HomeMy WebLinkAboutCOM 0683.000 2006-2008 BRENDA J. FORD °~•"•!!r, Phone: (808) 326-5684
Council Member Fax: (808) 329-4786
District 7 -Central Kona E-Mail: bford@co.hawaii.hi.us
•••j~•p,•M'~
HAWAII COUNTY COUNCIL
County of Hawai `i
Kailua Trade Center ~ rp
75-5706 Hanama Place, Suite /09 ~
Kailua-Kona, Hawaii 96740
fV
DATE: September 19, 2007 ~
TO: Pete Hoffinann, Chairman, and
Members of the Hawaii County Council
FROM: Brenda J. Ford, Council Member
RE: Discussion on the Hawaii Supreme Court Opinion NO. 27407 in the Hawaii Superferry
(EIS) case, The Sierra Club vs. The Department ofTransportation ofthe State ofHawai'i
(CIV. NO. OS-1-0114, (Appeal from the 2"d Circuit Court -Maui). I request Corporation
Counsel's legal opinion on the impact of the Hawaii Supreme Court opinion on Hawaii
County.
To assist with the discussion, I am attaching the relevant portions of the Hawaii Supreme
Court Opinion NO. 27407.
I anticipate about one hour for the discussion that will include Corporation Counsel.
Please agendize this discussion for the Public Works and Intergovernmental Relations
Committee on October 2, 2007.
Comm. No. ~ $3
Ref. To:
Re#. Uate-~`
Serving the /nterests ojthe People of Our Island
Hawai `i County Is An Equal Opportunity Provider And Employer
THE SUPREME COURT OF THE STATE OF HAWAII
THE SIERRA CLUB, a California non-profit corporation
registered to do business in the State of Hawaii; MAUI
TOMORROW, INC., a Hawai'inon-profit corporation; and the
KAHULUI HARBOR COALITION, an unincorporated association,
Plaintiffs-Appellants
vs.
THE DEPARTMENT OF TRANSPORTATION OF THE STATE OF
HAWAII; BARRY FUKUNAGA, in his capacity as Director of
the DEPARTMENT OF TRANSPORTATION OF THE STATE OF
HAWAII; MICHAEL FORMBY in his capacity as Deputy Director
for Harbors of the DEPARTMENT OF TRANSPORTATION OF
THE STATE OF HAWAI'I;~ and HAWAII SUPERFERRY, INC.,
Defendants-Appellees
NO. 27407
APPEAL FROM THE SECOND CIRCUIT COURT
(CIV. NO. 05-1-0114)
AUGUST 31, 2007
MOON, C.J., LEVINSON, NAKAYAMA, ACOBA, AND DUFFY, JJ.
OPINION OF THE COURT BY DUFFY J.
I. BACKGROUND
The Hawaii Superferry project generally involves aninter-island ferry service between
the islands of Oahu, Maui, Kauai, and Hawaii, using hazbor facilities on each island.
According to a permit application filed with the Public Utilities Commission (PUC) on
July 22, 2004, Hawaii Superferry, Inc. has proposed to develop and operate a high-
speed roll-on/roll-off ferry service, using two vessels, capable of cazrying up to 866
passengers and 282 cars, or 26 trucks or buses and 65 cazs per trip. As a result of
negotiations between the State and Hawaii Superferry, Inc., DOT concluded that several
improvements to Kahului Hazbor were necessary to accommodate the Superferry project,
including the construction of a removable bazge to Pier 2 of the harbor and other
improvements to assist in Superferry operations. According to DOT, "[t]he state
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anticipates the barge will cost as much as $10 million," and the State of Hawai' i has
allocated a total of approximately $40,000,000 in state funds for improvements to the
four harbors that will be utilized by the Superferry project.
Appellants, consisting of two nonprofits and one unincorporated association, aze
environmental groups whose members use the area around Kahului harbor in various
ways. The Sierra Club is one of the nation's largest environmental organizations, with
over 700,000 members, approximately 5,000 of which live in Hawaii. The Sierra Club
has a Hawaii Chapter and a Maui group, which aze involved in educating the public
about Hawaii's natural resources through hikes, exploring wild places and natural
resources, restoring and preserving eco-systems through service trips, and protecting
open space through lobbying and litigation. Maui Tomorrow is described by a member as
a "Maui island-wide environmental group which has participated in numerous
environmental issues including but not limited to the environmentally sound growth of [ ]
airport and harbor infrastructures." The Kahului Hazbor Coalition is "an organization of
farmers, businessmen, recreational users and citizens formed out of concern about the
increased risks of alien species introductions through Kahului Hazbor."
Appellants challenge, pursuant to HRS § 343-7(a) (1993), DOT's determination that the
improvements to Kahului Harbor to accommodate the Superferry project aze exempt
from the requirements of HEPA, thus obviating the need for an EA.
A. The Hawaii Environmental Procedure Act
HEPA, which was patterned after the National Environmental Policy Act of 1969
(HEPA), 42 U.S.C. § 4321-4370(f) (2000), was passed into law in 1974, 1974 Haw. Sess.
L. Act 246, and codified in HRS chapter 343. The law requires that EAs and
environmental impact statements (EIS) be prepared for development projects that meet
certain criteria. According to A Guidebook for the Hawaii State Enviromnental Review
Process, a publication of the Office of Environmental Quality Control (OEQC),
the law requires that government give systematic consideration to the environmental, social and
economic consequences of proposed development projects prior to allowing construction to begin.
The law also assures the public the right to participate in planning projects that may affect their
community.
Office of Environmental Quality Control, State of Hawaii, A Guidebook for the Hawaii
State Environmental Review Process 6 (2004) [hereinafter Guidebook], available at
http://www. state.hi.us/health/oegc/publications/guidebook.pdf.
The basic framework of HEPA consists of various stages of assessment by the proposing
or accepting agency, each of which may entail additional review procedures.
