# Kauai Springs, Inc. v. Planning Commission of the County of Kauai.

> Hawaii Supreme Court · February 28, 2014 · 133 Haw. 141

URL: https://www.frixlaw.com/law-library/cases/2655285

## Case

- **Full name:** KAUAI SPRINGS, INC., Petitioner/Appellant-Appellee, v. PLANNING COMMISSION OF the COUNTY OF KAUA'I, Respondent/Appellee-Appellant
- **Court:** Hawaii Supreme Court
- **Decided:** February 28, 2014
- **Citations:** 133 Haw. 141; 324 P.3d 951; 2014 Haw. LEXIS 104; 2014 WL 812683
- **Precedential status:** Published
- **Opinion:** Opinion
- **Judges:** Nakayama, Acoba, McKenna, Pollack, Recktenwald
- **Cited by:** 37 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/2655285

## How later opinions describe it (automated extraction)

- explaining that "a lack of information from the applicant is exactly the reason an agency 59 FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER is empowered to deny a proposed use of a public trust resource"
- explaining that an agency "must make findings sufficient to enable an appellate court to track the steps that the agency took in reaching its decision" (citation omitted)
- holding that county planning commission "is duty-bound to place the burden on the applicant to justify the proposed water use in light of the [public] trust purposes"
- noting that the public trust doctrine obligates an agency to consider “whether the proposed use is consistent with,” inter alia, “the protection of domestic water use” and to subject commercial uses to “a high level of scrutiny”
- noting that an “agency’s findings should be ‘sufficient to allow the reviewing court to track the steps by which the agency reached its decision.’” (citation omitted)

## Opinion text

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Electronically Filed
Supreme Court
SCWC-29440
28-FEB-2014
03:09 PM

IN THE SUPREME COURT OF THE STATE OF HAWAI#I

---o0o---

KAUAI SPRINGS, INC.,
Petitioner/Appellant-Appellee,

vs.

PLANNING COMMISSION OF THE COUNTY OF KAUA#I,
Respondent/Appellee-Appellant.

SCWC-29440

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(ICA NO. 29440; CIV. NO. 07-1-0042)

FEBRUARY 28, 2014

NAKAYAMA, ACOBA, McKENNA, AND POLLACK, JJ.,
WITH RECKTENWALD, C.J., CONCURRING AND DISSENTING

OPINION OF THE COURT BY POLLACK, J.

This appeal arises out of a decision by

Respondent/Appellee-Appellant Planning Commission of the County

of Kaua#i (Planning Commission) to deny Petitioner/Appellant-
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Appellee Kauai Springs, Inc.’s (Kauai Springs) application for

three permits related to the continued operation of Kauai

Springs’ water bottling facility. The Circuit Court of the Fifth

Circuit (circuit court) reversed in part and vacated in part the

Planning Commission’s decision and order, ordered that all three

permits be issued, and entered final judgment in favor of Kauai

Springs. The Intermediate Court of Appeals (ICA), pursuant to

its published opinion of April 30, 2013, vacated the circuit

court’s final judgment and remanded the case to the Planning

Commission for consideration of whether Kauai Springs can meet

the requirements for the permits. Kauai Springs filed an

application for writ of certiorari to this court (Application),

seeking reversal of the ICA’s May 30, 2013 Judgment on Appeal.

For the reasons set forth herein, we affirm the ICA

Judgment to the extent that it vacated the Final Judgment entered

by the circuit court and remand the case to the Planning

Commission to clarify its findings of fact and conclusions of

law.

I. BACKGROUND

Kauai Springs is a water bottling and distribution

company owned by Jim and Denise Satterfield. Kauai Springs

operates out of land located in Koloa, Kaua#i (the Property).

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The Property is leased from Makana Properties, LLC (Makana

Properties). The majority of the Property is designated

agricultural by the General Plan for the County of Kaua#i (Kaua#i

General Plan), Chapter 7 of the Kaua#i County Code (KCC).

On April 17, 2003, the County of Kaua#i (County) issued

Kauai Springs a Class IV Zoning Permit for the construction of a

watershed on the Property. On September 17, 2003, the County

issued a building permit to Kauai Springs for the construction of

a 1,600 square-foot “bottled water processing facility” on the

Property. On July 9, 2004, the State Department of Health issued

a four-year permit approving Kauai Springs as a “bottled water

manufacturer.”

Kauai Springs subsequently began operating its water

bottling facility. The water that Kauai Springs uses for its

operations originates from an underground spring located several

miles from the Property, 1,000 feet up Kahili Mountain.1 Kauai

Springs apparently “purchases” or “licenses” its water from EAK

Knudsen Trust (Knudsen Trust), the owner of the land where the

1
Contrary to the findings of the circuit court, the EAK Knudsen
Trust does not “own the spring [or] the water.” See, e.g., In re Water Use
Permit Applications, 94 Hawai#i 97, 129, 9 P.3d 409, 441 (2000) (“a public
trust was imposed upon all the waters of the kingdom. That is, . . . not
ownership in the corporeal sense . . . rather, . . . a retention of such
authority to assure the continued existence and beneficial application of the
resource for the common good.”).

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spring is located. The water is transmitted to the Property by a

private, gravity-fed system dating back to the 1890s, which is

owned by Knudsen Trust and operated by Grove Farm Company (Grove

Farm).2

Grove Farm owns the private water tank servicing the

Property. The water tank feeds several lines and services at

least eleven other residences neighboring the Property. Kauai

Springs has installed a tap into the water line connected to the

tank, which feeds a meter and an underground line to the water

bottling facility on the Property. Water overflows from the tank

into a tributary to Waihohonu Stream. Kauai Springs purifies the

water it extracts, bottles the water into five-gallon containers,

and delivers the bottles to customers on Kaua#i.

On May 15, 2006, the County Planning Department

(Planning Department) issued a cease and desist letter to Makana

Properties. The letter provided that upon receiving a complaint,

the Planning Department conducted a field inspection of the

Property on April 27, 2005, and found violations of KCC Chapter

8, The Comprehensive Zoning Ordinance for the County of Kauai

2
According to the State Public Utilities Commission (PUC), “[t]he
Grove Farm water system originates at one of two tunnels located on the land
owned by the [Knudsen Trust] at the foot of Mount Kahili . . . . The water
line delivers water to Kahili Mountain Park and a number of domestic and
agricultural users on various Knudsen Trust-owned and other parcels on its way
to Koloa Town, where it supplies at least eleven residential lots on Wailaau
Road.”

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(CZO).3 The Planning Department specified that 1) the “activity

of processing and packaging without the proper permits”

constitutes a violation of KCC § 8-19.14; and 2) the use of the

Property “for Industrial processing and packaging purposes is not

generally permitted within the Agriculture District,” pursuant to

KCC § 8-7.2.5 Makana Properties was instructed to immediately

“[c]ease and desist such use and relocate to an appropriate land

use district.”

On July 5, 2006, the Planning Department accepted Kauai

Springs’ completed application for three zoning permits: 1) a Use

Permit under KCC Article 20 (Use Permit); 2) a Special Permit

under Hawai#i Revised Statutes (HRS) § 205-6 (2005) (Special

Permit); and 3) a Class IV Zoning Permit under KCC Article 19

(Class IV Zoning Permit). According to the Planning Department,

a Use Permit and Special Permit were required because the

proposed use was not generally permitted in the agricultural

3
On December 3, 2012, the County of Kauai enacted the first of two
phases of updating the CZO, which had not been comprehensively updated since
its adoption in 1972. Ordinance No. 935 (Dec. 3, 2012), available at
http://qcode.us/codes/kauaicounty/.
4
KCC § 8-19.1 (1972) provides: “No person shall undertake any
construction or development or carry on any activity or use, for which a
zoning permit is required by this Chapter, or obtain a building permit for
construction, development, activity or use regulated by this Chapter, without
first obtaining the required zoning permit.”
5
KCC § 8-7.2 (1972) specifies the uses and structures permitted in
agriculture districts.

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district. A Class IV Zoning Permit is a procedural requirement

of a Use Permit in the agricultural district.

Kauai Springs’ application provided that it was

“requesting a permit for a water harvesting and bottling

operation.” The application stated that the “maximum current

capacity for the Kauai Springs’ operation is 1,000 [five-gallon]

bottles per day during one 8 hour shift.” Kauai Springs

estimated that it “expect[ed] vehicle capacity to reach a maximum

level of 8 trips per day by delivery and office personnel.”

Furthermore, Kauai Springs planned to expand its operation to

include bottling water in smaller bottles for distribution

throughout the State.

The Planning Commission held four public hearings on

the application, on August 8, September 26, November 14, and

November 28, 2006. The Commission also discussed the application

at a regular meeting on January 23, 2007. Public oral testimony

on the application was taken at each meeting. The minutes of the

hearings indicate that Kauai Springs’ application was identified

at each hearing as follows: “Use Permit U-2007-1, Special Permit

2007-1 and Class IV Zoning Z-IV-2007-1 = Kaua#i Springs, Inc.

(For a spring water bottling facility, Koloa, Tax Map Key 2-8-

2:por. 5.).” There is no indication in the record that members

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of the public were restricted to testifying on any particular

permit at any of the hearings. Many of those testifying

commented generally on the application as a whole rather than on

the permits individually.

Additionally, the Planning Department also requested

input from various State and County agencies throughout its

public hearings process.

Prior to the August 8 public hearing, the Planning

Department prepared a staff report describing the application and

providing a preliminary evaluation. The preliminary evaluation

stated that while Kauai Springs’ existing use is “relatively low

impact,” the expansion of operations “would intensify the use”:

The existing water bottling facility is relatively low
impact . . . in its current function and capacity. However,
expansion of the facility to include small bottle production
at the site would involve increased production machinery,
delivery frequency, generate more traffic, and generally
would intensify the use, which may not be appropriate or
compatible at this location.

At the August 8 hearing, Kauai Springs confirmed that

it had been in business for two to three years at that point and

the purpose of its application was to “increase . . .

productivity.” Kauai Springs stated that it was currently

filling between 300 and 500 five-gallon bottles per week. Kauai

Springs requested approval to expand to their maximum capacity of

1,000 five-gallon bottles per day at the existing facility, seven

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days a week (i.e., 35,000 gallons per week). At maximum

capacity, Kauai Springs anticipated “8 total vehicles” making

daily round-trips.

Kauai Springs stated that “there is no limit” to how

much water can be extracted from the private water system. Kauai

Springs also informed the Planning Commission that it planned to

produce smaller bottles at its existing facility once it had the

capacity to do so. The Planning Commission members discussed

whether they should base their decision on the permits upon Kauai

Springs’ current operations or upon the maximum capacity of the

operations.

The Planning Commission also discussed the overflow

from the water system. The Planning Department planner stated

that it was her understanding that “[t]he overflow from the pipe

and from the water tank . . . is overflowing into Waihohonu

Stream.” Commissioner Imai Aiu noted that if Kauai Springs

reached its full potential, “then that is 1,000 gallons a day

that is basically taken out of the Waihohonu Stream.” In

response to an individual who testified that the water “is being

wasted” by not being bottled, Commissioner Aiu stated, “So I

don’t know how much currently flows through there and how much of

an [effect] that would have but . . . it’s not a waste when it’s

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going through an actual river and riparian environment. That is

a natural system that does deserve to be looked at.”

The Trustee of the Knudsen Trust appeared at the August

8 meeting, in support of Kauai Springs’ application. The trustee

confirmed that the private water system was owned by Knudsen

Trust, and the trust had a signed licensing agreement for Kauai

Springs to take the water. The trustee did not think that the

licensing agreement was received by the Water Commission.

The August 8 meeting was continued to September 26 to

request clarification from the State Land Use Commission

regarding the size of the land area under consideration for a

Special Permit, and receive clarification from the Department of

Land and Natural Resources Commission on Water Resource

Management (Water Commission) regarding whether “the proposed

quantity of water to be captured and bottled by the operation is

of concern to them.” Kauai Springs was also asked “to define

what it wanted more clearly.” Additionally, the Planning

Department noted that “[a] question also arose as to whether the

Public Utilities Commission (PUC) . . . had any jurisdiction over

the water system or the sale of water to the Applicant.”

