapu Properties does not plan to continue either of those uses, and now plans

to put rural house lots, clearly a new use, on what was once Field 735:

I¡GÊ¡IO

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24

2. SV/UPA 2297N

Waikapu Properties' SV/UPA 2297N, WP OB, Exhibit "B., seeks 1,340,000

gpd for new uses: 100 acres oflivestock grazing,30 acres ofcoffee, and70 acres of

reforestation on the 657-acre parcel, in the area shown in the drawing attached to the

SWUPA:

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WP OB, Exhibit ooB." It appears, however, that Waikapu Properties has abandoned plans for

coffee or reforestation in this area. According to Figure 24 inits DEIS, Ex. OHA-7, this area

will now be used for rural house lots, photovoltaic panels, grazing longhorn cattle, and "Ag

Tourism/Open Land Recreation" :

T

25

\'\ C-T Co,t.eF,t.¡.rl ;\q'culu"¡rl ,\,1¡si*r I'l¡n1. Waikapu Commorrs Agricultural Park

2, Communlty Fârmêrs Märket3, Frcs lr Fruit and Vegetable Stand4. Long-horn Cattle Grazing5. Di'rersifed Agriculture6, Renewable Energy

n5m Recreation

AgrlantturalCommonsWoikopu

800 AcrePreærve

v d¡¡-r sm

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V/aikapu Properties' claim that 7 ,700 gad is a reasonable water duty for grazing longhorn

cattle does not withstand scrutiny. When Maui Cattle Company used water cannons on its

240-acre cattle pasture in Ma'alaea, its peak usage was 0.99 to I mgd, or 4,166 gad, but it

determined that 1,160 gad was "sufficient"; it also stated that if it were to lease the property

again, it would "simply graze it on a seasonable basis and without major irrigation." 2010

Decision, FOFs 379, 380, 38T.

3. SWUPA 3471N

By SWUPA 3471N (V/P OB, ExhibitooC"), Waikapu Properties seeks

109,048 gad for a new use growing herbs on TMK No. (2) 3-6-04:006, a 53-acre parcel that

suffounds Maui Tropical Plantation ("Parcel 6"):

26

This does indeed appeff to be the sort of diversified agriculture Maui needs, and the water

duty of 2,058 gad is consistent with what has been deemed reasonable for diversified

agriculture. Unfortunately for the farmers, however, this parcel is within the project

boundary for Waikapu Properties' urbanization, and V/aikapu Properties seeks to displace

them to make room for single family homes. See Ex. OHA-7, Figures 2,3c,4, 1lA, 118,

p. III-35.

4. SWUPA 3472N

Waikapu Properties' SWUPA 3472N (Exhibit o'D" to Waikapü Properties'

Opening Brief) requests 5,544 gad, to spray water with large water guns on the 0.72-acre

Parcel and graze longhorn cattle directly adjacent to the new homes on Parcel 6:

27

CorrightO20l0qPublio n.t

t

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\)36tû5t 680000

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O.'|2-acre Parcel

The idea is preposterous.

5. SWUPA 2203

SWIIPA 2203 is MTP's existing use SWUPA, and seeks 124,000 gpd to

inigate a variety of crops at Maui Tropical Plantation. MTP OB, Exhibit "A." The acreage

for each use stated on page 7 of MTP's opening brief is overstated, and the corresponding

water use per acre understated, because MTP has included the area of buildings, the parking

lot, reservoirs and roadways, which presumably are not watered. Moreover, MTP has not

explained why its average use of ll4,3l3 gpd (1,938 gad over the 59 acres) for the period of

2001 through2007, see 2010 Decision, FOF 390, increased by more than eight percent.

28

More fundamentally, MTP has not addressed how the agricultural uses on the Maui Tropical

Plantation will change when it becomes the "village center" for Waikapü Country Town. Seø

Ex. OHA-7,p.1-21. According to Figure I lB to the DEIS, Ex. OHA-7, what is now Maui

Tropical Plantation will have commercial use, ooCountry Town Mixed LJse," and park/open

space land, but no øgriculture.