First, it must be determined whether a project or programme is subject to the
environmental review process in the first place. Projects are subject to the law if they (1)
are either initiated by a government agency ("agency actions") or by a private party who
requires government approvals for the project to proceed ("applicant actions"), and (2)
propose one or more of nine enumerated land uses or administrative acts, known as
"triggers." See HRS § 343-5(a)(1)-(9); Guidebook, su ra, at 9. If a triggering event
occurs, an EA must be prepared, unless the program or project is declared exempt.
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Exemption determinations aze governed by HRS § 343-6(7) (1993), which delegates to
the Environmental Councils the responsibility to "adopt, amend, or repeal" rules which
shall "[e]stablish procedures whereby specific types of actions, because they will
probably have minimal or no significant effects on the enviromnent, are declared exempt
from the preparation of an assessment." HRS § 343-6(7). The exemption rules provide for
10 classes of exempt action, specified in HAR § 11-200-8(A)(1)-(10) (1996), available at
http://www.state.hi.us/health/about/rules/11-200.htm1
Agencies are also directed to develop their own lists of specific types of actions that fall
within the exempt classes, which are reviewed by the Environmental Council and must be
"consistent with both the letter and intent expressed in the exempt classes [of the EIS
Rules] and chapter 343." HAR § 11-200-8(D).
An agency may declare an action exempt from the preparation of an EA provided that the
agency obtains the advice of "other outside agencies or individuals having jurisdiction or
expertise as to the propriety of the exemption." HAR § 11-200-8(A). The exemption
classes do not apply when "the cumulative impact of planned successive actions in the
same place, over time, is significant, or when an action that is normally insignificant in its
impact on the environment may be significant in a particulazly sensitive environment."
HAR § 11-200-8(B). The exemption process is discussed in more detail infra, in Section
ILC.
When no exemption applies and one of the triggers of HRS § 343-5(a) is met,
environmental review begins with the development of a draft EA. Guidebook, supra at 6.
An EA, defiried in HRS § 343-2, is an informational document prepared by either the
agency proposing an action or a private applicant, which is used to evaluate the possible
enviromnental effects of a proposed action. Id. It must give a detailed description of the
proposed action or project and evaluate direct, indirect, and cumulative impacts, as well
as consider alternatives to the proposed project and describe any measures proposed to
minimize potential impacts. Id. Once completed, the public has thirty days to review and
comment on a draft EA. After the draft EA is finalized and public comments responded
to, the agency proposing or approving the action reviews the final EA to determine if any
"significant" environmental impacts aze anticipated. If the agency determines that there
will be no significant environmental impact, it issues a finding of no significant impact
(FONSI), allowing the project to proceed without further study, although a FONSI
determination may be challenged. However, if the agency determines that an action may
have a significant impact, a more detailed EIS must be prepazed. EIS preparation begins
with a notice and comment period to define the scope of the draft EIS. Following this, the
EIS is prepared in draft form by the proposing agency or applicant and becomes finalized
after review by public and government agencies and a period for public comment and
response. The final EIS must then be accepted, by the Governor or Mayor for agency
actions, and by the approving agency for applicant actions. Once the EIS is accepted, the
action may be implemented. Id.
HEPA provides for judicial review at various stages of the process: (1) when no EA is
prepared, (2) when a FONSI is prepazed, (3) and when an EIS is accepted. HRS § 343-
7(a)-(c).
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B. The Project
1. Harbor Improvements
In addition to the certificate of public convenience and necessity received by the PUC,
Superferry also received a "letter of intent" from the Hazbors Division of DOT, dated
December 9, 2004, which outlines the general terms, arrangements, and conditions of a
formal agreement that DOT intended to enter with Superferry.~ The letter sets out the
terms for use of state hazbors by Superferry as well as any equipment used at the harbor;
fees, chazges, and rents to be paid to the State by Superferry; various improvements to the
hazbors that the State "deem[ed] necessary to accommodate the start up" of Superferry's
operations, and which will be the responsibility of DOT; and vazious provisions related to
indemnification, insurance, the assigmnent of rights or obligations under the agreement,
termination of the agreement, the agreement's term, and other matters.
As eventually determined by DOT, the Superferry project requires the following
improvements at Kahului Harbor, the locus of Appellants' HEPA challenge: (1) the
construction and utilization of a removable barge (floating platform) that will be moored
at Pier 2 to provide a platform between the vessel and the pier for passenger loading and
off loading, and which will be configured with a removable raznp for safe vehicle loading
and off loading and (2) operational support to accommodate the Superferry project,
which will include (a) the provision of utility services (water, power, and lighting) on or
adjacent to the pier; (b) security fencing; (c) pavement striping; (d) the placement of
boarding gangway ramps; and (e) the installation of tents at inspection points or customer
waiting azeas.~ Several of these improvements aze also proposed in the "Facility Layout
Study" prepazed for Hawaii Superferry by outside consultants and dated November 22,
2004.
Sometime afrer 1997, DOT prepared a document known as the Kahului Harbor 2025
Master Plan ("Master Plan"). Pursuant to a directive in the EIS Rules, DOT also
developed a drafr EA, dated June 2004, for the "proposed short-term improvements" at
the Kahului Harbor identified in the Master Plan, also described as "those improvements
which will be necessary within the next ten (10) yeazs." The drafr EA, which precedes the
letter of intent, makes no reference to the Hawaii Su erferry project and does not include
an analysis of the improvements associated with it ~ As both pazties attest, the draft EA
has not yet been made into a final EA.