In a letter dated September 26, 2006, the Water

Commission responded to the Planning Department’s request for

input on the application. The Water Commission commented that

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“[t]here may be the potential for ground or surface water

degradation/contamination,” and therefore “recommend[ed] that

approvals for this project be conditioned upon a review by the

State Department of Health and the developer’s acceptance of any

resulting requirements related to water quality.”6 The Water

Commission further commented that “[g]round-water withdrawals

from this project may affect streamflows, which may require an

instream flow standard amendment.” Finally, the Water Commission

stated that although a water use permit was not required because

the island of Kaua#i was not a designated ground-water management

area, other permits from the Water Commission may be required if

the source of Kauai Springs’ water was modified:

The Island of Kauai has not been designated as a ground-
water management area; therefore a water use permit from the
Commission is not required to use the existing source(s) or
to change the type of water use. However, if the source
needs to be modified in any way, a well modification permit
from the Commission may be required. In addition, if a pump
is to be installed to induce additional water flow, a pump
installation permit from the Commission would be required.
If the source is modified to induce additional water flow,
and the modification results in impacts to surface waters, a
petition to amend the interim instream flow standard for
affected surface waters must be made and approved prior to
use of the water.

6
The State Department of Health (DOH) offered several
“environmental health concerns” for the Planning Commission to consider,
regarding: 1) sanitary facilities and disposal of wastewater; 2) the water
bottling facility’s compliance with applicable ventilating requirements; and
3) air pollution control measures. The DOH concluded that “[d]ue to the
general nature of the application submitted,” it “reserve[d] the right to
implement future environmental health restrictions when more detailed
information is provided.”

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(Emphases added).

At the September 26, 2006 public hearing, Kauai Springs

clarified that it was requesting “approval to fill up to 1,000 5-

gallon bottles of water per day, and up to 1,000 cases of bottled

water per week at the existing facility.” Kauai Springs further

clarified that it was requesting ten vans “to be added to our

existing facility to accommodate steady growth.” The Planning

Commission briefly discussed the Water Commission’s letter with

the applicant, but noted that the Water Commission would be

sending additional comments. At the end of the hearing, the

Planning Department planner commented that she did not know

“whether water is coming out of the tunnel and going into a

stream,” or “how much water is in the system,” although Kauai

Springs had “represented that 275,000 gallons a day are the

capabilities of this tunnel.”

On October 26, 2006, the Planning Department staff

conducted a site visit, accompanied by the applicants, to view

the tunnel where the water system originates, the Kahili Mountain

Park portion of the water system, the water bottling facility,

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and the adjacent Grove Farm water tank.7 The staff described the

water system as follows:

The tunnel entrance is located adjacent to a streambed with
steep sides, where it enters the hillside horizontally. To
prevent infiltration of surface water into the tunnel, a
concrete stem wall was constructed at the bottom of the
entrance to above the water level within the tunnel, and a
steel panel was mounted over the tunnel entrance. Inside
the tunnel, water enters the system through a water pipe
installed at or below the water surface. Except for two
places where the pipe crosses stream beds on piers, the pipe
is buried underground from the tunnel to a water tank on TMK
2-7-01:03. Water is chlorinated at the tank, which serves
the Kahili Mountain Park parcel, and feeds the line going to
Koloa Town. A second tunnel and a Kuia Stream intake used
to join this line in a junction house below the water tank;
however, these two water sources have been bypassed due to
Department of Health concerns for the influence of surface
water. The sole water source is Tunnel #1. Overflow from
the system on Kahili Mountain Park is returned to the
adjacent stream.

In a letter dated November 6, 2006, the Planning

Department requested clarification of the Water Commission’s

comments in its September 26 letter. The Planning Department

summarized its understanding that, providing certain hypothetical

conditions applied, no permit was required for Kauai Springs’ use

of water from the existing water system:

II. The tunnel is not being changed, and the Applicant’s
use of the water is not affecting the source in any way
(i.e. not inducing more water to come out of the source or
tunnel)

III. The existing source has been registered and is
basically grandfathered, and there is an agreement between
the new user (Applicant) and the operator of the system.

7
The Planning Commission did not attend the site visit. Although
the Commission approved a motion for a site visit to the tunnel and bottling
facility sometime between October 25 and October 31, 2006, the visit was not
scheduled due to Sunshine Law concerns and trail conditions.

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IV. There is a closed line from the tunnel to the tank.

It was also the Planning Department’s understanding that

additional permits and a petition to amend the interim instream

flow standard for affected surface waters may be required under

the circumstances outlined in the Water Commission’s letter.

At the November 14, 2006 hearing, counsel for Kauai

Springs stated that the application request was to bottle a

maximum of 1,000 gallons of water per day, and to use a maximum

of two vans a day for the delivery of that water. Counsel agreed

that “[t]his would represent an amendment to the previous request

of 1,000 five-gallon bottles a day and one thousand cases of

water in smaller bottles a week to be delivered in ten . . . vans

per day and one 40-foot container per day.”

A consultant for Grove Farm also appeared at the

November 14 hearing. He confirmed that Grove Farm did not own

the water tunnel, but managed the water system and sold the

water. He stated that Grove Farm was not “involved . . . at all”

in Kauai Springs’ Use Permit request because the request did not

involve Grove Farm property. The consultant stated that he had

“no clue” if there were any applicable PUC requirements regarding

Grove Farm selling the water to Kauai Springs. To his knowledge,

Grove Farm had never communicated with the PUC. The Planning

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Department planner suggested that the PUC does not “grandfather

at all so they just probably didn’t know about [the Grove Farm

system]. It wasn’t something that came to anybody’s attention

because it was so small a system.”

By letter dated November 20, 2006, the Water Commission

responded to the Planning Department’s request for clarification.

The Water Commission stated, “We concur with your summary of our

comments and confirm that no permits from the Commission are

required for the proposed use of water under the three conditions

outlined in your letter.”

By letter dated November 22, 2006, the PUC responded to

the Planning Department’s November 6 inquiry “as to whether Grove

Farm’s water system and Kauai Springs, Inc.’s sale of water from

the Grove Farm water system are regulated by the [PUC].” The PUC

responded that based on “the limited information provided, there

is a possibility that Grove Farm may be operating as a public

utility[.]”8 However, the PUC stated that an analysis of whether

Grove Farm was operating as a public utility would include

determining whether Grove Farm provides water service for the

8
A “public utility” is defined as “every person who may own,
control, operate, or manage as owner, lessee, trustee, receiver, or otherwise,
whether under a franchise, charter, license, articles of association, or
otherwise, any plant or equipment, of any part thereof, directly or indirectly
for public use . . . for the production, conveyance, transmission, delivery,
or furnishing of . . . water[.]” HRS § 269-1 (Supp. 2012).

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public’s use and the amount of control its customers may exert

over the water system. Accordingly, “[a]dditional information,

including a review of all relevant facts and possibly testimony

from all concerned parties, would be necessary before a

determination could be made[.]” With respect to Kauai Springs,

the PUC stated that “it does not appear that Kauai Springs would

be a public utility subject to commission jurisdiction.” The PUC

explained:

Such operations may not rise to services of such a public
character and of public consequence and concern that is to
be regulated under HRS Chapter 269, as bottled water may be
obtained from a number of competing sources and providers.
The commission does not currently exercise jurisdiction over
any water bottling facilities in the State.

The PUC cautioned that its letter constituted an “informal

opinion” based on the information provided and was not binding on

the PUC. The PUC concluded, “If you require a formal opinion on

this matter, you may file a petition for declaratory relief

pursuant to chapter 6-61, subchapter 16, Hawaii Administrative

Rules.”

At the November 28, 2006 public hearing, the Planning

Commission discussed granting conditional permits, provided that

Kauai Springs would agree to furnish status reports that would

allow the Commission to monitor progress. Specifically in regard

to the Use Permit, counsel for Kauai Springs informed the

Planning Commission that Kauai Springs would be willing to accept

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restrictions on the permit, such that the permit would be

exclusively for the use of Kauai Springs, it would not be

transferable, and the Commission would have the right to review

the permit if Kauai Springs sold its business.

The Planning Commission also discussed postponing its

decision pending a declaratory ruling by the PUC or Water

Commission, or conditioning approval of the permits on a

declaratory ruling. However, the Planning Commission stated that

it was required to act on the Special Permit by January 31, 2007

and that the rules of the Commission did not allow for an

extension of time. The Commission members thus voted to close

the public hearing.

By letter dated November 28, 2006, counsel for Kauai

Springs wrote to the Planning Commission to “confirm, in writing,

the Applicant’s request.” Counsel wrote, “In order to be capable

of further growth, the Applicant, after careful consideration of

the evidence presented at the public hearings and notwithstanding

the testimony provided by myself to the contrary, has decided to

maintain the request for approval as set forth in his original

application.” This request was for a maximum of 1,000 five-

gallon bottles per day (or 5,000 gallons per day or 35,000

gallons per week), a maximum of ten van round-trips per day, a

maximum of one 40-foot container round-trip per week, and a

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maximum of five employees at any one time. Counsel wrote that he

regretted any confusion caused by his testimony at the November

14 hearing and “look[ed] forward to coming to agreeable terms

that are acceptable to all parties involved.”

In a letter dated November 30, 2006, the Office of

Hawaiian Affairs (OHA) wrote that it was concerned with Kauai

Springs’ application “because it involves the use of an important

public trust resource - fresh water - for personal financial

gain,” and it “appear[ed] to be the first attempt to bottle and

sell Hawaii’s surface water[.]” OHA stated that the Planning

Commission had acted pursuant to its public trust duty “by

requesting clarification on public trust issues from [the Water

Commission] and the [PUC].” OHA wrote that it was not enough to

require Kauai Springs to request a declaratory ruling from the

Water Commission. Rather, the Water Commission should

investigate whether “Hawai#i water law is already being

violated.” “For example, the off-stream flows may have already

increased with Kauai Springs’ use of the water, or there may be

transport of water outside the watershed of origin.” OHA

requested that the Commission require these studies to be

conducted prior to issuing any permits. OHA further requested

that the Planning Commission resolve the “outstanding PUC issues”

regarding whether Grove Farm and Kauai Springs were operating as

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public utilities. Given the January 27, 2007 deadline for a

decision on the application, OHA argued that the Commission

“uphold its public trust responsibilities by denying Kauai

Springs’ permit applications without prejudice, until the

applicant can show, and the appropriate agencies can concur, that

Kauai Springs’ proposed use is reasonable-beneficial and will not

interfere with public trust purposes.” At a minimum, OHA

contended that Kauai Springs should be required to obtain a

declaratory ruling from the Water Commission “regarding the need

for an instream flow standard amendment and a final decision from

the PUC regarding the need to register as a public utility.”

By letter dated December 1, 2006, counsel for Kauai

Springs wrote to the Planning Commission, suggesting specific

language regarding the “non-transferability” condition to the Use

Permit that had been discussed at the prior public hearing.

At the January 23, 2007 regular meeting of the Planning

Commission, the Commission considered the recommendation to deny

the permits made by Planning Department planner Bryan Mamaclay,

who had recently replaced the prior planner. Counsel for Kauai

Springs stated that he “was really surprised” when he received

Mr. Mamaclay’s staff report recommending that the permits be

denied. Counsel believed that Mr. Mamaclay “was put in a

difficult position by inheriting this file at the last minute.”

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Counsel explained that based on his last conversation with Mr.

Mamaclay, his impression had been that Mr. Mamaclay “would like

to have some more time to look at it but because of the rules we

weren’t afforded that opportunity. So instead of working with

conditions . . . as you are enabled to do he chose to take the

denial route.”

Mr. Mamaclay explained that the comments received from

the Water Commission, PUC, and OHA were “an issue because . . .

we need some comfort level or some certainty that the applicant

has the right or the authority to extract and draw the water on a

commercial basis.” Mr. Mamaclay noted that the Water

Commission’s letter included “caveats or some qualifying

statements,” which raised the question of whether Kauai Springs

had gone “through a process to ensure that there is no violation

of any [Water Commission] rules.” Mr. Mamaclay further informed

the Commission that the “absolute deadline” for the Special

Permit was January 31, 2007.