E. Waikapu Properties and MTP Have lgnored Potentially PracticableAlternative Water Sources

In almost identical alternatives "analyses," Waikapu Properties and MTP

conclude'othere are no feasible alternative groundwater sources." WP OB at 10-11, MTP OB

at 8-9. Unlike MTP, V/aikapu Properties at least acknowledges the existence of its own

wells in Waikapü, but states "[t]he water development program's feasibility is ongoing, and

there is currently no water available from these wells to meet WP's immediate agricultural

water needs." WP OB at ll. Waikapü Properties does not explain whether there is anything

required other than turning on the pump for water to be "available" from the two non-potable

wells it represents in the DEIS will be "used for irrigation purposes for the residential lots,

agricultural farming, parks and open areas." Ex. OHA-7 atV-87 and Figure 42. See also id.,

Appendix H at24. Nor does Waikapü Properties explain why it cannot use its three potable

wells for agricultural uses until it has a need for potable water.

With respect to recycled water, both Waikapu Properties and MTP contend

"use of reclaimed County wastewater is simply not a viable alternative," 'WP OB at I 1; MTP

OB at 9, but neither mentions that V/aikapü Country Town will generate an anticipated

529,709 gpd of wastewater and that Waikapu Properties is planning to build its own

wastewater treatment plant or partner with another project such as A&B's V/ai'ale project to

build a regional wastewater treatment facility. Ex. OHA-7 , pp.I-34; I-38; Y -92-93;

29

Appendix H at 18-23. According to the engineering report, "the treatment plant will be

needed in about 20171.1" Appendix H at23.

In the IIFS Contested Case, at which time V/aikapu Properties was planning a

development in Ma'alaea, Mr. Atherton testified that the recycled water generated by the

development could be used to irrigate the King Kamehameha Golf Course, but he was much

more enthusiastic about using the recycled water in a "spray field" to irrigate pasture for the

longhom cattle that Waikapu Properties raises for o'ambiance." Transcript2l2Sl0S at

132-134;142-143. Based on that testimony, the Commission found that'oan alternative

source of approximately 620,000 gpd of wastewater the development project would generate

could be reclaimed in an onsite facility." 2010 Decision, FOF 386. It is thus somewhat

surprising that Mr. Atherton would overlook the potential for recycled water from Waikapu

Properties' own contemplated wastewater treatment plant, especially considering its plans to

expand its herd of longhom cattle, which currently numbers 200. See Ex. OHA-7, p. III-36.

IV. \ilAHI HO'OMALU

A. \ilahi Hooomalu Has Claimed Appurtenant Rights on KuleanaLand it does not Own and Appurtenant Rights that do not Exist

As OHA and the Community Groups pointed out in their joint Objections to

Appurtenant Rights Claims of l4rahi Ho'omalu Limited Partnership (2351) re TMK Nos. (2)

3-3-02:001 and (2) 3-3-02:026 filed on September 19,2013 ("Joint Objections"), given some

of the glaring effors in Wahi Ho'omalu's appurtenant rights application, the application

"warrants more careful scrutiny." Id. at 2. OHA and the Community Groups hoped Wahi

Ho'omalu's improper claims were simple mistakes, but nothing in its Opening Brief

indicates that is so. Instead of responding to the issues raised in the Joint Objections, V/ahi

Hooomalu has instead asserted additional claims for appurtenant rights thatwere not

provisionally recognized.

30

For example, as pointed out in the joint objections, two of the kuleana parcels

Wahi Hooomalu claims appurtenant rights on are actually separate TMK parcels that Wahi

Hooomalu does not own and has no interest in.

2

¿-c.éEtan, t.

l{Viluku €a. 1qØ

LGís.

l.c..ltt tz59

Enlørgementfrom TMK Map of Zone 3, Section 3, Plat 2

TMK No. (2) 3-3-02:013 is LCA 32758:4, for which V/ahi Ho'omalu claims

appurtenant rights notwithstanding they were not provisionally recognized. See WHLP OB

at 8, #11. And for good reason -- as indicated on the TMK Map, the County's records show

the fee simple ownership of this parcel in the Estate of James Kaimikaua, Jr. and others, see

Ex. OHA-I9, and Wahi Ho'omalu does not contend otherwise. TMK No. (2) 3-3-02:014 is a

I.245-acre parcel derived from LCA 2468:l that Wahi Ho'omalu claims the appurtenant

rights to, WHLP OB at 7,#3, but according to the County's records, is owned by Thomas

Cerizo and others. See Ex. OHA-20. The Commission has provisionally recognized Mr.

