Sierra Club Contested Case Hearing Pt. 3: Final Arguments

Politics on Maui moves into 2022 with a new story on an old subject: East Maui water, who gets it, how much and why.

Last month, the state Board of Land and Natural Resources (BLNR) held a contested case hearing about Sierra Club Hawaii’s continuing objections to Alexander & Baldwin/Mahi Pono-owned East Maui Irrigation’s use of water in Central Maui. Previous stories on the five-day hearing can be found here and here.

Short version: EMI wants to take 40 million gallons per day (mgd) of East Maui water in 2022 with no added conditions. That water is used to irrigate Mahi Pono’s growing fields of crops; to supply the County of Maui via one Upcountry water reservoir and the Kula Agricultural Park, and for a hodgepodge of other uses. Sierra Club thinks EMI is wasting a lot of that water (especially in the hodgepodge category) and wants the “take” maintained at its current 25 mgd in 2022.

The BLNR’s legal tools for this water use are four temporary “revocable” one-year water permits that cover four different state-owned areas in East Maui: Nahiku, Keanae, Huelo and Honomanu.  EMI wants to continue taking water from all of them; Sierra Club wants three permits taken away because EMI took water only from the Huelo area in 2021.

In addition, Sierra Club wants EMI to give Maui County its water free of charge. It wants Mahi Pono to reduce water loss by lining one reservoir, and for the Canadian pension investment company-owned entity to start more precisely reporting the particulars of its water use.

Nothing here to see, move on

Boiled down to its essence, A&B/EMI attorney David Schulmeister’s 30-minute closing argument on December 15^th was, “Yada, Yada, Yada.”

He said that the contested case hearing was held to consider new information that hadn’t been previously presented in two earlier trials on the temporary permit matter. But Sierra Club’s contested hearing testimony, Schulmeister told hearings officer (and BLNR Chair) Suzanne Case, was little more than “recycled and reasserted facts” that had already been delivered at the trials. “They’re trying to package [them] into new arguments,” Schulmeister asserted.

The attorney offered no rationale for the 40 mgd EMI wants to divert in 2022, or why that amount is less than the 45 mgd requested for the 2021 permits. (That 45 mgd was reduced to 25 mgd by Hawaii First Circuit Court Judge Jeffrey Crabtree in July, whose order said that the BLNR, Mahi Pono and A&B “offered nothing in the way of any options, plans or specifics” to justify the 45 mgd “take.”)

Schulmeister claimed that there were “no new facts” in the testimony presented about EMI “system losses.” He said Sierra Club was “continuing to argue what they’ve argued before, that system losses…are too high and efforts should be made to better account for and reduce it.’’

He said that current system losses, estimated during testimony to be more than the 22.7% allowed by the state Commission on Water Resource Management (CWRM), were just fine, compared to the losses that occurred during the thirsty days of sugarcane cultivation, when “over a hundred million gallons per day” (165 mgd at one point) were being diverted from East Maui streams, often losing as much as 40mgd.

“Positive for the environment”

Schulmeister was equally unimpressed by witness testimony elicited by Sierra Club attorney David Kimo Frankel that several hundred million gallons of diverted water end up each month unused and seeping from Mahi Pono reservoirs, with no proof that the seepage ended up in the Central Maui aquifer.  Saying that the previously diverted 100 mgd of water for sugarcane now remained in East Maui streams, Schulmeister called the current situation “positive for the environment. There’s no Red Hill type of disaster going on here that the board has to suddenly take action upon. There’s just nothing like that happening here.”

To me, Schulmeister’s “This is not Red Hill” argument contains unintended irony. There are similarities between the two situations. Like the U.S. Navy’s World War II era-built Red Hill fuel storage tanks, the 100-year-old EMI ditch system is aged and moldering. And it leaks.

Schulmeister’s other head-scratching argument came out of state hydrologist Dr. Ayron Strauch’s testimony that some of the information upon which instream flow estimates were based was incorrect. Schulmeister asserted, “It’s still the best available information” and should be used “until there’s something different.”

Schulmeister repeated his “nothing new” assertion throughout his arguments, which was followed by his second oft-repeated point, that Sierra Club’s proposed conditions made “no sense,” especially the financial conditions, such as lining a reservoir and contributing money to fighting invasive species in the permit areas.

He suggested that the environmental organization had a “bias” against diversified agriculture. The Hawaii state constitution “requires the board to promote diversified agriculture on important ag lands,” Schulmeister claimed. “You do not promote something by saddling somebody with…undefined costs.”

“We don’t care if you call it ‘waste’ or loss, it is too much”

Obviously, Sierra Club attorney David Frankel disagreed with Schulmeister, explaining in his half-hour closing arguments that plenty of new information had been presented during the hearing.  Here was a big one: when it came to EMI’s water diversions into Mahi Pono lands, “in some months, as much as 70% of the water was either ‘wasted’ or lost. In most months, 50%.  We don’t care if you call it waste or loss, it is too much,” Frankel emphasized. “It’s not appropriate.”

Referring to Mahi Pono CEO Ceil Howe’s testimony that its total reservoir capacity was less than 350 million gallons, Frankel asked the BLNR to “look at the data carefully,” saying, “You had more than 500 million gallons flowing into these reservoirs per month, sometimes 600 million gallons. That’s crazy. That means all that water is lost–or seeps.”

