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The Sierra Club v. D.R. Horton-Schuler Homes, LLC

Supreme Court of Hawaii

December 22, 2015

THE SIERRA CLUB and SENATOR CLAYTON HEE, Petitioners/Appellants-Appellants,
v.
D.R. HORTON-SCHULER HOMES, LLC, a Delaware limited liability company, d.b.a. D.R. HORTON-SCHULER DIVISION; THE LAND USE COMMISSION OF THE STATE OF HAWAI'I; OFFICE OF PLANNING, STATE OF HAWAI'I; DEPARTMENT OF PLANNING AND PERMITTING, Respondents/Appellees-Appellees.

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT (CAAP-13-0002266; CIV. NO. 12-1-2000-07)

Eric A. Seitz, Della A. Belatti, and Sarah R. Devine, for petitioners

Gregory W. Kugle and Matthew T. Evans for respondent D.R. Horton-Schuler Homes, LLC

RECKTENWALD, C.J., NAKAYAMA AND McKENNA, JJ., AND CIRCUIT JUDGE CHANG, IN PLACE OF ACOBA, J., RECUSED; WITH POLLACK, J., DISSENTING

OPINION OF THE COURT BY McKENNA, J.

I. Introduction

This appeal involves a long-standing issue in this state: balancing agricultural and urban land uses. Appellants Sierra Club and Clayton Hee challenge the Land Use Commission's ("LUC") reclassification of approximately 1525.516 acres of Appellee D.R. Horton-Schuler Homes' ("D.R. Horton-Schuler") land from the agricultural state land use district to the urban state land use district. The land is slated for development of the Ho'opili project. On transfer from the Intermediate Court of Appeals, Appellants seek review of the Decision and Order of the Circuit Court of the First Circuit[1] ("circuit court") affirming the LUCs Findings of Fact, Conclusions of Law, and Decision and Order ("D&O") and dismissing their appeal.

Appellants argue that the reclassification violated Article XI, Section 3 of the Hawai'i State Constitution, which provides the following:

The State shall conserve and protect agricultural lands, promote diversified agriculture, increase agricultural self-sufficiency and assure the availability of agriculturally suitable lands. The legislature shall provide standards and criteria to accomplish the foregoing.
Lands identified by the State as important agricultural lands needed to fulfill the purposes above shall not be reclassified by the State or rezoned by its political subdivisions without meeting the standards and criteria established by the legislature and approved by a two-thirds vote of the body responsible for the reclassification or rezoning action.

Appellants also argue that the reclassification violated Act 183, codified at Hawai'i Revised Statutes ("HRS") §§ 205-41 through -52 (Supp. 2005), and also known as Part III of HRS chapter 205 ("Part III"). Part III implements Article XI, Section 3's mandate and governs land use on important agricultural lands ("IALs"). Appellants contend that the LUC should not reclassify lands that the City and County of Honolulu could potentially designate as IALs in the future, pursuant to HRS § 205-47 (Supp. 2005).

Lastly, Appellants argue that the reclassification violated Hawai'i Administrative Rules ("HAR") § 15-15-77(a) (effective 2000-2013), which requires reclassifications to conform to the Hawai'i State Plan. They also contend that the reclassification violated HAR § 15-15-77(b)(6) (effective 2000-2013), which requires the LUC to consider whether taking land in "intensive agricultural use for two years prior to the date of a filing of a petition [for a district boundary amendment] or lands with a high capacity for intensive agricultural use" out of the agricultural district "[w]ill not substantially impair actual or potential agricultural production in the vicinity of the subject property or in the county or State; or . . . [i]s reasonably necessary for urban growth. ..."