After further discussion and public testimony, the

Planning Commission voted 6-1 to deny the three permits. That

same day, January 23, 2007, the Commission issued its Findings of

Fact, Conclusions of Law, Decision and Order (Decision and Order)

denying the application.

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With respect to time constraints for acting on the

application, the Planning Commission found that “[t]he absolute

deadline for action on the application based on procedures for

action on Special Permits is 210 days after the acceptance of the

application or January 31, 2007.” The Planning Commission found

that “[t]he delay in reaching a decision . . . was attributed to

staff’s effort in obtaining additional information relating to

the Applicant’s authority and right to obtain and extract the

water for commercial purposes.”

The Planning Commission summarized the findings and

comments submitted by the Water Commission and the PUC. In

relation to the Water Commission’s input, the Planning Commission

found the Water Commission had qualified its comments by stating

that permits may be required if certain modifications were made:

b. The Planning Department further acknowledges the
qualifying remarks by [the Water Commission] that:

I. if the source needs to be modified in any way, a well
modification permit from [the Water Commission] may be
required;

II. if a pump is to be installed to induce additional
water flow, a pump installation permit from [the Water
Commission] would be required;

III. if the modification results in impacts to surface
waters, a petition to amend the interim instream flow
standard for affected surface waters must be made and
approved prior to use of the water.

Relative to these comments, the Planning Commission found that

the Planning Department’s site visit to the tunnel where the

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private water line is located confirmed that a “concrete stem

wall” and “steel panel” had been constructed at the tunnel

entrance:

c. Relative to the foregoing, it is also acknowledged as
confirmed during a site visit to Tunnel #1, that to prevent
infiltration of surface water into the tunnel, a concrete
stem wall was constructed at the bottom of the tunnel
entrance to above water level within the tunnel and a steel
panel was mounted over the tunnel entrance. Furthermore and
as noted by the staff, inside the tunnel, water enters the
system through a water pipe installed at or below the water
surface. Thereafter, the water line is buried up to a water
tank . . . where it is chlorinated before servicing Kahili
Mountain Park and the 11 homes in Koloa Town.

(Emphasis added).

In relation to the PUC’s comments, the Planning

Commission found that “Kauai Springs would not be a public

utility subject to commission jurisdiction since the commission

does not currently exercise jurisdiction over any water bottling

facility in the State.” However, the Commission found that the

“PUC further draws interest in its findings relating to Grove

Farm as the seller of the water from its system to the Applicant

and its status with the PUC.” The Commission found in this

regard that the PUC’s letter stated “there is a possibility that

Grove Farm may be operating as a public utility,” and that the

PUC qualified its response as an “informal opinion based on the

limited information provided[.]” (Quotation marks omitted).

In light of the observations made during the site visit

and the comments made by the PUC and the Water Commission, the

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Planning Commission found “there may be outstanding regulatory

processes” that Kauai Springs must satisfy:

In view of the foregoing, there may be outstanding
regulatory processes with [the Water Commission] that the
Applicant must satisfy. Based on the comments provided by
[the Water Commission] and staff observations during the
field trip, it should be the Applicant’s responsibility to
confirm and determine the need for any permits that may be
required for the construction of the concrete stem wall and
the steel panel mounted over the tunnel entrance. The
permit requirements administered by [the Water Commission]
are cited in HRS Section 174C-71(3)(A), (Protection of
Instream Uses) . . . and requires persons to obtain a permit
from the Commission prior to undertaking stream channel
alteration provided that routine streambed and drainage way
maintenance activities and maintenance of existing
facilities are exempt from obtaining a permit.

Comments received from the PUC also draws interest to the
extent that as a purchaser of the water from Grove Farm, the
operation may be subject to PUC regulation. The PUC in this
regard encourages that a declaratory ruling be sought to
allow more diligent review of the relevant facts and
information associated with the proposed water bottling
facility.

As evidenced by additional testimony provided by [OHA] and
concerned parties, the Planning Commission is being
requested to exercise caution and deny the Applicant’s
request in its role as decision maker in the land use permit
process.

(Emphases added).

Based on the above findings, the Planning Commission

concluded that Kauai Springs had failed to carry its burden of

demonstrating that its proposed use did not violate all

applicable requirements and regulatory processes relating to

water rights, and that there was no substantive evidence that

Kauai Springs had legal standing and authority for its proposed

water use:

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3. In view of the comments received from [the Water
Commission] and PUC the land use permit process should
insure that all applicable requirements and regulatory
processes relating to water rights, usage, and sale are
satisfactorily complied with prior to taking action on the
subject permits. The Applicant, as a party to this
proceeding should also carry the burden of proof that the
proposed use and sale of the water does not violate any
applicable law administered by [the Water Commission], the
PUC or any other applicable regulatory agency.

4. There is no substantive evidence that the Applicant has
any legal standing and authority to extract and sell the
water on a commercial basis.

(Emphases added).

At the Planning Commission’s February 13, 2007 regular

meeting, the Commission considered Kauai Springs’ request for

reconsideration of the Decision and Order. At the hearing,

counsel for Kauai Springs argued that the purpose of the motion

for reconsideration was “to prevent hasty or ill advised action.”

Counsel stated that “after four months of lengthy public hearings

the new planning staff person received the file just days before

the purported deadline that we were told a decision had to be

made[,] which was the 210 day deadline [for the Special Permit].”

Counsel argued that it was a mistake for the Commission to deny

the permits based on issues raised in OHA’s letter, where OHA

erroneously stated that the application involved a surface water

system, and where every other administrative agency had

“responded favorably to the applicant.” Counsel requested that

the Commission “vote to reconsider and then continue this matter

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to a time in the not to[o] distant future when we can all get our

arms around any of the remaining issues including any issues

raised by that OHA letter that came in just days before [the

staff] report and that we can make a fully reasoned decision.”

In response to counsel’s comments, Commissioner Randall

Nishimura questioned whether granting reconsideration would place

the Commission in violation of the “210 day requirement for the

Special Permit.” The County Attorney responded that it was his

impression that the Commission could not grant an extension of

the deadline even if Kauai Springs requested it. Counsel for

Kauai Springs stated that he had discussed this issue with a

County Attorney and the Mayor, and it was his understanding that

Kauai Springs could waive the 210 day requirement. The County

Attorney informed the Commission that the Decision and Order had

been issued on the 203rd day following acceptance of the

application, which would leave the Commission with seven days to

act upon reconsideration.

After further discussion, counsel for Kauai Springs

stated that “[t]he applicant would certainly be willing to waive

something to avoid a hasty decision[.]” Counsel continued:

I think we would have asked for that two weeks ago in my
discussions with the planner had we known that we could and
that was why I was somewhat heartened after our meeting a
week and a half ago with the Mayor. But absolutely we would
be willing to execute a document, I’m happy to work with the
County Attorney, a waiver of our rights. We are not trying

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to have you open it today and then argue that that’s an
automatic approval we want to get this right. We believe
there are important issues to be resolved. We are not
trying to sneak anything by here.

(Emphasis added).

Following public oral testimony on the request for

reconsideration, a formal motion to reconsider the Decision and

Order was made. Several Commissioners stated that they could not

support the motion due to their belief that the Commission was

not in a position to resolve the “water rights issue.” The

Planning Commission voted 4-1 to deny the motion for

reconsideration.

In a letter dated February 15, 2007, the Planning

Department confirmed the Commission’s vote to deny the motion for

reconsideration and notified Kauai Springs that continued

operation on the Property constituted a land use violation. On

March 13, 2007, the Planning Department ordered Kauai Springs to

shut down its operations on the Property. The Planning

Department’s Notice of Violation dated March 13, 2007 provided

that the department inspected the Property on March 8, 2007, and

found violations of the Kauai CZO based on the continued

operation of the water bottling facility without the required

permits. Kauai Springs was ordered to correct the violation(s)

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within fifteen days and to cease and desist the illegal

activities.

II. Circuit Court Proceedings

On March 15, 2007, Kauai Springs appealed the Decision

and Order to the circuit court. On May 15, 2007, the circuit

court granted Kauai Springs’ motion for a preliminary injunction

and enjoined the Planning Department from enforcing the Decision

and Order.

On September 17, 2008, the circuit court issued its

order, reversing in part and vacating in part the Planning

Commission’s Decision and Order.

The circuit court concluded that pursuant to

HRS § 91-13.5 (Supp. 2006) and the relevant county code

provisions, and based upon the Planning Commission’s acceptance

of Kauai Springs’ application on July 5, 2006, the Commission was

required to act upon the three requested permits by the following

dates: 1) October 18, 2006 for the Use Permit; 2) November 2,

2006 for the Class IV Zoning Permit; and 3) January 31, 2007 for

the Special Permit.9 The circuit court concluded that the

9
For use permits, the Planning Director is required to either make
a decision on the permit or refer the permit application to the Planning
Commission within forty-five (45) days. KCC § 18-9.5(d). See KCC § 8-20.6(a)
(providing that use permit procedures are governed by KCC § 18-9.5, which
describes the procedures for a Class III zoning permit). If the application
is referred to the Planning Commission, the Planning Commission is required to
act on the application within sixty (60) days. KCC § 18-9.5(f). Thus the

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Planning Commission’s failure to act within the time frame for

the Use and Class IV Zoning permits meant that “Kauai Springs had

a legitimate claim of entitlement” to those permits and those

permits were “deemed approved” as of the date of the deadlines.

The circuit court further concluded that Kauai Springs

did not waive the deadlines or assent to extensions by appearing

and participating in subsequent public hearings or by not

demanding that its application be approved. The circuit court

concluded that “[i]t was reasonable for Kauai Springs to await

the Planning Commission’s decision,” and “[t]he failure to adhere

to the time requirements was due solely to the actions of the

Planning Commission.”

In regard to the criteria applied by the Planning

Commission in denying the permits, the circuit court concluded

Planning Commission had a total of 105 days from July 5, 2006 to act upon the
Use Permit, unless there was assent to an extension of the deadline.
For Class IV zoning permits, the Planning Director is required to
prepare a report on the application within sixty (60) days. KCC § 18-9.6(c).
Within sixty (60) days of receiving the report, the Planning Commission is
required to hold at least one public hearing on the application and to make a
determination on the application. KCC § 18-9.6(d). Thus the Planning
Commission had a total of 120 days from July 5, 2006 to act upon the Class IV
Zoning Permit, absent assent to an extension.
Special Permits are governed by Chapter 13 of the Rules of
Practice and Procedures of the Planning Commission (Planning Commission
Rules). Section 13-7(a) provides that the Commission must vote on a Special
Permit application no later than 210 days after the acceptance of the
application, “or within a longer period as may be agreed by the applicant to
the extent permitted by law.” For purposes of HRS § 91-13.5, if the
Commission fails to vote on the petition within the established time frame,
the petition is deemed approved after an additional thirty (30) days. § 13-
8(a)(2).

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that the Planning Commission did not consider the proper

criteria, although the “applicable standards” for the three

permits were “clearly established.”

Regarding the Use Permit, the circuit court concluded

that the Kauai CZO provides that the purpose of the permit, to

assure proper integration into the community of uses, was

satisfied by Kauai Springs’ proposed use:

42. The Kauai Zoning Code provides “the purpose of the ‘use
permit’ is to assure the proper integration into the
community of uses which may be suitable only in specific
locations in a district . . . and to prohibit such uses if
the proper integration cannot be assured.”

43. Kauai Springs is properly integrated into the community
of uses. It had been operating without issue and with all
the state and county permits necessary including two County
building permits. The Planning Department staffer remarked
about Kauai Springs, “[t]he existing water bottling facility
is relatively low impact at the subject location in its
current function and capacity.”

44. The Planning Department staffer also stated that the
watershed on the Property looked “just like any other Ag.
Building.”

45. There is nothing in the Decision and Order or the Record
to indicate that Kauai Springs’ existing or proposed uses
were not or will not be integrated.