2. DOT's Exemption Determination
Prior to its exemption determination, DOT had consulted with OEQC regarding whether
an exemption from the environmental review process was appropriate for the proposed
improvements. In a letter to Genevieve Salmonson dated November 15, 2004, Fukunaga
stated that DOT "request[s] confirmation from the [OEQC] that the intended
improvements fall within the approved Exemption Classes Established for the State
Department of Transportation." In a reply letter dated November 23, 2004, and with the
subject "Hawaii Superferry Improvements," Salmonson wrote that "OEQC believes that
the proposed improvements fall within the scope of work described in the Department of
Transportation's approved exemption list." Salmonson's letter states OEQC's
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"understand[ing]" that DOT would take the following actions with respect to Kahului
Hazbor: "DOT plans to demolish a portion of one side of the tip of pier 2 to create a notch
in the pier. DOT has received comments on the master plan EA for Kahului Harbor." The
letter continues by stating that "[t]he above actions generally fall under exemption class 6
number 8 and exemption class 8 number 1 of DOT's approved exemption list dated
November 15, 2000."~ The letter also states that OEQC "believes that minor projects
that have independent utility may be declazed exempt even though an on-going
environmental assessment may not have been finalized." Salmonson concluded her letter
by stating "[a]ccordingly, we believe that the Department of Transportation has authority
to declare the actions described above as exempt from the requirement to prepaze an
environmental assessment."
DOT also sent identical letters to two agencies regarding the Kahului Harbor, the
Department of Public Works and Waste Management for the County of Maui and the
Department of Planning for the County of Maui, expressing its intention to proceed with
the Superferry project, as well as explaining the contemplated improvements and
soliciting comments.
On Februazy 23, 2005, in a letter to OEQC Director Salmonson, DOT expressed its
determination that "the operation of Hawaii Superferry at Kahului Harbor ...meets
conditions that permit exemption from environmental review at such location based on
the method of operation planned." The letter described the action under review as "the
requirements and needs associated with hazbor access and use of pier facilities by Hawaii
Superferry Inc., at Kahului Hazbor on the Island of Maui." It set forth its decision as
follows:
Following discussions with Hawaii Superfeny and consultation with State and County agencies
regarding the intended use of the hazbor facility and in consideration of the provisions of Chapter
343, Hawaii Revised Statutes, and Chapter 11-200, Hawaii Administrative Rules, we have
determined that the operation of Hawaii Superferry at Kahului Harbor conforms with the intended
use and purpose of the harbor and meets conditions that permit exemption from environmental
review at such location based on the method of operation planned. The ferry activity at Kahului
Hazbor will use equipment appropriate for a harbor, include only minor facilities improvements and
will be conducted at an existing pier facility that is consistent with the purpose and reason for which
it was originally developed.
DOT also noted that
The installation and result of the minor improvements noted will not produce or create any adverse
air quality, noise or water quality impact. All changes, modifications, additions or adjustments
remain compatible with the uses established for the hazbor and its piers, fall within mazitime
activities that were identified in environmental reviews conducted in conjunction with the original
development of the facilities and conform to the purpose for which the hazbor was built.
DOT explained the legal basis of this decisions as follows:
Pursuant to chapter 343, Hawaii Revised Statutes, and chapter 11-200, Hawaii Administrative
Rules, the Department of Transportation has determined that the subject property will have minimal
or no significant effect on the environment and is therefore exempt from the prepazation of an
environmental assessment. The determination is based on the following Exemption Classes as listed
on the Comprehensive Exemption List for the State of Hawaii Denartment of Transportation
amended November 15.2000.[u] The applicable exemption classes aze as follows:
5
Exemption Class 3: Construction and location of single, new, small facilities or structures
and the alteration and modification of same and installation of new, small, equipment and
facilities and the alteration and modification of the same including but not limited to:
Item 3. Installation of security and safety equipment.
Exemntion Class 6: Construction or placement of minor structures accessory to existing
facilities.
Item 8. Alteration or addition of improvements with associated utilities, which are
incidental to existing hazbor and boat ramp operations, in accordance with master
plans that have met the requirements of Chapter 343, Hawaii Revised Statutes. Such
improvements and associated utilities include concessions, comfort stations,
pavilions, paving, rock walls, fencings, walkways, loading docks, wazehouses, piers,
offices, container freight stations, cranes, fuel lines, lighting, sprinkler and drainage
system.
Before this determination, the County councils of Maui, Kauai, and Hawaii each adopted
Resolutions recognizing potential adverse impacts of the Superferry and calling for the
preparation of an EIS to address and mitigate these impacts. Various other individuals,
including Superintendent Donald W. Reeser, of the Haleakala National Pazk, National
Park Service; the Maui Invasive Species Committee; and the Pacific Whale Foundation,
expressed similaz views to government officials.
3. Hawaii Superferry's Representations Regarding Superferry Operations
In March 2005, John L. Gazibaldi, CEO of Hawaii Superferry, Inc., submitted a letter to
the Chair of the Hawaii Senate Committee on Transportation and Government
Operations, urging the Senator to oppose a Senate Bill that would have required Hawaii
Superferry, Inc. to prepare an EIS for the Superferry. In the letter, Garibaldi discussed
plans undertaken by Hawaii Superferry, Inc. and DOT and expressed his view that
"Hawaii Superferry complies with all Hawaii and Federal environmental regulations."
The letter specifically addresses plans regarding the environment, stating:
Under the terms of an operating agreement with the State of Hawaii, Hawaii Superferry will submit
detailed operational plans prior to the commencement of services to the Harbors Division. The
operational plans will cover all aspects of the interisland ferry service operations and will be jointly
prepared by Hornblower Mazine Services, Inc., the ferry's operator, and CI-I2MHi11, Inc., consulting
engineers. Harbor Divisions will require that the operational plans cover operations at each harbor,
including topics bearing on the environment such as schedules, procedures for security screening
and agricultural inspection hazazdous material handline, and traffic control, as well as pier
and dock usage policies and procedures in general, relating to Hawaii Superferry and other harbor
users and harbor employees. In addition to the requvements of Harbors Division, the operational
plans will cover other environmental topics of utmost importance to Hawaii Superferry such as
alien pest species, whale avoidance and traffic impacts, among others.