Pursuant to Save Sunset Beach Coalition v. City & County of Honolulu, 102 Hawai'i 465, 476, 78 P.3d 1, 12 (2003), Article XI, Section 3, standing alone, is not self-executing; rather, its mandate is carried out through the provisions of Part III. Therefore, the plain language of Article XI, Section 3 does not require the LUC to stay reclassification of agricultural land while the formal county-initiated IAL designation process runs its course. Pursuant to the policies underlying Part III, state and county government should consider the "compelling state interest in conserving the State's agricultural land resource base assuring the long term availability of agricultural lands for agricultural use, " see HRS § 205-41 (Supp. 2005); however, the plain language of Part III contains no provision requiring a stay. Further, the constitutional history of Article XI, Section 3, as well as the legislative history of Part III, does not reveal an intent to require the LUC to delay reclassifying agricultural land pending formal designation of IALs. Second, reliable, probative, and substantial evidence supported the LUCs finding that the reclassification of the land at issue in this case was consistent with the Hawai'i State Plan, would not substantially impair agricultural production, and was necessary for urban growth. We therefore affirm the circuit court's decision and order, which affirmed the LUCs D&O.

II. Background

A. Land Use Commission Proceedings

1. D.R. Horton-Schuler's Petition for Land Use District Boundary Amendment

On January 24, 2007, D.R. Horton-Schuler filed a Petition for Land Use District Boundary Amendment ("Petition") before the LUC. D.R. Horton-Schuler described the Ho'opili project as follows:

Petitioner is currently proposing the development of a mixed-use, transit-ready community, including residential, business, and commercial areas, transit stops, schools, parks and open space. Petitioner is proposing to develop approximately 11, 750 residential units (including affordable units) ranging from an estimated $200, 000 to $700, 000 based upon 2006 market prices, a minimum of five (5) school sites (subject to continued negotiations with the Department of Education), approximately two hundred ten (210) acres for parks and open space, and approximately one hundred forty-five (145) acres for business and commercial spaces that would sell for approximately $35 to $45 per sq. ft. in today's market. Both the residential and commercial space selling prices are estimates and are subject to change according to fluctuating market conditions, as well as unanticipated costs incurred during construction. The Proposed Project is being designed as a mixed-use community ready to provide high-capacity transit stops to further encourage walking/bicycling and the use of public transportation to supplement that which already underpins Ho'opili's traditional neighborhood design. Infrastructure facilities to be expanded or improved include access and circulation roadways, drainage systems, water distribution and wastewater collection lines, and electrical/communication systems.

The Ho'opili project is scheduled to be developed in two ten-year phases, the first phase from 2013-2020, and the second phase from 2020-2030.[2]

The Petition stated that the land was "currently leased for agricultural purposes, " including "diversified agriculture; pasturage; grazing for livestock; cultivation of seed corn and other agricultural crops; and agricultural research." The Final Environmental Impact Statement ("FEIS") prepared in conjunction with the Petition represented that D.R. Horton-Schuler would be relocating the agricultural tenants onto replacement lands.

The FEIS also noted that the proposed project conformed to the Hawai'i State Plan. The FEIS pointed out that the Petition lands were "located within (and makai of) the Urban Growth Boundary of the Ewa Development Plan Urban Land Use Map." The FEIS represented that the project "is consistent with the State's goal to insure [sic] economic stability, diversity, and growth for present and future generations, " because the project "will provide various housing and employment opportunities for the rapidly growing 'Ewa region, which will in turn, relieve development pressures from other areas of O'ahu, particularly the Primary Urban Center, and rural areas such as Wai'anae, North Shore, Ko'olau Loa and Ko'olau Poko." The FEIS noted, "The agricultural policies [of the Hawai'i State Plan] are predominantly not applicable to the Ho'opili project."

2. Intervenors and Other Parties to the Petition Proceedings and Their Positions

When an "[a]mendment[] to district boundaries involving land areas greater than fifteen acres" is filed with the LUC, the State Office of Planning ("OP") and the county planning department, here the City and County of Honolulu's Department of Planning and Permitting ("DPP"), must appear as parties and "make recommendations relative to the proposed boundary change." HRS § 205-4(e)(1) (2001). The DPP supported the Petition because it found the project to be consistent with the City's General Plan, which "encourages development and growth and directs economic activity within the secondary urban center and urban fringe area in Ewa." The DPP noted that the project is located within the Urban Growth Boundary of the 'Ewa Development Plan, where urban development is "allowed and consistent with the long-range vision, policies, principles and guidelines in the Ewa Development Plan regarding land use and the plan's vision of building master planned residential communities that allow residents to live and work in the Ewa region." The OP generally supported the orderly development of Kapolei as Oahu's second city but did not initially take a position on the Petition, citing insufficient information. Four years into the Petition proceedings, the Sierra Club and Clayton Hee, in his individual capacity only, were permitted to intervene. Both opposed the Petition, arguing it proposed inappropriate uses for productive agricultural land.