Cerizo's claim to appurtenant rights in LCA 2468:I, see Provisional Order, Attachment C

(revised Exhibit 7), at 17, but not Wahi Ho'omalu's. Undeterred by either the lack of

provisional recognition or its knowledge that others own TMK No. (2) 3-3-02:014, Wahi

Ho'omalu continues to press its claim to appurtenant rights on the original 2.49 acres of LCA

u.) aê

tI

Lc/.*.1szzs.E,tl

945'

31

2468:I, V/HLP OB p. 7, #3; Declaration of John Russell, TIT 8-9, when even ìts own exhíbíts

show that 1.245 acres of that kuleana parcel is now TMK No. (2) 3-3-02:014, and the

remainder of that kuleana íncludes TMK No. (2) 3-3-02:026 ("Parcel 26") for which Wahi

Hoomalu has made duplicative claims, see 2351-Wahi-14, pdf p. 39;2351-Wahi-15, pdf pp.

16I,162, and on which the appurtenant rights have been extinguished as a matter of Hawai'i

law.

When V/ahi Hoomalu purchased Parcel 26 from Wailuku Agribusiness

Company in2004, the Quitclaim Deed provided that the conveyance was "EXCEPTING,

RESERVING AND GRANTING, HOWEVER, unto Grantor, its successors and assigns,

all water and water rights (surface or ground water) within or appurtenant to the

Propertyf.]" Ex. OHA-ZI, p. 2 (upper case in original). As discussed above, see Section

lIl.A.2., the grantor's reservation of the appurtenant rights had the effect of extinguishing

them as a matter of Hawai'i law. Reppun, 65 Haw. at 552, 656 P.2d at 7l ("the deed that

attempted to reserve [appurtenant] rights had the effect of extinguishing them"). Wahi

Ho'omalu was represented by sophisticated counsel, and obviously knew it was getting

no water rights with the parcel, which may explain why it was able to purchase Parcel26

for only $5,000. ,Seø Exhibit235l-Wahi-44.

Not only has V/ahi Hooomalu claimed appurtenant rights for land it does

not own, and appurtenant rights that have been extinguished, it has made no effort to

quantifr its appurtenant rights. It recognizes the requirement for "evidence of the amount

of land in the LCA (from which the current TMK is derived) that was using water at the

time of the original award" which "requires translations of the original documents to

show approximately what parts of the TMK were using water, an estimate of the acreage

using water at that time, and the purpose(s) of those uses (e.g., wetland kalo, crops such

32

as bananas and sweet potatos, pasture, household use, etc.)," WHLP OB at 6, and then

simply ignores those requirements. All Wahi Ho'omalu has done is simply add up all the

acreage it claims as its kuleana parcels, whether it owns them or not, and multiplies that

acreage by 150,000 gad, without regard to whether the land was used for kalo, pasture,

a house lot, or for some other purpose. S¿ø e.g., Exhibit 2351-Wahi-l (translated LCA

referring to LCA 1806:2 as a "house site"); Exhibit 2351-Wahi-16 (translated Native

Testimony referring to LCA 1806:1 as "Taro pauku and pasture"); Exhibit 2351-Wahi-

192 (translated Native Testimony referring to LCA 2468:l as "Taro land and pasture").

And, after showing no interest in kalo cultivation since it purchased the

property in2004, Wahi Ho'omalu now claims it is going to cultivate 37 acres of kalo and

is entitled to either 5,597,400 gpd, WHLP OB at 10, or 5,607,900 gpd, Declaration of

John Russell, 1T 14.