Garibaldi also discussed his company's work with "the State Department of Agriculture,
environmental and community groups to develop [Hawaii Superferry's] environmental
policies." Garibaldi further attested that Hawaii Superferry "ha[s] policies in place to
help stop the migration of alien species." Lastly, the letter stated that Hawaii Superferry's
"whale avoidance policy is much stricter than what is required by federal regulations" and
that Hawaii Superferry is "committed to ...procedures in mitigating the movement of
invasive species and ensuring the safety of marine mammals
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2. The Factors that Agencies Making Exemption Decisions Must Consider
The exemption authority derives from HRS § 343-6(7), which states that the
Envirorunental Council "shall adopt, amend, or repeal necessary rules ...which shall .
(7) Establish procedures whereby specific types of actions, because they will probably
have minimal or no significant effects on the environment, are declared exempt from the
preparation of an assessment." HRS § 343-6(7). Pursuant to this statute, the
Environmental Council promulgated a rule governing exemption determinations: HAR §
11-200-8, "Exempt Classes of Action." See supra note 8. The rule sets out ten exempt
classes of action, and specifies that a proposing or approving agency may declare an
action exempt, "provided that" the agency "shall obtain the advice of other outside
agencies or individuals having jurisdiction or expertise as to the propriety of the
exemption," and the action falls within one of the exempt classes specified in the rule.
Before making this determination, an agency must make a preliminazy conclusion to
determine whether a "group of actions" should be "treated as a single action," based on
HAR § 11-200-7. Additionally, HAR 11-200-8(B) specifies that "all exemptions ...are
inapplicable when the cumulative impact of planned successive actions in the same place,
over time, is significant, or when an action that is normally insignificant in its impact on
the environment may be significant in a particularly sensitive environment." HAR § 11-
200-8(B). Lastly, HAR § 11-200-8(D) directs agencies to develop their own lists of
"specific types of actions which fall within the exempt classes," which require approval
of the Environmental Council and must be "consistent with both the letter and intent
expressed in the exempt classes [of the EIS Rules] and chapter 343." HAR § 11-200-
8(D). DOT has developed its own exemption list. See supra note 13.
Therefore, an agency considering whether an action is exempt must make the following
determinations: (1) whether the action being considered is part of a "group of actions"
which must be "treated as a single action," HAR § 11-200-7; (2) whether it falls within an
exempt class of action, either under its own list developed pursuant to HAR § 11-200-
8(D) or that set out in HAR § 11-200-8(A); and (3) whether the exemption is inapplicable
because of the cumulative impact of an action or its impact on a particularly sensitive
environment. In addition to these determinations, an agency must comply with the
requirement that it seek advice.
There is a fourth, additional determination that is implied from the legislative and rule-
based framework. HRS § 343-6(7) delegated to the Environmental Council the authority
to make exemption rules for actions "because they will probably have minimal or no
significant effects on the environment." The Environmental Council, in HAR § 11-200-
8(D), directed other agencies to develop lists of specific types of actions, "as long as
these lists are consistent with both the letter and intent expressed in these exempt classes
and chapter 343, HRS." Moreover, EIS regulations define "exempt classes of action" as
"exceptions from the requirements of chapter 343, HRS, to prepare environmental
assessments, for a class of actions, based on a determination by the proposing agency or
approving agency that the class of actions will probably have a minimal or no significant
effect on the environment." HAR § 11-200-2. In other words, an agency making an
exemption determination must, at least implicitly, determine that the action will
7
"probably have minimal or no significant effects on the environment" not merely that it
fits the description of the exemption category.
This approach is consistent with our caselaw. In Kahana Sunset Owners Assn v. County
of Maui, 86 Hawaii 66, 947 P.2d 378 (1997), this court examined the decision of the
Maui County plazming commission to grant a special management area (SMA) use permit
to a developer without requiring an EA. The development, a 312-unit multi-family
residential development on the island of Maui, required the SMA use permit to instal] a
drainage line beneath a public road that would connect it to an existing culvert beneath
the highway. Id. at 68, 71, 947 P.2d at 380, 383. In analyzing whether the HEPA
exemption applied, this court stated that the "exemption approved by the council ...must
be consistent with both the letter and the intent contained within the administrative rule
exemption."~ Id. at 71, 947 P.2d at 383. Having established that "[i]t is apparent from
the context of the exemptions that the regulations intend to exempt only very minor
projects from the ambit of HEPA," the court concluded that installation of the new
drainage system was "qualitatively incompatible with the types of projects contained in"
the exemption list, and therefore "inconsistent with both the letter and intent of the
administrative regulations." Id. at 72, 947 P.2d at 384. Therefore, Kahana Sunset Owners
Assn makes clear that not only must the exemption list be developed with regard to the
letter and intent of HEPA and its regulations, but so also must individual exemption
detenninations.~ The agency must make a preliminary determination that the action to
be declared exempt is a "minor project" that will "probably have minimal or no
significant effects on the environment." This conclusion is further supported by OEQC's
Guidebook, which, in a sample exemption memo entitled "Declaration of Exemption,"
suggests use of the following statement: "I have considered the potential effects of the
above listed project as provided by Chapter 343, HRS and Chapter 11-200, HAR. I
declare that this project will probably have minimal or no significant effect on the
environment and is therefore exempt from the prepazation of an environmental
assessment.
B. The Merits: Whether Appellees, as a Matter of Law, Complied with HEPA
On the merits, 44 Appellants azgue that DOT's exemption determinations were in
violation of the law because: (1) DOT failed to review the secondary and cumulative
impacts of the project as a whole; (2) DOT failed to apply the significance criteria to the
Superferry project; (3) Appellees admit that Superferry may have significant adverse
impacts, so that an EA is required; (4) the exemptions violate the intent of the categorical
exemptions; (5) DOT failed to consult with agencies and individuals with expertise about
the propriety of the exemptions; and (6) the two selected exemptions relied on are
inapplicable as a matter of fact and law.