3. Evidentiary Hearings

The LUC held evidentiary hearings on the Petition on March 19, 2 009; March 20, 2 009; May 15, 2 009; June 25, 2 009; June 2 6, 2 009; October 20, 2 011; October 21, 2 011; November 17, 2 011; November 18, 2 011; January 5, 2 012; January 19, 2012; March 1, 2012; March 2, 2012; March 15, 2012; and March 16, 2012.

a. Evidence and Testimony on Agricultural Impacts

D.R. Horton-Schuler called Bruce Plasch, who was admitted as an "expert in the field of agricultural economics." D.R. Horton-Schuler also submitted Plasch's written direct testimony and supplemental written direct testimony. First, Plasch described the agronomic conditions of the Petition area as follows, starting with soil conditions:

About 1, 340 65 acres of the Petition Area are comprised of higher-quality soils (I and II for the NRCS ratings, Prime for ALISH, and A and B for the LSB). This is about 2.4% of the 55, 563 acres of Prime agricultural lands that O'ahu had in 1977, and about 2.5% of the 53, 039 acres of A and B lands that O'ahu had in 1972.

In his supplemental written testimony he described agricultural productivity at Ho'opili as follows:

In 2010, the primary crops grown at Ho'opili were bananas, basil, snap beans, broccoli, cabbage, seed corn, sweet corn, cucumbers, eggplant, lettuces, melons, dry onions, bell peppers, squash, pumpkin, and tomatoes. This includes crops grown for the local market as well as for export. For vegetables, melons and fruits, about 1, 027 acres were harvested with an estimated yield of 15.3 million pounds. This represented about 6% of Hawaii's production of these crops.

Second, Plasch testified that the contraction of plantation agriculture has released hundreds of thousands of acres of farmland:

During the past four decades, a vast amount of farmland has become available for diversified crop farming due to the contraction of plantation agriculture. In 1980, we had 17 large plantations in Hawaii that produced sugar and pineapple for export: 14 sugar plantations and 3 pineapple plantations. Now we have just one, the HC&S sugar plantation on Maui (Dole's pineapple operation remains on Oahu, but it is no longer a large plantation growing pineapple for export, but a farm that grows pineapple primarily for the Hawaii market.)
In actual acreages, the contraction of plantation agriculture released about 263, 000 acres of farmland from 1968 to 2009. However, despite the availability of such farmland, the demand for land for diversified crops over the same period increased only by about 26, 800 acres (about 10% of the land released from plantation agriculture).
Oahu experienced a similar trend. Since 1960, plantation agriculture released about 73, 500 acres on Oahu, while acreage in diversified crops increased only by about 2, 300 acres (about 3% of the land released from plantation agriculture).

Third, Plasch estimated that about 177, 000 ± 5, 000 acres of farmland remains available statewide for diversified agriculture, with 30, 000 acres available on O'ahu.

Fourth, Plasch explained that the Wahiawa wastewater treatment plant was in the process of being upgraded to provide North Shore agricultural land with a water source:

[A] $30 million upgrade to the Plant is under construction, and is slated for completion in October 2012. The decision to upgrade the Plant is the result of a 1998 Consent Decree with the U.S. Environmental Protection Agency ("EPA").
The purpose of the recommendation is to allow farmers to use R-l water from the Wahiawa Reservoir to irrigate any type of crop using any type of irrigation system. The upgrade to the R-l water-quality standard will open up the mid-level and high-level fields on the North Shore for growing vegetable crops. Under the current R-2 water-quality rating, water from the Reservoir can be used to irrigate orchards and some other crops, but not vegetable and melon crops. As a result, most vegetables and melon crops on the North Shore must be grown at lower elevations where they can be irrigated using groundwater which has no restrictions on use.
In the meantime, landowners and some farmers on the North Shore have reactivated and improved groundwater wells so that more fields can be irrigated with groundwater only. This has allowed some farmers to move some of their operations to the North Shore.