(Citations omitted) (emphases added). The circuit court further

concluded that KCC § 8-20.5 “sets forth the standards the

Planning Commission should have applied when considering Kauai

Springs’ application for a Use Permit.” The circuit court

concluded that the Decision and Order did not state, and the

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record did not indicate, that Kauai Springs did not meet these

standards.

In regard to the standards for the Special Permit, the

circuit court similarly concluded that HRS § 205-6, county

ordinances, and the Planning Commission Rules set forth the

proper standard for issuing the permit and there was no

indication in the Decision and Order or the record that Kauai

Springs failed to meet these criteria. The circuit court reached

a similar conclusion for the Class IV Zoning Permit.

The circuit court then addressed the Planning

Commission’s duties under the public trust. The circuit court

first concluded that the County has duties under the public

trust:

61. The State of Hawaii and its political subdivisions have
duties under the public trust. Haw. Const. art. IX; Kelly v.
1250 Oceanside Partners, 111 Hawai#i 205, 140 P.3d 985
(2006).

62. “Political subdivisions” of the State include the County
of Kauai. Kelly v. 1250 Oceanside Partners, 111 Hawai#i 205,
140 P.3d 985 (2006).

(Emphases added). The circuit court then concluded that the

record was devoid of any evidence that Kauai Springs’ proposed or

existing use would affect public trust resources, and nothing to

indicate that the Planning Commission did not fulfill its public

trust duties:

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63. Decisions on permit applications must be grounded in
fact and the Record, not speculation, and the Record in this
case is devoid of any evidence that Kauai Springs[’]
existing or proposed uses might affect water resources
subject to the public trust.

64. In the Decision and Order, the Planning Commission
concluded that Kauai Springs’ applications could be denied
because Kauai Springs should have pursued “outstanding
regulatory processes.” The only regulatory process asserted
by the Planning Commission as being outstanding was that
Kauai Springs had not “proactively sought a declaratory
ruling” from either the Water Commission or the PUC.

With respect to the Water Commission and the PUC’s

input, the circuit court found that those agencies informed the

Planning Commission that Kauai Springs was not within their

“jurisdictions, interests, or concerns,” and the Water Commission

stated that no permits were required because of the circumstances

of Kauai Springs’ water use:

53. The Decision and Order stated the Planning Commission
had sought and received the input of the . . . Water
Commission and the PUC, both of which informed the Planning
Commission that Kauai Springs was not within their
respective jurisdictions, interests, or concerns.
. . . .
RA at 344 (FOF #18).

54. The Decision and Order stated the Water Commission
informed the Planning Commission that Kauai Springs required
“no permits” because “the Applicant's use of the water is
not affecting the source in any way (i.e., not inducing more
water to come out of the source or tunnel),” “the existing
source has been registered and is basically grandfathered,
and there is an agreement between the new user (Applicant)
and the operator of the system,” and “there is a closed line
from the tunnel to the tank.” RA at 344 (FOF #19.a.).

The circuit court concluded that the Water Commission and PUC

disclaimed interest in the application, state law did not require

“pursuit of futile administrative processes,” and the Commission

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had not identified “any other outstanding regulatory processes”

required to be fulfilled by Kauai Springs:

65. The Water Commission and the PUC are authorized pursuant
to Haw. Rev. Stat. ch. 269 and ch. 174C respectively to
regulate water allocations and public utilities. Both
agencies informed the Planning Commission that Kauai
Springs’ uses were of no significant interest to them.
. . . .
70. Hawaii law does not require pursuit of futile
administrative processes.

71. The Planning Commission did not identify any other
outstanding regulatory processes that it claimed must have
been fulfilled in order to satisfy any duty under the public
trust that it may have had.

(Citations omitted). Accordingly, the circuit court concluded

that there was “nothing in the Record . . . to show that the

Planning Commission did not fulfill any duty it may have under

the public trust.”

Finally, the circuit court concluded that Kauai Springs

carried its burden of showing that its proposed use did not

violate any applicable law administered by any applicable

regulatory agencies:

73. If Kauai Springs bore the burden of proof that its
proposed use did “not violate any applicable law
administered by [the Water Commission], the PUC or any other
applicable regulatory agency,” Kauai Springs plainly carried
that burden of proof. Both of these agencies had provided
their input to the Planning Commission, and neither agency
had any substantial concerns with Kauai Springs, as
reflected in the Decision and Order.

74. There was no evidence presented at the public hearings,
and no findings made by the Planning Commission that Kauai
Springs did not carry any of its burdens to show it was
entitled to the three permits at issue in this appeal, and
the Planning Commission was clearly erroneous when it

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determined that Kauai Springs did not meet the burden on the
zoning permit applications.

(Citations omitted) (emphases added).

The circuit court concluded that the Decision and Order

“purport[ed] to shift a burden to Kauai Springs to disprove

future events,” and therefore the Decision and Order was

arbitrary or capricious. The circuit court further concluded

that “[t]he Decision and Order is in violation of statutory

provisions, in excess of the statutory authority or jurisdiction

of the Planning Commission, made upon unlawful procedure,

affected by other error of law, clearly erroneous, and arbitrary

or capricious.”

Based on the above, the circuit court reversed the

Decision and Order with regard to the Use Permit and the Zoning

Permit. The circuit court ruled that Kauai Springs’ application

for those permits was approved and “shall be issued by the

appropriate agency or department.” The circuit court vacated the

Decision and Order with regard to the Special Permit and remanded

the case to the Planning Commission “with an order to issue the

Special Permit to Kauai Springs immediately.”

The circuit court further ruled that the Decision and

Order “exceeds the Planning Commission’s authority or

jurisdiction, is clearly erroneous in view of the reliable,

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probative and substantial evidence on the whole record; and is

arbitrary, or capricious, or characterized by abuse of discretion

or clearly unwarranted exercise of discretion.” The circuit

court permanently enjoined the Planning Commission from enforcing

the Decision and Order.

The circuit court’s final judgment in favor of Kauai

Springs and against the Planning Commission was entered on

September 23, 2008. On October 22, 2008, the Planning Commission

timely appealed to the ICA.

III. ICA Appeal

A.

On appeal to the ICA, the Planning Commission raised

four points of error:

a. Whether the circuit court was correct that the Use Permit
and the Class IV Zoning Permit were automatically approved
pursuant to provisions in the KCC.

b. Whether the Planning Commission had public trust
obligations to review Kauai Springs’ use of water.

c. If the Planning Commission had public trust obligations
to review Kauai Springs’ use of water, whether the Planning
Commission applied the proper standards and criteria in
reviewing the application for the permits.

d. Whether the circuit court was correct that Kauai Springs
met its burden of proof to be entitled to the permits.

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Kauai Springs, Inc. v. Planning Comm’n of the Cnty. of Kauai, 130

Hawai#i 407, 410, 312 P.3d 283, 286 (App. 2013).

First, with respect to the automatic approval deadlines

for the Use and Class IV Zoning permits, the Planning Commission

argued that the circuit court erred in concluding that Kauai

Springs did not assent to extending the deadlines and that the

failure to adhere to the time requirements was due solely to the

actions of the Planning Commission. The Commission argued that

the CZO plainly permits applicants to “assent” to a delay in the

approval process for Use and Class IV Zoning permits. (Citing

KCC §§ 8-19.5(g) and 8-19.6). The Planning Commission noted that

the deadline for the Use and Class IV Zoning permits had expired

on October 18 and November 2, 2006, respectively. However,

during the five public meetings held between August 8, 2006 and

February 13, 2007, Kauai Springs and its counsel “were fully

engaged in deliberations and negotiations” and did not assert

that the deadlines were set to expire or had expired. The

Planning Commission thus contended that “[b]y its conduct, [Kauai

Springs] led the Planning Commission to reasonably believe that

[Kauai Springs] assented to a delay in the final decision” on the

Use and Class IV Zoning permits. The Planning Commission argued

that the ICA should reverse the circuit court’s order deeming the

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Use and Class IV Zoning permits to have been automatically

approved.10

Second, the Planning Commission argued that the circuit

court erred in implicitly holding that the Planning Commission

had no duty under the public trust doctrine to consider the

implications of the proposed water use on public trust

resources.11 The Planning Commission argued that based on

article 11, section 7 of the Hawai#i Constitution and applicable

law, the circuit court should have concluded that the Planning

Commission, as a political subdivision, had a duty to examine the

legality of Kauai Springs’ water use, regardless of whether the

Water Commission asserted jurisdiction over the matter.

The Planning Commission also challenged the circuit

court’s COL ¶ 63, concluding that the record was “devoid of any

10
Malama Kaua#i and Hawaii’s Thousand Friends (MKHTF) filed a brief
of amici curiae in the proceedings before the ICA. MKHTF agreed with the
Planning Commission that Kauai Springs assented to an extension of the time
period for consideration of the Use and Class IV Zoning permits.
Additionally, MKHTF argued that “deeming Kauai Springs’ applications
‘automatically approved,’ where [the Planning Commission] specifically and
diligently sought to fulfill its trust duties with Kauai Springs’ assent,
would wrongly penalize [the Planning Commission] and the public trust and
nullify [the Planning Commission’s] duties and Kauai Springs’ burden of proof
and, therefore, run afoul of the constitution.”
11
The Planning Commission specifically challenged the circuit
court’s COL ¶ 71 (“The Planning Commission did not identify any other
outstanding regulatory processes that it claimed must have been fulfilled in
order to satisfy any duty under the public trust that it may have had”) and
COL ¶ 72 (“There is nothing in the Record . . . to show that the Planning
Commission did not fulfill any duty it may have under the public trust”) based
on the use of the word “may” to describe the Planning Commission’s public
trust duties.

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evidence that Kauai Springs existing or proposed use might affect

water resources subject to the public trust.” The Planning

Commission argued that the public trust doctrine applies to all

water resources. Thus, although the Knudsen Trust owns the land

containing the water source and Grove Farm owns the water system,

the Planning Commission was obligated to examine Kauai Springs’

use of water, and Kauai Springs was required to show that its use

was “legal.” Given that Kauai Springs “sought after-the-fact

permits to greatly increase its industrial bottling and

commercialization of drinking water taken from a ground-water

source,” the Planning Commission argued that “the record

contained ample evidence demonstrating that [Kauai Springs’]

existing or proposed use might affect resources subject to the

public trust.”

Third, the Planning Commission argued that the circuit

court erred in concluding that the Planning Commission did not

consider the proper criteria when reviewing and processing Kauai

Springs’ application. The Planning Commission contended that

implicit in the circuit court’s conclusion was the assumption

that Kauai Springs was only bound by the specific permit

requirements and “was not required [under the public trust

doctrine] to prove the legality of its commercialization of

fresh-water resources[.]” The Planning Commission argued that

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Kauai Springs had the burden of justifying its proposed uses in

light of the public trust doctrine and the higher level of

scrutiny imposed for private commercial uses of public resources.

Thus, the Planning Commission did not act arbitrarily or

capriciously by scrutinizing Kauai Springs’ water use and denying

the three permits based on the issue of water rights.

Finally, the Planning Commission argued that the

circuit court erred in concluding that assuming Kauai Springs

bore the burden of proof in showing that its proposed use did

“not violate any applicable law” administered by the Water

Commission, the PUC or any other applicable regulatory agency,

Kauai Springs “plainly carried that burden of proof.” According

to the Planning Commission, Kauai Springs “was required to

present concrete evidence that it possessed a legal right to

bottle and sell water taken from the cave owned by Knudsen Trust,

and that the proposed use was not inimical to the purposes of the

public trust.” Kauai Springs failed to present such evidence,

offering “only conclusory assertions regarding the impact of

[its] proposed increase in water use on the interests of other

users, the general public, and the environment,” and offering

insufficient information as to its relationship with Grove Farm

and Knudsen Trust. The Planning Commission focused on the

“equivocal responses” from the Water Commission and the PUC and

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argued that it was erroneous for the circuit court to conclude

that “neither agency had any substantial concerns.”