B. \üahi Ho'omalu Has Not Provided SuffÏcient Information toMeet its Burden for New Uses

Wahi Ho'omalu seeks 739,200 gpd for a new use - irrigating 168 acres of

macadamia nuts that it claims have been planted on TMK (2) 3-3-02:001 since some time

in the 1980s. SWUPA 235lN, Addendum,pp. l-2. It seeks additional water for another

new use - either an additional 180,000 gpd to produce 108,000 gpd of potable water for

domestic use on 30 lots, id., p.2, or 240,000 gpd to produce 144,000 gpd of potable water

for domestic use on 40 lots, WHLP OB at 10.17 Wahi Ho'omalu has not even made an

17 Both of these new uses would occur on the same'0647 acres of agricultural zoned landwithin the larger 834 acres." V/HLP OB at 10. It appears that there is considerably less

than 647 acres zoned agriculture in TMK No. (2) 3-3-02:001 . See Ex. OHA-22, from theCounty's website. Well over half of the parcel is colored blue, indicating it is in the State

conservation district. The acreage zoned agriculture is probably closer to the 336.556acres on which wahi Ho'omalu pays property taxes based on drastically reduced

agricultural assessments. ,See Ex. OHA-23..^-t -t

effort to meet its burden of proof; it simply recites the conclusion that its proposed uses

are reasonable and beneficial. WHLP OB at 11.

For example, V/ahi Ho'omalu has not explained why it now needs to start

irrigating, or increase its inigation of, macadamia nut trees that have been planted for

decades. Wahi Ho'omalu has, or had, a Water Delivery Agreement with WWC, Ex.

OHA-24, and the evidence in the IIFS case of its water use (which covers only the first ten

months of 2007) shows it used an average of 480,000 gpd (2,857 gad over 168 acres), Ex.

OHA-25, which was slightly less than half of the "Maximum Delivery" under the Water

Delivery Agreement and substantially less than the 4,400 gad it now claims to need. Wahi

Ho'omalu states in its 2009 SWUPA that "the macadamia trees located on Fields 36 and37

in the north east portion of the lands owned by Wahi Ho'omalu are still growing and the

irrigation system is in place, although it needs repair," SWUPA 235lN, Addendum at l,

which would suggest that the macadamia nut trees were no longer being inigated at that time,

but even that is unclear. V/ahi Ho'omalu simply has not provided enough information to

determine whether its "new" use for macadamia nuts is a bona fide agricultural use, or

simply a way to bank water while taking advantage of reduced property taxes while it

pursues development.

Wahi Ho'omalu has provided virtually no information regarding its

development plans, notwithstanding its burden to establish that its development "[i]s

consistent with state and county general plans and land use designations," and "[i]s consistent

with county land use plans and policies." HRS 174C-49(aX1) & (2). lt discloses only that

there will be either 30 lots or 40 lots, each of which will need two domestic water hookups.

Its calculation of its proposed water use is based on needing 3,600 gpd of potable water for

each lot, which will require 6,000 gpd of non-potable water per lot to produce. Wahi

34

Hooomalu's proposed use is excessive on its face, even according to Wahi Ho'omalu's own

Exhibit 2351-V/ahi-42. See also 2010 Decision, FOFs 402,403.

Wahi Ho'omalu has fallen woefully short of even recognizing, let alone

satisfying, its heavy burden to justify its proposed new commercial uses in light of protected

public rights in the resource.

DATED: Honolulu, Hawai'i, April 29, 2016

A.TAMELA W. BUNN

Attomeys forOFFICE OF HAWAIIAN AFFAIRS

35

BEFORE THE COMMISSION ON V/ATER RESOURCE MANAGEMENT

STATE OF HAWAII

Surface'Water Use Permit Applications, )Integration of Appurtenant Rights and )Amendments to the Interim Instream Flow )Standards, Nã Wai 'Ehã Surface Water )Management Areas of Waihe'e, Waiehu, 'Iaoand Waikapü Streams, Maui

Case No. CCH-MAI5-01

CERTIFICATE OF SERVICE

On April 29,2016, a copy of the foregoing document was served on the following

parties by electronic service, as indicated below:

ELECTRONIC SERVICE

Douglas Bell1420 Honua Place

Waikapu, HI96793

sandi.doue@hawaiiantel.net

Doyle Betsillc/o Betsill BrothersP.O. Box 1451

V/ailuku, }lI96793

teresa@bbcmaui.com

Francisco CerizoPO Box 492Wailuku, H[96793

cerizof@gmail.com

Heinz Jung and Cecilia ChangP.O. Box 1211

Wailuku, HI96793

cici. chan g@hawaiiantel. net

Jordanella (Jonie) Ciotti484 Kalua RoadWailuku, H[96793

j onieciotti@ gmail. com

I

Fred Coffeyl27l Malaihi RoadWailuku, H[96793

James DoddP.O. Box 351

Wailuku, H[96793

Kathy De HartP.O. Box 1574

V/ailuku, H196793

John V. & Rose Marie H. DueyHooululahui LLC575 A Iao Valley Rd.