Appellees make two principal azguments for upholding the circuit court's conclusion that
DOT complied with HEPA: (1) that DOT followed all proper procedures in issuing its
exemption decision, and therefore met the requirements of HEPA and HAR § 11-200-8
s
and (2) that Appellants' azguments regazding the propriety of the exemptions aze
irrelevant and without merit, because DOT's determination was supported by the record
Before discussing Appellants' points of error, we address Appellees' first argument, the
essence of which has already been discussed in the standazd of review section. Appellees
appear to azgue that HAR § 11-200-8, the rule governing exemptions, allows agencies to
declare an action falling within a designated class exempt "provided only" they claim
"that the agency obtain the advice of other agencies or individuals having jurisdiction or
expertise as to the propriety of the exemption."~ In other words, they equate
compliance with the consultation proviso as satisfaction of the administrative rule, and do
not believe it is within the province of the courts to inquire into the propriety of DOT's
exemption determination. Accordingly, Appellees argue that they have met the
consultation requirement, because DOT sought and received OEQC's advice specifically
pertaining to the harbor improvements, and also sought advice from the Maui Department
of Public Works and Waste Management as well as the Maui Department of Planning.
Appellees' azgument is akin to their position, discussed suyra Section II.C, that the courts
should defer to agency determinations regarding exemptions. However, as elaborated
above, HEPA and its implementing regulations require more than facial compliance with
the consultation proviso and a determination that an action falls within an exempt class.
In addition, an agency must consider the exclusions to the exemption spelled out in HAR
§ 11-200-8(B), and whether the exemption is consistent with the letter and intent of
HEPA because it will "probably have minimal or no significant effects on the
environment," both of which are disputed by Appellants. Because Appellees have
incorrectly characterized the requirements of HEPA and the EIS rules regarding
exemption determinations, Appellees argument for limited review of DOT's actions is
unwarranted.
We now turn to Appellants' principal argument, and in our view the crux of this case, that
the circuit court erred in ruling that DOT had complied with HEPA, because under the
regulatory and statutory framework DOT was required, "in making exemption
determinations, to review all phases of a project as a whole, without segmentation, and to
review the secondazy and cumulative impacts of the project." In short, the dispute is
whether DOT was correct to analyze only the harbor improvements in making its
exemption determination, or was also required to consider the potential environmental
impacts caused by the Hawaii Superferry project.
Appellants' argument on this point is composed of three subparts: (1) DOT failed to
review and analyze the environmental impacts of the Hawaii Superferry project as
whole/connected actions; (2) DOT failed to review the secondary impacts of the Hawaii
Superferry project; and (3) DOT failed to address the exclusions to the exemptions,
which Appellants assert are applicable.
Before addressing these azguments, we note that this issue is dispositive of the case. It is
not disputed that the harbor improvements which propose the use of state funds and
state lands are a triggering "action" under HEPA; the only question is whether an
exemption applied. If DOT was required to consider the Superferry project itself, as
opposed to the hazbor improvements alone, in making this exemption determination, it is
9
cleaz that the exemption would not apply. The fact that Hawaii Superferry, Inc. has
undertaken operating plans and developed policies to minimize its effect on the
environment, see suura Section LB.3, although laudatory, indicates a probability that
absent these voluntary policies, the ferry's operations would have more than minimal
environmental effects. Although we do not take Gazibaldi's comments to that effect as a
direct admission that the Superferry will cause significant effects on the environment,
they make clear that the Superferry project itself were its environmental effects
considered does not meet the standard of an exempt action, i.e., a "minor project" that
will "probably have minimal or no significant effects on the environment." See supra
Section ILC; HAR § 11-200-2; Kahana Sunset Owner's Assn, 86 Hawaii at 71, 947 P.2d
at 383.
1. Connected Actions Under HAR § 11-200-7
Appellants argues that DOT committed legal error in its exemption determination
because it failed to consider the Superferry project and the harbor improvements as a
"single action." In support of this contention, Appellants cite to Kahana Sunset Owners
Assn, which discussed the application of HAR § 11-200-7 in the context of exemption
determinations. As discussed suura, Section ILC, in Kahana Sunset Owners Assn this
court considered whether installation of a drainage pipe under a public street required
environmental review under HEPA, or would fall within an exemption for "[i]nstallation
of drains, sewers and waterlines within streets and highways," on the list of exempt
classes of action developed by the Maui Planning Commission. 86 Hawai i at 71, 947
P.2d at 383. The context of this determination was a request, by the developer, for an
SMA use permit to install a drainage line beneath a public road that would connect it to
an existing culvert beneath the highway and provide a drainage system for the 312-unit
residential development. After determining that the exemption did not apply, based on the
letter and intent of the administrative regulations, see infra Section II.C, so that an EA
was necessary, the court went on to consider the "scope" of the EA. Applying HAR § 11-
200-7, the court concluded that an EA must address the environmental effects of the
entire proposed development, not just the drainage system, reasoning as follows:
HAR § 11-200-7 provides that "[a] group of actions proposed by an agency or an applicant shall be treated
as a single action when: (1) The component actions aze phases or increments of a lazger total undertaking;
[or] (2) An individual project is a necessary precedent for a larger project." In the instant case, the action
proposed by JGL is the entve Napilihau development. The proposed drainage system is part of the larger
project and is a "necessary precedent" for the development. The drainage system has no independent utility.
It would not be constructed except as part of the larger development. Isolating only that particulaz
component of the development for environmental assessment would be improper segmentation of the
project.
Id. at 74, 947 P.2d at 387.
Based on Kahana Sunset Owners Assn, Appellants argue that: (1) HAR § 11-200-7
should apply in this case and (2) when applied, the rule would require that DOT, in
making its exemption determination, consider the environmental effects of the Hawaii
Superferry project, because the hazbor improvements area "necessary precedent" to a
larger action. Appellees do not provide any azgument regazding whether HAR § 11-200-7
10
should apply to DOT's exemption determination. Rather, Appellees seek to factually
disfinguish Kahana Sunset Owners Assn, stating that in that case
the court specifically distinguished [the 'completely new drainage system serving over 300 residences,' id.
At 73, 947 P.2d at 385] from minor change to existing facilities, which would have been exempt. This latter
situation is what is at issue in this case i.e. DOT is making minor improvements to the existing harbor.
Such minor changes to an existing facilities [sic] do not require an EA.