Relatedly, the Planning Commission argued that the

circuit court erred in concluding that Kauai Springs met the

relevant permit criteria. Specifically, the Planning Commission

argued that the circuit court erred by concluding that Kauai

Springs’ existing or proposed uses “were not or will not be

integrated” into the community of uses, given that: 1) the

applicable law required Kauai Springs to present evidence that

its existing and proposed uses were integrated into the community

of uses; and 2) Kauai Springs’ “burden to demonstrate the

integration of its proposed land-use was not mutually exclusive

from its burden to demonstrate the legality of its proposed

water-use.” The Planning Commission contended that Kauai Springs

failed to present “substantive evidence concerning either water

rights or possible impacts that the proposed increase in water

usage would have on the ground-water source or neighboring users’

access to the water.” Thus, Kauai Springs did not satisfy the

applicable permit criteria.12

12
OHA filed an amicus curiae brief in which it argued that the
circuit court erred in concluding that the record was devoid of any evidence
that Kauai Springs’ proposed or existing uses might affect public trust
resources. OHA argued that the “bottling and sale of water is inconsistent
with protecting” the water resource “in its natural state,” and that “it was
necessary for the Planning Commission to evaluate these two competing uses of
water.” OHA also challenged the circuit court’s COL ¶ 72 as improperly

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B.

Kauai Springs first responded that the County

ordinances and rules permitting a permit applicant to assent to

an extension were invalid because they exceeded the scope of

their enabling statute, HRS § 91-13.5. HRS § 91-13.5 provides

that agencies shall adopt rules specifying maximum time periods

for acting on certain permits, and that any application not

decided within the established time frame is “deemed approved.”

Kauai Springs emphasized that HRS § 91-13.5(e) provides for only

three circumstances under which the designated time periods may

be extended, for national disasters, state emergencies, or union

strikes preventing the fulfillment of application or review

requirements. Kauai Springs argued that the statute does not

include the applicant’s “assent” as a reason for extending

deadline, which demonstrates that “assent” was intended to be

excluded from the statute’s scope. Thus, Kauai Springs argued

that the County ordinances and rules permitting an applicant to

stating that the Planning Commission had no duty to address the impact of
Kauai Springs’ operation on the public trust resource. OHA contended that
because the Water Commission and PUC stated that they did not have direct
jurisdiction over the operation, the duty to protect the public trust
resources fell to the Planning Commission, which properly denied the permits
“when it became clear that Applicant Kauai Springs had not met its burden of
addressing the public trust values incorporated into Hawaii’s Constitution and
in the State Water Code.”

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“assent” to an extension were in conflict with superior state law

and therefore invalid.

Even assuming that an applicant is permitted to assent

to an extension, Kauai Springs argued that the circuit court

correctly found that Kauai Springs did not assent to an extension

by appearing at the public hearings after the deadlines had

passed. Kauai Springs contended that merely appearing at the

hearings did not constitute waiver or affirmation, and that in

this case, it did not waive the deadlines by any affirmative

conduct such as asking for extra time or withdrawing its

application.

Second, Kauai Springs argued that the circuit court

recognized the Planning Commission’s public trust duties and held

that the Planning Commission satisfied those duties. Kauai

Springs further argued that it did not seek approval for a “use

of water” because the application did not seek the Planning

Commission’s permission to take or extract water, as Kauai

Springs does not control the source of the water or the

transmission system. Rather, Kauai Springs sought only to tap

into a “pipeline that crosses its property,” similar to “any

person or business statewide that purchases water from someone

else, or fills a bottle with a garden hose.” “Thus, the Planning

Commission’s public trust inquiry was limited to whether public

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resources would be impacted by Kauai Springs’ building on

agriculturally-zoned land.”

Kauai Springs argued that the Planning Commission’s

public trust duties did not entitle it to “turn the usual zoning

process into an open-ended and standardless inquiry . . . merely

because a connection can be made between a permit application and

water resources.” Kauai Springs claimed that in this case, the

Planning Commission took reasonable measures and made appropriate

assessments to assess the impact of Kauai Springs’ use on public

trust resources, and possessed affirmative evidence, based on

input from the other county agencies, that the use would have no

impact on such resources.

Kauai Springs argued that the Planning Commission

sought to have Kauai Springs pursue “outstanding regulatory

processes,” without identifying the required “processes.” Kauai

Springs notes that as the circuit court determined, “[t]he only

regulatory process asserted by the Planning Commission as being

outstanding was that Kauai Springs had not ‘proactively sought a

declaratory ruling’ from either the Water Commission or the PUC.”

However, those agencies “had already expressly informed the

Planning Commission they had no interest in Kauai Springs,” and

the “Planning Commission has never revealed what . . .

declaratory rulings . . . would accomplish.” Kauai Springs

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concluded that “[t]he public trust doctrine does not empower an

agency to deny an application for zoning permits simply because

the agency asserts it lacks information.”

C.

The ICA vacated the circuit court’s judgment and

remanded the case to the Planning Commission for further

proceedings to consider whether Kauai Springs satisfied the

specific criteria for the requested permits, in light of the

public trust doctrine.

On the first issue of the “deemed approved” deadlines,

the ICA found it uncontested that the deadlines for the Planning

Commission to act on the Use and Class IV Zoning permits were

October 18 and November 2, 2006, respectively, and that the

Decision and Order was not issued until January 23, 2007. Kauai

Springs, 130 Hawai#i at 418, 312 P.3d at 294. However, the ICA

recognized that the applicable ordinances provide that permits

shall be deemed approved if the Planning Commission fails to take

action within the prescribed time limits, “unless the applicant

assents to a delay.” Id. (emphasis in original) (quoting KCC §§

8-19.5(g), 18-9.6(e)).

The ICA rejected Kauai Springs’ argument that the

County ordinances are in conflict with HRS § 91-13.5(e) because

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“assent” is not one of the three enumerated circumstances for

extending agency deadlines. Id. Examining the legislative

history of HRS § 91-13.5, the ICA found that the legislature

“contemplated flexibility in rule-making and a balance between

streamlining on one hand and constitutional demands, public

input, and environmental concerns on the other hand[.]” Id. The

ICA thus held that the “challenged assent provisions do not

conflict with HRS § 91-13.5.” Id. (citations omitted).

The ICA then held that Kauai Springs assented to an

extension of the deadlines for the Use and Class IV Zoning

permits based on the following conduct by Kauai Springs and its

counsel: 1) on November 14, 2006, amending the original

application to seek approval for only its current needs; 2) on

November 28, 2006, retracting its earlier amendment and asking

the Planning Commission to consider its original application for

approval of future needs, and continuing to negotiate for the

granting of a conditional Use Permit; 3) on January 23, 2007,

contending that the Planning Commission should grant all three

permits; and 4) on February 13, 2007, requesting reconsideration

of the Decision and Order, offering to accept conditional

permits, and requesting a continuance to obtain more evidence

pertaining to the issue of water rights. Id. at 419-20, 312 P.3d

at 295-96. The ICA reasoned that “[a]t no point in time did

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Kauai Springs assert that its permit application had been

automatically approved.” Id. at 421, 312 P.3d at 297.

Accordingly, the ICA held that the circuit court erred

in concluding that Kauai Springs did not assent to an extension

of the deadlines for the Use and Class IV Zoning permits. Id.

Second, in regard to the Planning Commission’s public

trust obligations to review Kauai Springs’ use of water, the ICA

found the circuit court’s conclusions “somewhat conflicting” as

to the scope of the Planning Commission’s public trust duties,

given that COL ¶ 63 provided that the record “is devoid of any

evidence that Kauai Springs existing or proposed uses might

affect water resources subject to the public trust,” and COLs ¶¶

71 and 72 suggested that the Planning Commission “may” have

public trust duties. Id. at 422-23, 312 P.3d at 298-99. The ICA

therefore held that COLs ¶¶ 63, 71 and 72 were “incorrect in that

they do not recognize the Planning Commission’s public trust duty

to consider and review Kauai Springs’ water usage in its water

bottling operation.” Id. (emphasis added).

The public trust duty to protect ocean waters is based

on a “combined analysis of article XI, section I and the ‘general

laws’ that delegated duties and responsibilities to the county.”

Id. at 423, 312 P.3d at 299 (citing Kelly v. 1250 Oceanside

Partners, 111 Hawai#i 205, 224-25, 140 P.3d 985, 1004-05 (2006)).

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The ICA concluded that the County’s public trust duty and the

general laws conferring zoning power to the County established

that the Planning Commission “had a duty to conserve and protect

water in considering whether to issue the Use Permit and the

Class IV Zoning Permit[.]” Id. at 425-426, 312 P.3d at 301-02.

The ICA then found that Kauai Springs’ current and

proposed use of the Property “directly affects a public trust

resource.” Id. at 427, 312 P.3d at 303. Thus, the ICA vacated

the circuit court’s COLs ¶¶ 63, 71 and 72 and rejected Kauai

Springs’ claim that the Planning Commission’s public trust

inquiry was limited to whether public resources would be affected

by Kauai Springs’ building on the land. Id.

Third, the ICA considered whether the Planning

Commission applied “the correct standards and criteria in

carrying out its public trust obligations.” Id. The ICA held

that the Planning Commission was required to make “appropriate

assessments and require reasonable measures to protect the water

resources,” to employ a “higher level of scrutiny,” and to place

the burden on Kauai Springs to justify its proposed use of water

in light of the public trust purposes:

Based on our reading of Kelly, Wai~hole I, and in In re Kukui
(Molokai), Inc., we thus hold that the Planning Commission's
decision be initially grounded in the framework of the statutes
and regulatory provisions that authorize the Planning Commission
to act in this instance; in addition thereto, that the Planning

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Commission make appropriate assessments and require reasonable
measures to protect the water resources at issue in this case;

Id. at 429, 312 P.3d at 305 (emphasis in original).

The ICA found that although the Planning Commission’s

Decision and Order cited the applicable criteria for issuing the

permits (citing KCC § 8-20.5 and Planning Commission Rules § 13-

6), the Planning Commission’s denial of the permits was not based

on such criteria. Id. at 429-30, 312 P.3d at 305-06. Rather,

the “Planning Commission essentially required Kauai Springs to

prove that its water usage – and the sale of the water by the

Knudsen Trust and Grove Farm’s operation of the water system –

were legal and met all potentially applicable regulatory

requirements.” Id.

The ICA held that such a requirement was not a

“reasonable measure,” as it “create[d] an obscure and indefinite

burden of proof” and was “completely open-ended as to the

‘applicable law’.” Id. at 431-32, 312 P.3d at 307-08. Thus, the

Decision and Order was arbitrary and capricious. Id.

The ICA further explained that “it was not a reasonable

measure for the Planning Commission to require Kauai Springs to

undertake regulatory action to establish and confirm that other

parties, Knudsen Trust and Grove Farm, were in compliance with

all applicable requirements and regulatory processes,”

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particularly “given the limited and specific concerns raised by

the Water Commission and the PUC.” Id. at 432, 312 P.3d at 308.

The ICA found that although the Water Commission raised some

concerns about issues that could affect the water resource, these

issues were “factual questions that could have been addressed

directly by the Planning Commission.” Id., (emphasis added).

Accordingly, the ICA held that the circuit court’s COL

¶ 41 was correct to the extent that it concluded the Planning

Commission did not consider the proper criteria. Id. at 433, 312

P.3d at 309. The ICA vacated the remaining portion of COL ¶ 41

to the extent it suggested standards inconsistent with the ICA’s

opinion. Id.

The ICA held that the circuit court was correct in

concluding that the Planning Commission’s: COL ¶ 3 (“land use

permit process should insure that all applicable requirements and

regulatory processes related to water rights” are complied with),

and COL ¶ 4 (there was no substantive evidence that Kauai Springs

“has any legal standing and authority to extract and sell the

water on a commercial basis”) were wrong as a basis for denying

the permits.13 Id.

13
The ICA then vacated the circuit court’s FOF ¶ 54, which misstated
the Decision and Order and the information provided by the Water Commission,
and vacated the circuit court’s COLs ¶¶ 73 and 74, which determined that the
Water Commission and PUC had not raised substantial concerns about the permit
application. Id.