Wailuku, HI96793cc: Nani Santos

Stanley Faustinoc/o Kanealoha Lovato-Rodrigues384 Waihee Valley Road

V/ailuku, HI96793

William Freitasc/o Kapuna Farms LLC2644Kahekili HighwayWailuku, }l[96793

Diannah Gooc/o April Goo2120 C Kahekili Hwy.Wailuku, HI96793

Nicholas Harders on behalf of:Karl & Lee Ann Harders1422 Nuna Pl.

Wailuku, HI96793

hawaii 5 0peleke@yahoo. com

jimdodd4T@gmail.com

kdehartlT@gmail.com

ìduey@maui.net

nani santosS 0 I @ gmail. com

kanealohaS0S@ gmail.com

kapunafarms@ gmail.com

ag25l7@aol.com

waikapu@me.com

Theodore & Zelie HardersT&ZHarders FAM LTD PTNSHPTheodore andZelie Harders Family Ltd. Partnership

1415 Kilohi St.

Wailuku, HL96793

2

Greg Ibara227 Kawaipuna Street

Wailuku, HL96793

Evelyn KamasakiCynthia Ann McCarthyClaire S. Kamasaki1550 Nukuna Place

Wailuku, H[96793

Charlene E. and Jacob H. Kana, SrPO Box292Wailuku, H196793

Kimberly LozanoP.O. Box 2082Wailuku, HI96793

Renee MolinaP.O. Box 1746

Wailuku, Hl96793

Douglas Myers1299Malaihi RoadWailuku, H[96793

Lorrin Pang166 River RoadWailuku, HI96793

Victor and Wallette Pellegrinoc/o Hokuao Pellegrino213 West Waiko Road

Waikapu, H[96793

L. IshikawaPiko Ao, LLC2839 Kalialani CirclePukalani, H[96768

Michael Rodrigues2518 V/. Main Street

Wailuku, H[96793

greeibara5 6@ gmail.com

cmcmaui@live.com

charl 15 I @hawaii.rr.com

pauahi808@aol.com

myoheo@yahoo.com

upperwaiehu@yahoo. com

pangkO05 @hawaii.n.com

hokuao.pellegrino@ gmail.com

lorilei@hawaii.edu

mikerodmaui@yahoo. com

J

Burt Sakata107 Waihee Valley RdWailuku, H196793

Bryan Sarasin, Sr.

c/o Bryan Sarasin, Jr.

P.O. Box 218

V/ailuku, Hl96193

Duke &,Iean Sevilla & Christina Smith702 Kaae Road

Wailuku, H196793

Jeff and Ramona Lei SmithP.O. Box 592

Wailuku, H[96793

Murray and Carol SmithP.O. Box 11255

Lahaina,HI9676l

Crystal SmytheJohn Minamina Brown Trust727 Wainee Street, Suite 104Lahaina,H|9676l

Clayton SuzukiLinda KadosakiReed SuzukiScott SuzukiP.O.Box2577Wailuku, H[96793

John Varel191 Waihee Valley Road'Wailuku, H196793

Michele and Leslie Vida, Jr135 Pilikana Place

Wailuku, H[96793

Leslie Vida, Sr.

c/o Donna Vida125 Pilikana Street

Wailuku, H196793

waiheeS9(ù,yahoo.com

mauifi shfarm@hawaiiantel. net

sevilladO0 I @hawaii.rr. com

ohianui.ohana@ gmail.com

murray@jps.net

cytl@maui.net

csuzuki@wailukuwater. com

i vare I @.fus io nstorm. com

mikievida@hotmail.com

dmlavida@yahoo.com

4

Roger YamaokaKevin Yamaoka1295 Old Waikapu RoadWailuku, H[96793

Caleb Rowe, Esq.

Kristin Tarnstrom, Esq.