It appears that Appellees do not contest that agencies making exemption determinations
must consider HAR § 11-200-7 as a preliminary step in defining the action at issue. See
supra Section ILC. Rather, they contest its applicability to the facts of the case. HAR §
11-200-7 is part of subchapter 5 of the EIS Rules, which is entitled "Applicability." The
rule commands that "[a] group of actions proposed by an agency or an applicant shall be
treated as a single action" when one of four conditions is met. HAR § 11-200-7. Although
this court in Kahana Sunset Owners Assn applied HAR § 11-200-7 when considering the
scope of the EA that would be required, both the nature of the rule and its placement
within the larger scheme of the EIS rules indicate that it is a threshold determination that
must be made in order to define how to "treat" the action under consideration. We
therefore conclude that it should be applied to exemption determinations.
On these facts, however, there is no "group of actions" to be treated as a single action.
Therefore, HAR § 11-200-7 does not apply. HAR § 11-200-7, entitled "Multiple or
Phased Applicant or Agency Actions" mandates that:
A group of actions proposed by an agency or an applicant shall be treated as a single action when:
A. The component actions are phases or increments of a larger total undertaking;
B. An individual project is a necessary precedent for a lazger project;
C. An individual project represents a commitment to a larger project; or
D. The actions in question are essentially identical and a single statement will adequately address the
impacts of each individual action and those of the group of actions
as a whole.
HAR 11-200-7. The rule discusses situations when a "group of actions ...shall be
treated as a single action." The word "action" is defined in the EIS rules as "any program
or project to be initiated by an agency or applicant." HAR § 11-200-2. While the harbor
improvements certainly constitute an "action," because they were initiated by DOT (an
"agency"~), Appellants have produced no argument to demonstrate that the Superferry
project itself is an "acfion" either because it was initiated by an agency or an applicant.
Appellants have not identified an official request for approval that was required in order
for the project to proceed, making the Superferry itself a "project ...initiated by an .
applicant." 47 HAR § 11-200-2. Therefore, HAR § 11-200-7 does not apply, as there is
no "group of actions" that may be treated as a single action.
Rules like HAR § 11-200-7 are meant to keep applicants or agencies from escaping full
environmental review by pursuing projects in a piecemeal fashion. See Guidebook at 19
("The proposed action must be described in its entirety and cannot be broken up into
component parts which, if each is taken separately, may have minimal impact on the
environment. Segmenting a project in this incremental way to avoid the preparation of an
11
environmental impact statement is against the law."); Kenneth A. Manaster & Daniel P.
Selmi, 2 State Environmental Law § 13.10 (2006) (discussing the problem of
"segmentation" or "piecemealing" of projects, including "situations in which the
agency tries to mask the full nature of its project or divides up what is clearly a larger
action into smaller pieces that will be implemented simultaneously," "where a private
applicant plainly has definite plans for additional, related projects in the future," or where
"a project unquestionably will give rise to later, secondazy actions by other
individuals[.]"). However, because the rule for assessing multiple actions depends on the
formal requirement of discrete "actions," it would appeaz not to apply to projects such as
this one where government plays a facilitative role for a private project that itself does
not constitute an applicant action.
2. Secondary Impacts
Appellants next azgue that the Superferry project must be considered as a secondary
impact of the hazbor improvements. Appellants thus contend that the circuit court's
decision should be reversed because "HDOT, in its exemption determination, never
analyzes the environmental impacts that the[ ]harbor improvements, in facilitating the
Hawaii Superferry project, will have Appellants' argument with respect to
secondary impacts relies on two cases: McGlone v. Inaba, 64 Haw. 27, 636 P.2d 158
(1981), and Ocean Advocates v. U.S. Army Corps of Ensineers, 402 F.3d 846 (9th Cir.
2005).
a. McGlone
In McGlone, a group of concerned persons brought suit to enjoin the Boazd of Land and
Natural Resources (BLNR) from approving construction of underground utilities on
conservation land without an EIS. 64 Haw. at 28, 636 P.2d at 160. The BLNR had
approved a conservation district use application (CDUA) filed by landowners on a
residential lot neaz the Paiko Lagoon Wildlife Sanctuary in East Oahu, to construct and
install underground utilities through an adjacent, state-owned lot over which they had a
perpetual non-exclusive easement in order to serve a house they planned to build on the
residential lot. Id. at 29, 636 P.2d at 160. In approving the CDUA, the BLNR determined
that an EIS was not required because the proposed activity fell under an exemption of the
then-applicable EIS Rules. Id. at 29, 636 P.2d at 161. Although the court ultimately found
that the exemption was proper, in the course of its analysis it explained several concepts
relevant to review of exemption determinations generally.
First, the court discussed the term "significant effect," a term that was then and is
currently used in determining which types of actions may be declared exempt. See HRS §
343-6(7) (1993) (delegating to the environmental council the establishment of procedures
"whereby specific types of actions, because they will probably have minimal or no
significant effects on the environment, aze declared exempt from the preparation of an
assessment" (Emphasis added.)). In reference to the concept of "significant effect," the
court stated that "an agency making such a determination must consider every phase and
every expected consequence of the proposed action," citing EIS regulations. 49 64 Haw.
at 35, 636 P.2d at 164. The concerned citizens had argued that an exclusion to the
exemption should apply because the wildlife sanctuary was a "particulazly sensitive
12
environment" which would be significantly affected by the construction of the
underground utilities and the construction, use, and occupancy of the house. Id. at 36, 636
P.2d at 165.
The BLNR had found that the proposed activities would not have a significant effect on
the sanctuary. Id. at 37, 636 P.2d at 165. In reviewing this determination, the court
followed the BLNR's designation of the construction of the underground utilities as the
"primary impact," id. at 37 n. 14, 636 P.2d at 165 n.14, and the construction, use, and
occupancy of the house as the "secondary impact" because the latter was "incident to
and a consequence of the primazy impact." Id. at 38 n.16, 636 P.2d at 166 n.16. The court
thus stated that "the effects of such 'secondary impacts', like'primary impacts', must be
considered in determining the relative environmental effects." Id. at 38 n.16, 636 P.2d at
166 n.16. Reviewing the alleged effect of these impacts on the Paiko Lagoon, the court
held that the BLNR had not erred in its finding, and that the exemption was therefore
proper. Id. at 39, 636 P.2d at 166-67.