Fifth, Plasch testified that existing agricultural lands could be farmed more intensively:

The large diversified farmers on Oahu generally harvest one, and sometimes two, crops per year from a given field. As a result, land is in crop for about a third of the year, and fallow for about two-thirds of the year.
There are many ways to increase yields, including:
• Farming two or more crops per year.
• For certain crops, going vertical using trellises, cages or sticks to support plants.
• Growing plants using hydroponic farming in greenhouses.
For certain vegetable crops, a number of farmers are already implementing more intensive farming that greatly increases yields, and as a result, greatly reduces land requirements. In particular, many of the tomatoes, cucumbers, peppers, and lettuces sold in our supermarkets are grown hydroponically in greenhouses by Hawaii and mainland farmers.

Plasch also noted that although the capital costs are higher, there are many benefits to hydroponics, including year-round production, higher yields, higher quality produce, fewer pest problems, less energy and water use, and lower transportation costs. Plasch opined that intensive farming practices could increase agricultural production without requiring more land.

Sixth, Plasch testified that 100% self-sufficiency was possible but unlikely in Hawai'i:

Hawaii has ample farmland to achieve 100% self-sufficiency, with or without Ho'opili and other projects that are consistent with City plans. But as I mentioned above, 100% self-sufficiency in fresh vegetables, melons and fruits is not achievable given competition from low-cost imports, and would not provide food security.
Currently, approximately 15, 000 acres of land is farmed statewide to produce approximately 33% of our fresh vegetables, melons and fruits. Therefore, achieving 100% self-sufficiency in these crops would require about 45, 000 acres of farmland. That would be 30, 000 additional acres statewide. It should be noted that this figure is high, considering the fact that more intensive farming than is currently the case would greatly reduce the amount of land required. The additional land required is small compared to the estimated 177, 000 acres ± 5, 000 acres of good farmland that is available statewide. In addition, another 70, 000 acres could become available if shipping is interrupted to such an extent that exporting crops becomes unfeasible.
A similar situation would apply to Oahu. About 23, 000 additional acres would be required for 100% self-sufficiency in fresh produce (45, 000 acres for statewide self-sufficiency x 67% for Oahu's share of the population -the existing 7, 300 acres used to grow food crops on Oahu). Again this estimate is high given inter-island shipping and reduced land requirements from intensive farming. As aforementioned, even if all of the farms within the Growth Boundaries relocate to land outside the Growth Boundaries, there would still be 30, 000 acres of good farmland available on Oahu outside the Growth Boundaries, plus about 4, 700 acres used for export and non-food crops that could come available if needed.

Seventh, as to Hoopili's impact on the current agricultural tenants at the Petition area, Plasch testified that the farms currently operating in the Petition area had all found sufficient lands outside of the urban growth boundary to continue their operations. In Plasch's professional opinion,

the Project will have little or no adverse impact on Hawai'i's agricultural production because farmland is available in upper Kunia and the North Shore to accommodate the relocation of existing farms in Ewa. Also the development of the Petition Area and the resulting loss of agricultural land will not limit the growth of diversified crops since ample agricultural land is available on O'ahu and the other islands.

Plasch's supplemental written direct testimony also opined

Ho'opili will have little to no adverse impact on Hawaii's agricultural production because ample farmland is available on Oahu and the other islands to accommodate the relocation of the existing Ewa farms as well as to accommodate the future growth of diversified crop farming. Land is available because of the closure or severe contraction of all plantations in Hawai'i with the single exception of one sugar plantation, HC&S on Maui.