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In regard to the Planning Commission’s claim that the

circuit court erred in concluding that Kauai Springs met the

specific criteria set forth for the permits in the CZO and the

Planning Commission Rules (COLs ¶¶ 43, 45, 59), the ICA explained

that the circuit court’s conclusions “appear to hold that Kauai

Springs met the regulatory criteria . . . for issuing the

permits.” Id. at 434, 312 P.3d at 310. However, the ICA again

stated that the Decision and Order did not “address in any

substantive way” the regulatory criteria. Id. Therefore, the

ICA concluded that “it would be more appropriate to allow the

Planning Commission to consider and decide whether Kauai Springs

can carry its burden in meeting the requirements[.]” Id. The

ICA thus vacated the challenged COLs and remanded to the Planning

Commission to consider Kauai Springs’ application for the three

permits based on the specific criteria established in the CZO and

the Planning Commission Rules. Id.

IV. Application

A.

In its Application to this court, Kauai Springs raised

two issues for consideration: 1) whether the ICA gravely erred in

concluding that Kauai Springs impliedly assented to extend the

designated time periods for consideration of the Use and Class IV

Zoning permits; and 2) whether the ICA gravely erred in remanding

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the case to the Planning Commission, where the Planning

Commission already had the opportunity to make the relevant

inquiries and denied the three permits based on reasons that the

circuit court and ICA concluded were “unreasonable, arbitrary and

capricious.”

Regarding the first issue, Kauai Springs maintained

that HRS § 91-13.5(e) does not permit extending the relevant

deadlines based on an applicant’s assent. Kauai Springs argued

that the legislature’s concern for flexibility in rulemaking,

which the ICA cited, was satisfied by the option for counties to

opt out of setting maximum time periods for consideration of

permits.

Even assuming that an applicant could assent to an

extension, Kauai Springs argued that the ICA erred in construing

“post-approval cooperation” to “imply assent” to an extension of

the deemed approved deadlines for the Use and Class IV Zoning

permits. Kauai Springs contended that by the time it had

purportedly assented to the extensions by conduct, the Use and

Class IV Zoning permits had already “vested” and been deemed

approved.

Finally, Kauai Springs noted that the ICA did not

identify any limitation to the extension of deadlines for the Use

and Class IV Zoning permits on remand. Kauai Springs argued that

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remanding for consideration of the Special Permit is futile,

given that only eight days remain before the deadline for that

permit expires.

In regard to the second issue, Kauai Springs asserted

that the ICA’s decision to remand the case “rests on its

incorrect conclusion [that] the circuit court did not recognize”

the Planning Commission’s public trust duties. Kauai Springs

argued that the circuit court clearly recognized its public trust

duty, and it was appropriate for the circuit court to state that

the Planning Commission “may” have had public trust duties

“because it was not its duty to define the exact extent of [its]

Kelly duties.” Rather, it was the circuit court’s duty to

determine whether the Planning Commission made “appropriate

assessments” and “reasonable measures,” and whether the Planning

Commission’s denial of the permits was “unreasonable, arbitrary,

or capricious.”

Kauai Springs maintained that the Planning Commission

possessed all of the necessary information to act on the permits

and should not have been permitted to base its denial on a lack

of information. Kauai Springs concluded that “the ICA’s opinion

serves as a blueprint for agency abuse under the guise of the

public trust in every case,” by allowing an agency to “issue an

unreasonable and arbitrary denial” and then “argue[] that its own

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Order was lacking” because the applicant failed to seek the

“right information.”

B.

On the first issue, the Planning Commission responded

that Kauai Springs’ conduct was reasonably interpreted as

manifesting its assent to delaying final action on the Use and

Class IV Zoning permits. The Planning Commission also argued

that it would have been inconsistent and illogical for the

Legislature to permit counties to opt out of establishing

deadlines entirely, while precluding counties from permitting

extensions of any deadlines based on the circumstances of the

application and the applicant’s assent.

In regard to the ICA ordering a remand without setting

a time limit for the Planning Commission’s consideration on

remand, the Planning Commission noted that the ICA “remanded the

case for the Planning Commission’s review under specific

standards and criteria, and that review necessarily will take

time.”

On the second issue, the Planning Commission argued

that the ICA properly remanded the case upon finding the circuit

court’s conclusions to be erroneous. The Planning Commission

argued that the circuit court did not recognize the Planning

Commission’s public trust duties under Kelly, as demonstrated by

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COL ¶ 63, providing that “the Record . . . is devoid of any

evidence that Kauai Springs[’] existing or proposed use might

affect water resources subject to the public trust.” COL ¶ 63

was erroneous because the record clearly contained evidence that

Kauai Springs’ existing and proposed use of the Property directly

affected a public trust resource.

The Planning Commission further argued that despite

Kauai Springs’ claim that the Commission argued “its own process

was inadequate,” the Commission consistently considered its

public trust duties, and Kauai Springs failed to carry its burden

of establishing that its use of water was inconsistent with the

public trust.

V. Standard of Review

A. Statutory Interpretation

“The interpretation of a statute is a question of law

reviewable de novo.” Franks v. City & Cnty. of Honolulu, 74 Haw.

328, 334, 843 P.2d 668, 671 (1993). This court's construction of

statutes is guided by the following rules:

When construing a statute, our foremost obligation is to
ascertain and give effect to the intention of the
legislature which is to be obtained primarily from the
language contained in the statute itself. We must read
statutory language in the context of the entire statute and
construe it in a manner consistent with its purpose. When
there is doubt, doubleness of meaning, or indistinctiveness
or uncertainty of an expression used in a statute an
ambiguity exists. If the statutory language is ambiguous or
doubt exists as to its meaning, courts may take legislative
history into consideration in construing a statute.

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Id., at 334-35, 843 P.2d at 671-72 (quotation marks and citations

omitted). “It is fundamental in statutory construction that each

part or section of a statute should be construed in connection

with every other part or section so as to produce a harmonious

whole.” State v. Davis, 63 Haw. 191, 196, 624 P.2d 376, 380

(1981).

B. Agency appeals

Review of a decision made by a court upon its review of an
administrative decision is a secondary appeal. The standard
of review is one in which this court must determine whether
the court under review was right or wrong in its decision.

To determine if the decision under review is right or wrong,
we apply the standards set forth in HRS § 91–14(g) to the
agency's decision.

Leslie v. Bd. of Appeals of the Cnty. of Haw., 109 Hawai#i 384,

391, 126 P.3d 1071, 1078 (2006) (quotation marks and citations

omitted). HRS § 91-14(g) (2012) provides:

(g) 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; or
(2) In excess of the statutory authority or jurisdiction
of the agency; or
(3) Made upon unlawful procedure; or
(4) Affected by other error of law; or
(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.

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Additionally,

[i]t is well settled that in an appeal from a circuit
court's review of an administrative decision the appellate
court will utilize identical standards applied by the
circuit court. The clearly erroneous standard governs an
agency's findings of fact. An agency's findings are not
clearly erroneous and will be upheld if supported by
reliable, probative and substantial evidence unless the
reviewing court is left with a firm and definite conviction
that a mistake has been made.

The courts may freely review an agency’s conclusions of law.

Leslie, 109 Hawai#i at 391, 126 P.3d at 1078 (quotation marks,

brackets and citations omitted). See Save Diamond Head Waters LLC

v. Hans Hedemann Surf, Inc., 121 Hawai#i 16, 24, 211 P.3d 74, 82

(2009).

Conclusions 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 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). Save Diamond Head Waters

LLC, 121 Hawai#i at 24, 211 P.3d at 82. Mixed questions of law

and fact are “‘reviewed under the clearly erroneous standard

because the conclusion is dependent upon the facts and

circumstances of the particular case.’” Id. at 25, 211 P.3d at

83 (quoting Del Monte Fresh Produce (Haw), Inc. v. Int’l

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Longshore & Warehouse Union, 112 Hawai#i 489, 499, 146 P.3d 1066,

1076 (2006)).

A court reviewing the decision of an agency should

ensure that the “agency . . . make its findings reasonably clear.

The parties and the court should not be left to guess . . . the

precise finding of the agency.” In re Water Use Permit

Applications, 94 Hawai#i 97, 157, 9 P.3d 409, 469 (2000)

(“Wai~hole I”) (quoting In re Kauai Elec. Div. of Citizens

Utilities Co., 60 Haw. 166, 183, 590 P.2d 524, 537 (1978)). An

agency's findings should be “sufficient to allow the reviewing

court to track the steps by which the agency reached its

decision.” Kilauea Neighborhood Ass’n v. Land Use Comm’n, 7 Haw.

App. 227, 230, 751 P.2d 1031, 1034 (1988). See also In re

Wai#ola O Mokoka#i, Inc., 103 Hawai#i 401, 432, 83 P.3d 664, 695

(2004) (explaining that any presumption of validity, given to an

agency's decision, “presupposes that the agency has grounded its

decision in reasonably clear” findings of fact and conclusions of

law).

C. Public trust

Review of an agency decision under the public trust

doctrine requires additional rigor. “Clarity in the agency’s

decision is all the more essential ‘in a case such as this where

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the agency performs as a public trustee and is duty bound to

demonstrate that it has properly exercised the discretion vested

in it by the constitution and the statute.’” Wai~hole I, 94

Hawai#i at 158, 9 P.3d at 470 (quoting Save Ourselves, Inc. v.

La. Envtl. Control Comm’n, 452 So. 2d 1152, 1159 (La. 1984)).

[T]he special public interests in trust resources demand
that this court observe certain qualifications of its
standard of review. As in other cases, agency decisions
affecting public trust resources carry a presumption of
validity. The presumption is particularly significant where
the appellant challenges a substantive decision within the
agency’s expertise as “clearly erroneous,” “arbitrary,”
“capricious,” or an “abuse of discretion.”

The public trust, however, is a state constitutional
doctrine. As with other state constitutional guarantees,
the ultimate authority to interpret and defend the public
trust in Hawai#i rests with the courts of this state.

Wai~hole I, 94 Hawai#i at 143, 9 P.3d at 455 (citations omitted)

(emphasis added).

In light of the duty imposed on the state under the

public trust doctrine, we have stated we must take a “close

look” at agency decisions that involve the public trust. In re

Water Use Permit Applications, 105 Haw. 1, 16, 93 P.3d 643, 658

(2004) (“Wai~hole II”), cited by In re Contested Case Hearing on

Water Use Permit Application Filed by Kukui (Molokai), Inc.,

116 Hawai#i 481, 490-91, 174 P.3d 320, 329-30 (2007) (“Kukui

(Molokai), Inc.”).

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Questions of constitutional law require the court to

“exercis[e] its own independent judgment based on the facts of

the case” under the right or wrong standard. Kelly, 111 Hawai#i

at 221, 140 P.3d at 1001 (quotation marks and brackets omitted).

“Under the right or wrong standard, this court examines the facts

and answers the question without being required to give any

weight to the trial court’s answer to it.” Id. (quotation marks

and brackets omitted).

VI. Discussion

A.

The first issue raised is whether the ICA gravely erred

in holding that Kauai Springs assented, through verbal and

nonverbal conduct, to extend the automatic approval deadlines for

the Use and Class IV Zoning permits.

1.

HRS § 91-13.5(a) requires state and county agencies to

adopt rules specifying a maximum time period for granting or

denying a business or development-related permit. The statute

provides that permits are “deemed approved” if the issuing agency

fails to take action within the specified time period.

HRS § 91-13.5(c). In conjunction thereto, KCC §§ 8-19.5(g) and

8-19.6(e) provide that an application that is not acted upon

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within the prescribed time limits (120 days for a special permit,

90 days for a use permit) is “deemed approved” unless the

applicant assents to a delay. (Emphasis added).

Kauai Springs maintains that these ordinances

permitting assent to a delay are in conflict with HRS § 91-13.5

and are therefore invalid. In support of this argument, Kauai

Springs relies on HRS § 91-13.5(e), which provides that the

established time period “shall be extended in the event of a

national disaster, state emergency, or union strike, which would

prevent the applicant, the agency, or the department from

fulfilling application or review requirements.” Thus, Kauai

Springs maintains that the legislature authorized no other

exception to the automatic approval deadline other than those

circumstances specified in the statute.