The court in McGlone also discussed what it termed "the limited nature of categorical
exemptions":
As noted earlier, these activities are designated exempt because it is presumed that under ordinary
circumstances there occurs negligible environmental impact. However, what is normally presumed to be
innocuous activities may constitute actions which will significantly affect the environment when done m
"sensitive" areas or under varying circumstances. Merely because the proposed activities here are listed as
exempt does not make it so. The building of a house and the support facilities are only deemed exempt
because it will probably not have a significant effect under the totality of circumstances.
Id. at 36 n.12, 636 P.2d at 165 n.12 (emphasis added).
Therefore, according to McGlone, an agency making an exemption determination must
look beyond an action's facial compliance with an exemption class, and also determine
that the activity will probably not have a significant effect. This is consistent with the
view expressed in Kahana Sunset Owners Assn that exemption determinations "must be
consistent with both the letter and the intent contained within the administrative rule
exemption," 86 Hawaii at 71, 947 P.2d at 383, discussed supra in Section II.C. Moreover,
McGlone makes clear that in making this determination, the agency must consider not
just the effect of an action on the direct site to which the exemption applies (the "primary
impact"), but also secondary impacts that are "incident to and a consequence of the
primary impact."
Based on McGlone, Appellants azgue that "[a]ny purported exempt activity must, by law,
include an analysis of that activity's potential connected actions, secondazy impacts,
significant effects and cumulative impacts." Because the agency did not analyze this
totality of circumstances, Appellants contend, "the exemption is illegal and void."
Appellants also assert that "the hazbor improvements are a condition precedent to the
Hawaii Superferry project and the impacts of the Hawaii Superferry project must also be
addressed."
In response to these azgtunents, Appellees contend that McGlone is not controlling
because the case "was based on the pre 1979 version of HEPA which did not include the
concept of EAs or draft EAs." While this is true, Appellees provide no argument as to
13
why the subsequent changes in the NEPA statute make McGlone's analysis inapplicable
to the case at hand. To the contrary, because McGlone specifically concerned an
exemption determination under a similaz statutory and regulatory scheme, see suura note
48, the statements of the court in that case regazding exemptions have persuasive force in
interpreting the requirements of HEPA today.
b. Ocean Advocates
Appellants also rely on Ocean Advocates, a Ninth Circuit Court of Appeals case in which
an environmental group challenged, under NEPA, the issuance and extension of a permit
by the Army Corps of Engineers (the Corps) that allowed for the construction of an
additional platform to an existing oil refinery dock off the coast of Washington state, at
Cherry Point in northeast Puget Sound. 402 F.3d at 855-58. At issue was whether the pier
extension would "facilitate an increase in taztker traffic and product handling, thereby
increasing the likelihood of a major oil spill." Id. at 855. The Corps granted the permit at
issue and made a finding of no significant impact, determining that the pier addition "will
not significantly affect the quality of the human environment," and that an EIS was not
required. Id. at 856. The environmental group, Ocean Advocates (OA), having twice
asked the Corp to reopen the permit it had granted in order to perform a more complete
evaluation of the cumulative impacts that the new platform would have on vessel traffic
safety, was twice rebuffed. Id. at 856-57. Several years later, when the developer
requested aone-yeaz extension to its permit to complete the dock construction, OA and
other groups again expressed concerns to the Corps about the harbor extension, and filed
suit after the Corps again concluded that an EIS was not required. Id. at 857-58.
Reversing the district court, the Ninth Circuit held that the Corps must complete an EIS,
because it found that a "reasonably close causal relationship" existed between the Corps'
issuance of the permit, the environmental effect of increased vessel traffic, and the
attendant increase risk of oil spills. Id. at 867-68. It thus concluded:
Increased tanker traffic elevates the risk of oil spills an undeniable and patently appazent risk of harm to
Puget Sound. An oil spill could destroy and disrupt ecosystems and kill or injure critical numbers of
threatened and endangered species that live, and thrive, in the Cherry Point Region. The Corps failed to
appreciate that the permitted activity would lead to increased tanker traffic. an error about the fundamental
nature and severity of the impact that the dock extension would have. The obvious severity of the impact
that increased tanker traffic poses is enough to warrant reversal on OA's NEPA claim. Were we
unconvinced, however, some of the Council on Environmental Quality factors also demonstrate the
significance of increased tanker traffic on this ecologically sensitive azea, particularly cumulative
significant impacts and uncertain environmental impacts.
Id. at 868 (emphasis added). Although the dock extension had already been completed,
the court nevertheless required that the Corps conduct an EIS, because the Corps could
revoke the permit or "impose restrictions on the operation of the dock or require other
mitigating measures." Id. at 871. The Ninth Circuit remanded to the district court to
consider OA's request that the district court "issue an injunction freezing any vessel
traffic to and from the facility at pre-20001evels pending completion of the NEPA
process." Id. at 871-72.
Appellants argue that DOT's limitation of its consideration to the direct effects of the
harbor improvements, rather than of the Superferry operations at Kahului harbor, is
14
similar to the Corps' failure to recognize the potential for increased tanker activity due to
the dock extension in Ocean Advocates. Accordingly, Appellants state:
HDOT, in its exemption determination, does not disclose that these improvements aze conditions precedent
to the implementation of the Hawaii Superferry project. Most importantly, HDOT, in is exemption
determination, never analyzes the enduonmental impacts that these harbor improvements, in facilitating the
Hawaii Superferry project, will have on already congested state harbors and roadway systems, as well as on
threatened and endangered species, an increase in the rate of alien species introductions, and the
curtailment or restriction of recreational and cultural uses. All of these are clear ersors requiring reversal . .