As for the argument that the water went to recharging the underlying aquifer, Frankel said A&B/EMI had failed “to provide evidence, not one bit” to support that contention.

“This case is about Alexander and Baldwin’s failure to meet its burden of proof,” Frankel concluded. “It’s about real answers to hard questions, not unsubstantiated claims. It is about bias towards protection rather than the unquestioning belief in assertions made by corporations whose primary motivation is profit and whose assertions are easily undercut with questioning. This case is about water from streams that is not used. It’s about sensible mitigation measures, alternatives, and conditions.”

What Everyone Wants

Days after the end of the hearing, both parties filed Proposed Findings of Fact, Conclusions of Law and Order [see A&B/EMI’s here and Sierra Club’s here] which basically offer a blueprint for how they think the BLNR should examine the case and how it should rule on it.

A&B/EMI weighed in with a 70-plus page document that in its first 15 pages offers a pretty readable history of the legal battles over East Maui water through the years.

The bulk of the document amplified Schulmeister’s comments at the hearing (yada, yada, nothing new here), plus a stout defense of Mahi Pono and its efforts. Its proposed order to the BLNR: change absolutely nothing in the conditions of the 2022 temporary permits, except the amount of water diverted (40 mgd).

Sierra Club, of course, had a different view.  In a much more linear and terse 42-page presentation, it presented the reasons behind its request that the BLNR alter its 2022 permit terms with EMI to maintain its water use at 25 mgd. It also wants the BLNR to require EMI/Mahi Pono to use more comprehensive reporting procedures to document its various water usages. And it asks that EMI/Mahi Pono be ordered to line one of its most used reservoirs to help reduce leakage/seepage.

The County of Maui didn’t offer any closing arguments, but did submit its own 8-page Findings of Fact, etc.  The County took a very neutral stance, saying only that providing water to 35,000 Upcountry residents “serves the best interests of the state,” an assertion contested by no one.

Comparing the conclusions

Here’s a quick sample of some contrasting arguments from the A&B/EMI and Sierra Club filings. I’ve quoted directly when appropriate and paraphrased the lengthier arguments.

A&B/EMI: “It is unreasonable to expect any farming operation, let alone a new farming operation that is in a period of transition, to predict down to the last drop what its water needs will be a year into the future.”

Sierra Club: Mahi Pono consistently exaggerates its water demands. A review of four Mahi Pono water needs estimates for 2020 showed the forecasts were off (i.e., needing less water than stated) by 11%, 50%, 35% and 15%. Mahi Pono planting estimates for 2021 were off by 15%. Also, Mahi Pono claimed that a 25 mgd water cap “would have a high detrimental impact on the expansion of our farming operations.” However, Mahi Pono executives testified that there had been no detrimental effect on crops at that usage rate, after Judge Crabtree reduced it from 45 mgd in July.

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A&B/EMI: It’s not possible to stop taking water from three of the four license areas.  They operate as a coordinated system that spans 50,000 acres.

Sierra Club: In 2021, all the water that came from East Maui came from the Huelo permit area closest to Central Maui. No water came from the three areas further east. No water is forecast to be needed from those areas in 2022.

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A&B/EMI: “In the beginning of 2021, the amount of water attributed to reservoir, seepage, fire protection, evaporation, dust control and hydroelectric was in the 20 mgd range. However, from June 2021 to October 2021, the amount dropped to the 10 mgd range.”

Sierra Club: “Other than the water that was used for dust control, in the first and second quarters of 2021, virtually none of the water in the column labelled ‘Reservoir/Fire Protection/Evaporation/Dust Control/Hydroelectric’ was actually used.” And “There was no credible evidence submitted that more than 100,000 gallons per day are used for dust control.”

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A&B/EMI: In the context of a one-year permit, “it would not be reasonable…to impose conditions requiring EMI to line and cover the reservoirs.” Water that seeps from the reservoirs “is not permanently ‘lost’” but goes to recharge the underlying aquifer.

 Sierra Club: Mahi Pono has spent $20 million on “efficiency upgrades.” None of that money has been spent lining or covering reservoirs. A&B produced no data (or any expert) to show what percentage of seeped or leaked water “actually reaches the aquifer and is actually contained in it for future use.”

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Finally, in the “weakest argument” category:

A&B/EMI: “Sierra Club’s proposed condition that A&B/EMI provide 5 mgd to the County “for free” is not reasonable.”

Sierra Club: “It is in the public interest” to provide 5 mgd to the County for free.

Now what?

Of course, there is much, much more.  What is clear is that the two sides agree on, well, pretty much nothing.  The matter is now before Hearing Office Suzanne Case who could come up with a recommended decision by the end of January.  After that, the parties will be given several more weeks to file “exceptions” to the recommendation before a BLNR meeting is scheduled.

In the meantime, A&B/EMI quietly went before Judge Crabtree several days after the hearing and received permission to extend the 2021 permits beyond their December 31, 2021 expiration date.  Under the order, EMI may continue to use 25 mgd until May 1, or until the BLNR renders a “substantive” decision.