“Courts may take legislative history into consideration

in construing a statute.” Life of the Land, Inc. v. City Council

of City & Cnty. of Honolulu, 61 Haw. 390, 447, 606 P.2d 866, 899

(1980), see also Franks, 74 Haw. at 335, 843 P.2d 671-72. The

legislative history of HRS § 91-13.5 demonstrates that the

legislature was concerned that the automatic approval process

should not affect the agency’s ability to make an accurate

determination on the application, and therefore contemplated that

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any established deadline could be extended with the assent of the

parties.

When HRS § 91-13.5 was adopted in 1998, its purpose was

“to take constructive steps to improve Hawaii’s business climate”

and to address concerns about the “lengthy and indeterminate time

required for business and development-related regulatory

approvals[.]” 1998 Haw. Sess. Laws Act 164, § 2 at 613. Thus

the statute was intended “to require the establishment of maximum

time periods for the review and approval of all business and

development-related permit approvals,” in order “to provide all

parties with a greater level of certainty of the time required

for review and final determination by an agency[.]”14 Id.

The committee reports on the bill indicate that the

legislature was concerned with balancing the need to streamline

the permit application process with the need for agencies to

properly and thoroughly consider each application. The

conference committee recognized “the continued concerns of some

that automatic permit approval will be misused to short-circuit

public input processes.” Conf. Comm. Rep. No. 127, in 1998

Senate Journal, at 799. The committee noted that such concerns

14
The ICA noted that the County had adopted maximum time periods for
the Planning Commission to act on the permits involved in this case prior to
the adoption of HRS § 91-13.5. Kauai Springs, 130 Hawai#i at 418, 312 P.3d at
294.

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should be addressed by the agencies themselves: “Your Committee

is confident that agencies will account for the preservation of

such processes in their rulemaking.” Id. Similarly, the Senate

standing committee noted that “[i]n streamlining the approval

process,” the committee was “also mindful of environmental

concerns.” S. Stand. Comm. Rep. No. 2760, in 1998 Senate

Journal, at 1121. The committee clarified that the bill was “not

intended to jeopardize the environment” and was “intended to

allow for the continued safeguard of legitimate review and public

comment on those issues.” Id. Therefore, the legislature was

concerned that the automatic approval process should not affect

the agency’s ability to make an accurate determination on the

application.

Additionally, in 2005, HRS § 91-13.5(c) was amended to

provide that a delay in acting on the application caused by the

lack of quorum at a regular meeting shall not result in an

automatic approval of the application. 2005 Haw. Sess. Laws Act

68, § 1 at 150. The amendment also provided that “any subsequent

lack of quorum at a regular meeting of the issuing agency that

delays the same matter shall not give cause for further

extension, unless an extension is agreed to by all parties.” Id.

(emphasis added). Thus, the statute contemplates in the context

of automatic approvals that an extension may be granted by

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agreement of the parties, which is analogous to granting an

extension by assent of the applicant. See Black’s Law Dictionary

132 (9th ed. 2009) (defining “assent” as “[a]greement, approval,

or permission”).

Finally, in 2006 the statute was amended to provide

that it does not apply to “[a]ny county or county agency that is

exempted by county ordinance from this section.” HRS § 91-

13.5(e)(2); 2006 Haw. Sess. Laws Act 280, § 2, at 1156. The

purpose of the act was “to allow a county to opt out of the

automatic approval law by adopting an ordinance to exempt the

county as a whole or any county agency from the automatic permit

approval law.” 2006 Haw. Sess. Laws. Act 280, § 1, at 1156. In

adopting this amendment, the legislature explained that it found

automatic approval to be “poor public policy” that “can lead to

negative consequences for the community.” Id. at 1155. Due to

the automatic approval law, applications for development

approvals and other permits “can be granted by default.” Id.

The legislature emphasized that automatic approval was especially

harmful in situations involving complex applications, which

require significant time to consider public input and “various

needs”:

Automatic approval eliminates the opportunity for local
decision making. Applications are often complex and must be
carefully reviewed, which can take significant time. In
many situations, this is difficult because departments are

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understaffed and people serving on boards are volunteers.
Any good decision requires open public input, thorough
discussion, and careful consideration of various needs from
the county government, environmental interests, and
community groups.

Id. (emphases added). The legislature further explained that

even when “a government body unjustifiably fails to take timely

action on an application, . . . the public should not have to

suffer the consequences of having an ill-advised or harmful

project go forward.” Id. In support of its determination that

automatic approval was “poor public policy,” the legislature gave

examples of counties granting applications “because it could not

satisfactorily review the application within the time limits.”

Id. at 1155-56.

Based on the above, the legislative history of HRS §

91-13.5 does not indicate that it prohibits agencies from

considering an applicant’s assent as a reason for extending the

maximum time period for acting on a permit application. See

Waikiki Resort Hotel, Inc. v. City & Cnty. of Honolulu, 63 Haw.

222, 241, 624 P.2d 1353, 1366 (1981) (“A test to determine

whether an ordinance conflicts with a statute is whether it . . .

permits what the statute prohibits.”). On the contrary, the

history of the statute demonstrates that it would be considered

poor public policy for an issuing agency to make a decision on a

complex permit application solely for the purpose of meeting the

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established deadline, where the applicant has assented to an

extension of the deadline and the issuing agency is justified in

taking more time to thoroughly and accurately consider the merits

of the application.15

Accordingly, the ICA correctly determined that the

assent provisions in KCC §§ 8-19.5(g) and 8-19.6(e) do not

conflict with HRS § 91-13.5. Kauai Springs, 130 Hawai#i at 419,

317 P.3d at 295. The Planning Commission was permitted to extend

the time frame for considering Kauai Springs’ application for the

Use and Class IV Zoning permits based on Kauai Springs’ assent to

such an extension.

2.

Having determined that the applicant’s assent is a

valid reason for extending the time frame for acting on permits,

the next issue is whether the ICA correctly determined that Kauai

Springs assented to extending the automatic approval deadlines

for the Use and Class IV Zoning permits in this case. Kauai

Springs, 130 Hawai#i at 419-20, 317 P.3d at 295-296.

15
Given the legislative history of the statute, the canon of
construction that “the express mention of a particular provision may imply the
exclusion of that which is not included” does not support the inference that
the legislature intended to prohibit counties from considering an applicant’s
assent as a reason for delaying a decision on an application. See Int’l Sav.
& Loan Ass’n, Ltd. v. Wiig, 82 Hawai#i 197, 201, 921 P.2d 117, 121 (1996)
(maxim “exists only as an aid to statutory interpretation and its application
should be limited to ascertaining legislative intent which is not otherwise
apparent”).

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The circuit court concluded that Kauai Springs did not

“waive” the automatic approval deadlines or “consent to” or

“affirm” an extension of the deadlines by participating in the

permit application process after the deadlines had passed. The

circuit court concluded that time deadlines can be “waived by

affirmative conduct such as an applicant requesting extra time,”

or by an applicant withdrawing its application. The circuit

court concluded that Kauai Springs did not ask for extra time or

withdraw its application.

As noted by the ICA, the word “assent” is defined to

mean “[a]greement, approval, or permission; esp., verbal or

nonverbal conduct reasonably interpreted as willingness.” Black’s

Law Dictionary 132 (9th ed. 2009). There are different types of

assent, including actual, apparent, constructive, or implied

assent:

actual assent. Assent given by words or conduct intended to
express willingness.
apparent assent. Assent given by language or conduct that,
while not necessarily intended to express willingness, would
be understood by a reasonable person to be so intended and
is actually so understood.
constructive assent. Assent imputed to someone based on
conduct.
express assent. Assent clearly and unmistakably
communicated.
implied assent. Assent inferred from one's conduct rather
than from direct expression.

Id. Although the circuit court referred interchangeably to

“waiver” and “assent,” the concept of waiver is distinct in that

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it is generally defined as an “intentional relinquishment of a

known right.” Coon v. City & Cnty. of Honolulu, 98 Hawai#i 233,

261, 47 P.3d 348, 376 (2002) (quotation marks omitted) (emphasis

added). Although waiver may be “implied . . . by acts and

conduct from which an intention to waive may be reasonably

inferred,” id. (quotation marks and brackets omitted), this is

distinct from “assent,” which is “conduct reasonably interpreted

as willingness” rather than conduct reasonably interpreted as an

intentional relinquishment of a known right.

The ICA held that Kauai Springs assented to a delay in

the final decision on the Use and Class IV Zoning permits by

participating in public hearings, amending its application, and

continuing to negotiate for a conditional Use Permit after the

relevant deadlines had passed, without asserting at any point

that the permits had been automatically approved. Kauai Springs,

130 Hawai#i at 420, 317 P.3d at 296. The ICA determined that

based on the above conduct, which occurred after the deadlines

had passed, the Planning Commission reasonably interpreted Kauai

Springs’ conduct as willingness to extend the applicable

automatic approval deadlines. Id.

However, the ICA’s reliance on post-approval conduct to

find assent is inconsistent with the plain language of the

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relevant ordinances, which provide that Use and Class IV Zoning

permits are “deemed approved” if the application is not acted

upon during the established time frame, unless the applicant

assents to a delay. See KCC §§ 8-19.5(g) and 8-19.6(e). The

applicant’s assent to a delay must occur prior to the deadline.

Permitting an applicant to “assent” to a delay after the fact

would be contrary to the purpose of establishing maximum time

frames, which are intended to benefit permit applicants and “to

provide all parties with a greater level of certainty of the time

required for review and final determination” of an application.

1998 Haw. Sess. Laws Act 164, § 2 at 613.

Under the ICA’s analysis, the time frame for acting on

a permit application could be extended indefinitely based on

conduct occurring after the relevant deadline had already passed;

the ICA provided no limits as to when conduct could not be

interpreted as retroactive assent to an extension of a deadline.

It would also defeat the purpose of providing that “application

approval would be automatic” if the established time frame was

not met, 1998 Haw. Sess. Laws Act 164, § 2 at 613 (emphasis

added), if post-approval conduct could be construed as assenting

to a delay. See Webster’s Third New Int’l Dictionary 148 (1993)

(defining “automatic” as “having a self-acting or self-regulating

mechanism that performs a required act at a predetermined point

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in an operation” or “aris[ing] as . . . apparently necessary

reaction to or consequence of a given set of circumstances”).

If the Use and Class IV Zoning permits in this case

were automatically approved as of October 18, 2006 and November

2, 2006, respectively, then any conduct occurring thereafter

cannot be retroactively applied to establish “assent” to an

extension of the relevant deadlines. Thus, the ICA erred by

relying on post-approval conduct to find that Kauai Springs

assented to an extension of the deadlines.

However, the record in this case demonstrates that

Kauai Springs assented to an extension of the time frame for

considering the Use and Class IV Zoning permits, prior to the

deadlines for those individual permits, as both Kauai Springs and

the Planning Commission treated the application for the three

permits as comprising a consolidated application request. In

accordance with this understanding, the parties agreed, as

repeatedly evidenced by their conduct, that the Planning

Commission would be required to render a decision on the

consolidated application by January 31, 2007, which was the

latest deadline possible for the Special Permit. Under the

circumstances, this was clearly the most reasonable manner to

proceed.

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Kauai Springs submitted a single application for the

three permits. From the outset, it was understood that Kauai

Springs was required to obtain all three permits in order to

continue operating its water bottling facility. The Planning

Department’s cease and desist letter of May 15, 2006 stated that

the department found various violations of the CZO, including the

“activity of processing and packaging without the proper permits”

and the use of the Property “for Industrial processing and

packaging purposes,” which is “not generally permitted within the

Agriculture District.” The landowner, Makana Properties, was

instructed to immediately cease and desist the above use of the

Property.