County of MauiDepartment of the Corporation Counsel200 South High Street

Wailuku, HI96793(County of Maui, Department of Water Supply)

Colin J. Lau, Esq.465 S. King Street, Room 300Honolulu, Hawaii 96813

cc: Russell Kumabe

Yvonne Izu, Esq.Morihara Lau &. Fong LLP400 Davies Pacific Center841 Bishop Street

Honolulu, HI96813cc: Garret Hew(Hawaiian Commercial & Sugar Co. (HC&S))

Tina Aiu, Esq.

Oahu Island DirectorHawaiian Islands Land Trust, HILTP.O. Box 965

Wailuku, H[96793cc: Scott Fisher

Penny Levin

rryamaoka@aol.comkty@hawaii.rr.com

caleb.rowe@co.maui.hi.uskristin.tamstrom@co.maui.hi. us

susan.pacheco@co.maui.hi. us

colinj.lau@hawaii. gov

rus se I l. p. ku mab e (ò,hawai i. gov

.com

christina@hilt.org

scott@hilt.orgpennysftr@hawai i. rr. com

Holly McEldowney holly.mceldowney@hawaii.eov(Department of Land and Natural Resources, Division of State Parks)

yizu@moriharagroup. com

Isaac Moriwake, Esq. imoriwake@earthjustice.oreSummer Kupau-Odo skupau@earttrjustice.orgEarthjustice jbrown@earthjustice.org

850 Richards Street jparks@earthjustice.org

Suite 400Honolulu, HI96813(Hui O Na Wai Eha and Maui Tomoffow Foundation)

5

Avery &.Mary Chumbley363 West Waiko RoadV/ailuku, H[96793(Makani Olu Partners LLC)

abc@aloha.net

Jodi Yamamoto, Esq. ivamamoto@ychawaii.comWil Yamamoto, Esq. wyamamoto@ychawaii.comYamamoto Caliboso1099 Alakea Street

Suite 2100Honolulu, HI96813(MMK Maui, LP, The King Kamehameha Golf Club, Kahili Golf Course)

CraigNakamura, Esq.

Catherine L.M. Hall, Esq.

Carlsmith Ball LLP2200Main Street, Suite 400Wailuku, H[96793(V/ahi Hoomalu Limited Partnership)

cnakamura@.carl smith. comchall@carlsmith.com

Peter A. Horovitz, Esq. pah@mhmaui.com

Kristine Tsukiyama, Esq. kkt@mhmaui.comMerchant Horovitz LLLC2145 V/ells Street, Suite 303

Wailuku, H[96793(Waikapu Properties, LLC and MTP (Maui Tropical Plantation) Operating Company, LLC)cc: Albert Boyce albertboyce@gmail.com

Brian Kang, Esq bkanefD.wik.com

Emi L.M. Kaimuloa ekaimuloa@wik.comWatanabe Ing, LLPFirst Hawaiian Center999 Bishop Street,23rd FloorHonolulu, HI968l3(Wailuku Country Estates Inigation Company (V/CEIC)

Paul R. Mancini, Esq.

James W. Geiger, Esq.

Paul Mancini, Esq.

Mancini, Welch, & Geiger LLPRSK Building305 Wakea Avenue, Suite 200Kahului, H[96732cc: Avery Chumbley(Wailuku W'ater Company, LLC)

pmancini (Ò,mrwl aw. c omjgeiger@mrwlaw.com

6

Tim Mayer, Ph.D.Supervisory Hydrologist'Water

Resources BranchUS Fish and Wildlife Service911 NE l lth Avenue

Portland, OR 97232-4181cc: Frank V/ilson:

Lawrence H. MiikeHearings Officer1 1 5 1 Punchbowl Street, Room 227Honolulu, Hawaii 96813

Linda L.V/. Chow, Esq.

Deputy Attorney General465 S. King Street, Room 300Honolulu, Hawaii 96813

DATED: Honolulu, Hawaii,

tim_mayer@fws.gov

frank.wilson@sol. doi. gov

lhmiike@hawaii.rr.com

linda.l.chow@hawaii. govkathy. s.yoda@hawaii. gov

A.PAMELA W. BUNNAttorneys for OFFICE OF HAV/AIIAN AFFAIRS

I

7