Agricultural tenants Aloun Farms and Sugarland Farms also submitted letters in support of the Ho'opili project. Alec Sou of Aloun Farms stated that he had already secured "rights to 400 acres of farm land outside of the urban growth boundary with the opportunity to acquire as much as 1, 000 acres." Thus, Sou stated, "We do not view the plans by D.R. Horton as the end of all farming in Honolulu, much less Hawaii. ... We believe there is more than sufficient land on Oahu to support our farming operations. ..." Larry Jefts of Sugarland Farms stated he was "look[ing] forward to continu[ing] to farm as long as [D.R. Horton-Schuler] would allow [him] to [at Ho'opili] . . . and [was] willing to move and cooperate with the development plan to the advantage of Horton, to [the farm] and to the entire community, who will benefit from the development, new schools, the rail lines, etc." Jefts stated that the development "will not hurt [his] business model, " as he had "planned for it since 1994, " when he initially entered into a lease with the prior owner, the James Campbell Company.

The OP called Russell Kokubun, the Chair of the Board of Agriculture. He testified, "I understand that there will be a loss of some very, very good agricultural lands. But the Department is prepared to make available as much good agricultural land as possible. And that's part of our strategy to expand our agricultural industry in the state." On cross-examination, Kokubun elaborated on the Department's strategy as follows:

A: Well, there are a number of agricultural lands that are going to be made available, I think very good agricultural lands.
Q: Such as?
A: One of the issues that the Department is working on is there are - there's a proposed ag park on Kunia Road of 150 acres. There's a parcel again off of Kunia Road, that the DLNR will, is in the process of providing to the Department of Agriculture for agricultural purposes of 400 acres. And we are on the threshold of completing the purchase of the Galbraith Estate or Galbraith Trust Lands.
Q: Now, with respect to all of those, to your knowledge do they have adequate existing supplies of water to grow the kinds of crops that Aloun Farms is currently growing?
A: The 150-acre ag park does -- it needs the infrastructure to get the water to the site. But that's something that the Department will do. The 400 acres also has access to Waiahole ditch water. That would also have to be a transmission line provided for that that we would be prepared to do. And the Galbraith Trust Lands have one well, but that's not adequate to irrigate the entire 1700-acre parcel. So we are working on getting some planning and design money to take a look at this.

On cross-examination, Kokubun admitted that the Department did not currently have funds to make water improvements on these other lands, but that his Department was "working on getting some planning and design money to take a look at" the infrastructure.

Leon Stollenberger, who was admitted as an "expert on the characteristics of agricultural lands in the Central and North Shore areas of [O'ahu], " testified that the Ho'opili lands were "one of the most suited to vegetable production literally in the world."

The Sierra Club called Hector Valenzuela, who was admitted without objection as an expert in agriculture, in particular, vegetable crops. He did not support the Petition because of the loss of prime agricultural lands. He testified that the Petition lands were "among the most productive and valuable lands in the state because of their proximity to market and ideal growing conditions, " which included higher solar radiation and temperature, lower humidity, and ideal soil conditions resulting in little erosion. These conditions contributed to faster, earlier harvests and higher crop yields. Valenzuela also testified that the state needs "isolated sections of land . . . [to] grow crops competitively, " with these isolated sections contributing to the "overall self-sufficiency and sustainability of the state." At Ho'opili, Aloun Farms had been successful in growing certain crops, providing 40 to 70 percent of the entire production of those crops in the state. Valenzuela believed that "some of the crops that are grown in Ho'opili . . . may be very difficult to grow . . . competitively in other parts of the state." He disagreed that hydroponics could replace the need for prime agricultural land on O'ahu. According to Valenzuela, hydroponics is capital-intensive; he criticized D.R. Horton-Schuler's lack of documentation supporting the idea that greenhouses or other hi-tech farming methods were "feasible and/or profitable in the proposed Ho'opili development area."

The Sierra Club also called farmer Gary Maunakea-Forth, who testified that finding available farmland for long-term lease was difficult, and it was costly to prepare land for farming.

The Sierra Club also submitted into evidence an undated scholarly article entitled "Agriculture" by C.N. Lee and H.C. "Skip" Bittenbender that opined that "near self-sufficiency [in Hawai'i] would require an estimated 260, ...


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