Soon after, the Planning Department accepted Kauai

Springs’ completed application for the three permits. The Use

Permit and Special Permit were the substantive permits required

in order to permit Kauai Springs’ proposed use, which was not

otherwise permitted in the agricultural district. See KCC § 8-

20.1 (providing that a Use Permit is required to assure proper

integration into the community of uses in a district)16; HRS §

16
KCC § 8-20.1 (1976) provides: “The purpose of the ‘use permit’
procedure is to assure the proper integration into the community of uses which
may be suitable only in specific locations in a district, or only under
certain conditions, or only if the uses are designed, arranged or conducted in
a particular manner, and to prohibit such uses if the proper integration
cannot be assured.”

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205-6 (providing that a Special Permit is required to permit

“certain unusual and reasonable uses” within the agricultural

district).17 The Class IV Zoning Permit was simply a procedural

requirement of a Use Permit in the agricultural district.

See KCC § 8-19.1 (prohibiting any activity or use regulated by

the CZO without first obtaining the required zoning permit).18

Thus, in order for Kauai Springs to validly operate its

water bottling facility in the agricultural district, Kauai

Springs was required to obtain all three permits. Kauai Springs

would not have been able to operate legally with just the Use

Permit after October 18, 2006, or with just the Use Permit and

Class IV Zoning Permit after November 2, 2006. Rather, Kauai

Springs was required to also obtain the Special Permit, which had

the latest review deadline of January 31, 2007.

From the Planning Commission’s position, it would have

been illogical and impractical to decide separately upon the Use

Permit and Special Permit, given the similarity of the permits’

17
HRS § 205-6 (Supp. 2006), entitled “Special Permit,” provides that
“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,” provided that “the use would promote the
effectiveness and objectives” of Chapter 205.
18
KCC § 8-19.1 (1976) provides: “No person shall undertake any
construction or development or carry on any activity or use, for which a
zoning permit is required by this Chapter, or obtain a building permit for
construction, development, activity or use regulated by this Chapter, without
first obtaining the required zoning permit.”

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requirements. A use permit may be granted only if the Planning

Commission finds that the activity or use “is a compatible use”

and is not detrimental or injurious to the general welfare of the

community, neighborhood, land or waters. KCC § 8-20.5.

Consideration of use permits are guided by the Kauai General

Plan, which guides all zoning decisions pursuant to HRS § 46-4

and requires the County to “practice careful stewardship of the

island’s land and waters.”19 Kauai General Plan at Chapter 2,

available at http://www.kauai.gov/Portals/0/planning/Ch2.PDF.

Similarly, a special permit may be granted only if the

Planning Commission finds that the proposed use is “an unusual

and reasonable use of land,” after considering factors such as

whether the proposed use is suitable for the uses permitted

within the district or would adversely affect the surrounding

property. Planning Commission Rules § 13-6. As with use

permits, special permits are guided by more general objectives;

special permits may only be granted for uses that “promote the

effectiveness and objectives” of HRS Chapter 205, which provides

that its “overarching purpose” is to “protect and conserve

19
Pursuant to KCC § 7-1.2 (2000), the General Plan “states the
County’s vision for Kaua#i and establishes strategies for achieving that
vision.” “All actions and decisions undertaken by the County Council and the
County Administration, including all County departments, agencies, boards and
commissions, shall be guided by the vision statement, policies, and the
implementing actions of the General Plan.” KCC § 7-1.4 (2000).

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natural resources and foster intelligent, effective, and orderly

land allocation and development.” See HRS § 205-6(c); Curtis v.

Bd. of Appeals, Cnty. of Haw., 90 Hawai#i 384, 396, 978 P.2d 822,

834 (1999).

Given the similarities in standards for use and special

permits, it was reasonable for all parties to expect that the

Planning Commission would rely on common information to render

consistent decisions on both permits. It would have been

incongruous for the Planning Commission to have rendered a

decision on the Use Permit by October 18, 2006, but to continue

deliberating on the Special Permit until January 31, 2007, when

both permits required consideration of similar standards. None

of the parties treated the application as if the Planning

Commission’s decision-making would be divisible in this way.

Consistent with the expectation that the three permits

would be considered together rather than separately, the Planning

Commission accepted public oral testimony on the application in

its entirety at the public hearings on August 8, 2006, September

26, 2006, November 14, 2006, and January 23, 2007. The minutes

indicate that the public was permitted to testify generally on

the application as a whole and was not restricted to testifying

on any particular permit. Additionally, members of the public

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were permitted to continue commenting on the Use Permit after the

purported deadline for the permit had passed.

Kauai Springs’ conduct also confirms its expectation

that the Planning Commission would treat the three permits as

part of a single application. Although Kauai Springs’ conduct

subsequent to the established time frame for the Use and Class IV

Zoning permits cannot be used to establish its post-deadline

assent to an extension of the automatic deadlines, Kauai Springs’

subsequent conduct was clearly consistent with and evidence of an

earlier mutual agreement between the Planning Commission and

Kauai Springs, from the onset of the application process, to

treat the application for the three permits as a consolidated

application and to allow the Planning Commission to render a

decision on the application based on the time frame for the

Special Permit.

At the November 14, 2006 hearing, after the Use Permit

and Class IV Zoning Permit deadlines would have passed absent the

applicant’s assent, counsel for Kauai Springs amended the

application request, from requesting permission to bottle 5,000

gallons a day to 1,000 gallons a day. Subsequently at the

November 28, 2006 public hearing, counsel for Kauai Springs

continued to negotiate for the Planning Commission to grant the

Use Permit, informing the Planning Commission that Kauai Springs

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would be willing to accept certain conditions with the permit.

There was no indication that Kauai Springs was proceeding upon a

premise that the Use Permit had already been granted. At the

same hearing, the Planning Commission stated, and there was no

disagreement from Kauai Springs, that the Planning Commission was

required to act on the application by January 31, 2007.

In a letter dated November 28, 2006, counsel for Kauai

Springs wrote to the Planning Commission, confirming that Kauai

Springs was retracting its earlier amendment to the application

and was again asking for permission to bottle a maximum of 5,000

gallons per day. Counsel wrote that he was “looking forward to

coming to agreeable terms that are acceptable to all parties

involved.” In a letter dated December 1, 2006, counsel continued

to negotiate the granting of the Use Permit, suggesting specific

language for the proposed “non-transferability” condition.

At the January 23, 2007 meeting, the Planning

Commission considered the Planning Department’s recommendation to

deny all three permits. Counsel for Kauai Springs reacted to the

recommendation by stating that he was “really surprised.”

Counsel also stated that he believed the Planning Department

planner had not had sufficient time to consider the application.

Counsel did not argue that the Use and Class IV Zoning permits

had already been approved by operation of the automatic approval

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ordinances. On the contrary, counsel indicated the Planning

Commission could take more time to “work[] with conditions[.]”

At the same meeting, the Planning Department informed

the Planning Commission that the “absolute deadline” for acting

on the Special Permit was January 31, 2007. There was no

disagreement or discussion regarding whether the other two

permits had already been deemed approved. Consistent with the

actions of all parties throughout the permit proceedings, the

Planning Commission’s Decision and Order found that “[t]he

absolute deadline for action on the application based on

procedures for action on Special Permits” was January 31, 2007.20

20
Following the entry of the Decision and Order, the Planning
Commission considered Kauai Springs’ request for reconsideration. At the
reconsideration meeting on February 13, 2007, counsel for Kauai Springs did
not take issue with the Planning Commission’s finding that the absolute
deadline for acting “on the application” was January 31. Rather, counsel
continued to argue that the Planning Commission should grant all three
permits, and specifically argued that the Commission should continue the
matter for consideration of the issues raised by OHA in its letter to the
Planning Commission.
When the Planning Commission responded that voting for
reconsideration would put the Planning Commission in violation of the January
31 deadline, counsel stated that Kauai Springs “would certainly be willing to
waive something to avoid a hasty decision[.]” Counsel also demonstrated that
he was aware of the automatic approval rules, by stating that Kauai Springs
was not attempting to have the Planning Commission open the matter for
reconsideration in order to argue that the Planning Commission was in
violation of the automatic approval rule and that the application was
therefore deemed approved: “We are not trying to have you open it today and
then argue that that’s an automatic approval[.] [W]e want to get this right.
We believe there are important issues to be resolved. We are not trying to
sneak anything by here.” Counsel and the Planning Commission both agreed
that Kauai Springs could agree to an extension of the January 31 deadline if
the request for reconsideration was granted.

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Thus, Kauai Springs’ conduct evidences an assent

agreement to consolidate the Planning Commission’s consideration

of the three permits into a single application that the Planning

Commission would render a decision upon by January 31, 2007.

Kauai Springs therefore assented to an extension of the time

frame for decision on the Use and Class IV Permits, and the

Planning Commission timely rendered its decision on all three

permits.21

B.

1.

The second issue raised by Kauai Springs’ Application

is whether the ICA gravely erred in remanding the case to the

Planning Commission for additional findings. Kauai Springs

questions whether a permit can be denied “for reasons every court

concluded were unreasonable, arbitrary and capricious” “[w]hen an

agency has the opportunity to make every inquiry of an applicant

that it desires,” and whether that agency “can claim that its own

process was lacking[]” when that denial is challenged. The

application also challenged the ICA’s determination that the

21
Amici contend that “deeming Kauai Springs’ applications
‘automatically approved,’. . . would wrongly penalize . . . the public trust
and . . . therefore, run afoul of the constitution . . . .” In light of our
determination that Kauai Springs assented to an extension of the time frame
for decision on the consolidated permits and the Planning Commission timely
rendered its decision, we do not address this argument.

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circuit court failed to recognize the Planning Commission’s

duties under the water resources public trust. Essentially, the

Application contends that, given that the ICA agreed with the

circuit court that the Decision and Order was arbitrary and

capricious, remand is unwarranted.

To address Kauai Springs’ contentions, we first address

general principles and factors that an agency must consider when

reviewing a permit for the use of a public resource, and then

examine whether a decision to deny permits can be predicated upon

the lack of information. Second, we consider whether the permits

were denied upon grounds that were “unreasonable, arbitrary and

capricious.” Third, we determine whether the case should be

remanded to the Planning Commission for clarification of its

findings of fact and conclusions of law in accordance with the

public trust doctrine.

2.

a.

The Hawai#i Constitution “adopt[s] the public trust

doctrine as a fundamental principle of constitutional law[.]”

Wai~hole I, 94 Hawai#i at 132, 9 P.3d at 444. Article XI,

section 1 declares that “all public resources are held in trust

by the state for the benefit of its people” and mandates that the

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“State and its subdivisions shall conserve and protect” the

State’s water resources.22 (Emphasis added). Article XI,

section 7 reiterates that “[t]he State has an obligation to

protect, control and regulate the use of Hawaii’s water resources

for the benefit of its people.”

“In Hawaii, this court has recognized . . . a distinct

public trust encompassing all the water resources of the

State.”23 Wai~hole I, 94 Hawai#i at 133, 9 P.3d at 445. “[T]he

public trust doctrine applies to all water resources without

exception or distinction.” Id. at 133, 9 P.3d at 445 (emphasis

added). “The state water resources trust thus embodies a dual

mandate of 1) protection and 2) maximum reasonable and beneficial

use.” Id., 94 Hawai#i at 139, 9 P.3d at 451. The public trust

22
Article XI, section 1 of the Hawai#i Constitution provides:

For the benefit of present and future generations, the State
and its political subdivisions shall conserve and protect
Hawaii’s natural beauty and all natural resources, including
land, water, air, minerals and energy sources, and shall
promote the development and utilization of these resources
in a manner consistent with their conservation and in
furtherance of the self-sufficiency of the State.

All public natural resources are held in trust by the State
for the benefit of the people.
23
“The public trust in the water resources of this state . . . has
its genesis in the common law.” Wai~hole I, 94 Hawai#i at 130, 9 P.3d at 442.
See King v. Oahu Ry. & Land Co., 11 Haw. 717, 725 (Hawai#i Rep. 1899) (holding
that “[t]he people of Hawaii hold the absolute rights to all its navigable
waters and the soils under them for their own common use,” and “[t]he lands
under the navigable waters in and around the territory of the Hawaii
Government are held in trust for the pub

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/2655285. Public record. Not legal advice.