Appellees, for their part, argue that Ocean Advocates is inapplicable, because it involved
the adequacy of the Corps' analysis in its Final EA, and did not involve a "decision not to
prepare an EA" as Appellants state in their brief. Appellees also take issue with
Appellants' citation of Ocean Advocates as support for its assertion that "uncertainty
about the impacts of a project have been sufficient to require EISs and to reverse
exemptions."
Appellees' attempts to minimize the applicability of Ocean Advocates miss the point.
Regardless of Appellants' appazent misstatements regarding the case, Ocean Advocates is
persuasive authority regazding how afactually-similaz scenazio is treated under NEPA,
and provides an example of a court analyzing the secondary effects of harbor alterations,
namely, what effect they will have on the activity of ocean vessels.
c. application to this case
Kahana Sunset Owners Assn and McGlone make clear that when an agency considers an
exemption it must determine that the action will probably have minimal or no significant
effects on the environment, and McGlone teaches that in addition to the direct site of
impact the agency must also consider other impacts that are "incident to and a
consequence of the primazy impact." Considered together with these Hawaii precedents,
Ocean Advocates provides a concrete analogy to the legal error committed by DOT.
DOT's written exemption determination is restricted to the hazbor improvements and does
not consider the secondary impacts that may result from the use of Hawaii Superferry in
conjunction with Kahului Harbor. Rather, DOT treats the physical improvements in
isolation, fitting them into two exemption classes related to "security and safety
equipment," (exemption class 3 item 3) and "alteration or addition of improvements with
associated utilities, which are incidental to existing hazbor and boat ramp operations, in
accordance with master plans [that comply with HEPA]" (exemption class 6 item 8). See
supra Section I.B.2. Although DOT, in its exemption detennination letter, does reference
the Hawaii Superferry ("we have determined that the operation of Hawaii Superferry at
Kahului Hazbor conforms with the intended use and purpose of the harbor and meets
conditions that permit exemption from environmental review at such location based on
the method of operation planned"), it restricts its analysis to the harbor equipment that
will be employed in order to facilitate the Superfen•y's operation ("ferry activity at
Kahului Harbor will use equipment appropriate for a hazbor, include only minor facilities
improvements and will be conducted at an existing pier facility that is consistent with the
purpose and reason for which it was originally developed"). See id. The exemption letter
does not consider whether Superferry operation independent of the harbor will have any
15
significant effect on the environment. Rather, DOT appears to studiously restrict its
consideration of environmental impact to the physical hazbor improvements themselves.
Although DOT does say that "[t]he installation and result of the minor improvements
noted will not produce or create any adverse air quality, noise or water quality impact,"
which could imply a reference to the Superfeny itself, as the "result" of the harbor
improvements, this statement is oblique and does not indicate that secondary impacts
were considered. Purposely or not, DOT ignores the more direct language suggested by
OEQC in its sample exemption memorandum, wherein an agency director would state
that he or she "ha[s] considered the potential effects of the above listed project as
provided by Chapter 343, HRS and Chapter 11-200, HAR [and] declaze[s] that th[e]
project will probably have minimal or no significant effect on the environment and is
therefore exempt from the preparation of an environmental assessment." Guidebook,
supra at 50.
As suggested by Appellees, it is not the province of this court "to substitute its judgment
for that of an agency within the executive branch of govenunent Obayashi Hawaii
Coro, 81 Haw. at 182 n.12, 914 P.2d at 1375 n.12. The flipside of this caution, however,
is that this court "must ensure that the agency has taken a 'hard look' at environmental
factors." Id. at 182 n.12, 914 P.2d at 1375 n.12 (quoting Stop H-3 Assn v. Lewis, 538
F.Supp. at 159).
The applicable standard of review requires that this court determine, as a matter of law,
whether or not DOT has followed the correct procedures and considered the appropriate
factors in making its detennination that the hazbor improvements made to Kahului hazbor
to facilitate the Superferry project should be exempted from the requirements of HRS
chapter 343. See supra Section II.C.3.
Stated simply, the record in this case shows that DOT did not consider whether its
facilitation of the Hawaii Superferry Project will probably have minimal or no significant
impacts, both primary and secondary, on the environment. Therefore, based on this
record, we can only conclude that DOT's determination that the improvements to Kahului
Hazbor aze exempt from the requirements of HEPA was erroneous as a matter of law. The
exemption being invalid, the EA requirement of HRS § 343-5 is applicable. This issue
being diapositive, we need not consider Appellants' other azguments.~
IV. CONCLUSION
The stated purpose of HEPA is "to establish a system of environmental review which will
ensure that environmental concerns are given appropriate consideration in decision
making along with economic and technical considerations." HRS § 343-1.
In enacting HEPA and establishing a system of environmental review, the legislature
expressly emphasized the importance of public participation in the process:
The legislature further fmds that the process of reviewing enduonmental effects is desvable because
environmental consciousness is enhanced, cooperation and coordination aze encouraged, and up blic
participation durine the review process benefits all parties involved and society as a whole.
Id. (emphasis added).
16
Contrary to the expressly stated purpose and intent of HEPA, the public was prevented
from participating in an environmental review process for the Superferry project by
DOT's grant of an exemption to the requirements of HRS chapter 343. The exemption
was erroneously granted as DOT considered only the physical improvements to Kahului
harbor in isolation and did not consider the secondazy impacts on the environment that
may result from the use of the Hawaii Superferry in conjunction with the harbor
improvements. "All parties involved and society as a whole" would have benefitted had
the public been allowed to participate in the review process of the Superferry project, as
was envisioned by the legislature when it enacted the Hawaii Environmental Protection
Act.
Based on the foregoing, we reverse the circuit court's July 12, 2005 final judgment. As
indicated in our August 23, 2007 order, we have instructed the circuit court to enter
summary judgment in favor of Appellants on their claim as to the request for an
environmental assessment and remanded the case for such other and further disposition of
any remaining claims as may be appropriate.
17