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Flores v. Board of Land and Natural Resources

Supreme Court of Hawaii

August 8, 2018

E. KALANI FLORES, Appellant-Appellee,
v.
BOARD OF LAND AND NATURAL RESOURCES; DEPARTMENT OF LAND AND NATURAL RESOURCES; SUZANNE D. CASE, in her official capacity as Chairperson of the Board of Land and Natural Resources, STATE OF HAWAI'I, Appellees-Appellants/Cross-Appellees, and UNIVERSITY OF HAWAI'I, Appellee-Appellee/Cross-Appellant.

          APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT ENVIRONMENTAL COURT (CAAP-17-0000059; CIV. NO. 14-1-324)

          Clyde J. Wadsworth and Kaliko#onalani D. Fernandes, (Kimberly Tsumoto Guidry, William. J. Wynhoff, Julie China and David D. Day, with them on the briefs) for Appellees-Appellants/Cross- Appellees State of Hawai#i, Board of Land and Natural Resources, Department of Land and Natural Resources, and Chairperson Suzanne D. Case.

          David Kauila Kopper and Camille Kaimâlie Kalama for Appellant-Appellee E. Kalani Flores.

          John P. Manaut and Ian L. Sandison (Arsima A. Muller with them on the briefs) for Appellee-Appellee/Cross- Appellant University of Hawai'i.

          RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

          OPINION

          NAKAYAMA, J.

         In May 2014, Appellee-Appellee/Cross-Appellant University of Hawai'i (the University) requested that Appellee- Appellant/Cross-Appellee Board of Land and Natural Resources (BLNR) consent to a sublease that the University intended to enter into with TMT International Observatory LLC (TIO) for the construction of the Thirty Meter Telescope (TMT) on the Mauna Kea Science Reserve (Sublease). BLNR subsequently addressed the University's request for its consent to the Sublease at two separate public meetings. At both meetings, Appellant-Appellee E. Kalani Flores (Flores) orally requested that BLNR hold a contested case hearing prior to making a decision on the matter. Following the second meeting, Flores filed a written petition for a contested case hearing. BLNR denied Flores's request and consented to the Sublease.

         Flores appealed BLNR's denial of his request for a contested case hearing to the Environmental Court of the Third Circuit (environmental court). The environmental court ruled that based upon this court's opinion in Mauna Kea Anaina Hou v. Board of Land and Natural Resources, 136 Hawai'i 376, 363 P.3d 224 (2015), BLNR infringed upon Flores's constitutional rights by rejecting his request for a contested case hearing.

         On secondary appeal, BLNR and the University argue that the environmental court erred in ruling that Flores was entitled to a contested case hearing because: (1) BLNR's consent to the Sublease did not fall within the purview of Hawai'i Revised Statutes (HRS) Chapter 91, as BLNR was acting as a landlord engaged in the custodial management of public property; and (2) a contested case hearing was not required by law because it was not mandated by statute, administrative rule, or due process.

         For the reasons stated below, we reject BLNR's and the University's argument that HRS Chapter 91 does not apply in this case. However, we agree with BLNR and the University that BLNR was not required to hold a contested case hearing prior to consenting to the Sublease because such a hearing was not required by statute, administrative rule, or due process under the circumstances of this case. Consequently, we hold that the environmental court erred in ruling that BLNR violated Flores's constitutional rights when it denied his request for a contested case hearing in this case.

         Accordingly, we reverse the environmental court's January 6, 2017 Final Judgment and "Order Granting in Part and Denying in Part Appellees State of Hawai'i, Board of Land and Natural Resources, Department of Land and Natural Resources, and Chairperson Suzanne D. Case's Motion for Stay of Proceedings, or in the Alternative for the Court to Issue its Decision on Appeal, Filed October 25, 2016; Vacating Consent to Sublease and Non-Exclusive Easement Agreement Between TMT International Observatory LLC and the University of Hawaii Under General Lease No. S-4191; and Remanding Matter to the Board of Land and Natural Resources" (Order).

         I. BACKGROUND

         On June 21, 1968, BLNR leased the land within the Mauna Kea Science Reserve to the University for a term of sixty-five years (Master Lease). The Master Lease is set to expire on December 31, 2033, and permits the University to use the leased premises "as a scientific complex, including without limitation thereof an observatory, and as a scientific reserve being more specifically a buffer zone to prevent the intrusion of activities inimical to said scientific complex." Pursuant to paragraph five of the Master Lease, the University "shall not sublease . . . any rights thereunder without the prior written approval of [BLNR]."

         On May 22, 2014, Donald 0. Straney (Straney), the Chancellor of the University of Hawai'i at Hilo, sent BLNR a written request for BLNR's approval and consent to the Sublease. Straney stated that the University intended to sublease an 8.7-acre portion of the Mauna Kea Science Reserve, which was covered by the Master Lease, to TIO for the construction and operation of the TMT.

         The Sublease is set to expire on December 31, 2033, the same date that the Master Lease is set to terminate. With respect to the use of the subleased premises, the Sublease provides, in relevant part:

Sublessee shall use the Subleased Premises solely to construct and operate the TMT Facilities in accordance with this Sublease and the Scientific Cooperation Agreement. The construction and operation of the Subleased Premises shall be conducted in strict compliance with the terms and conditions of Conservation District Use Permit HA-3568 approved by the Lessor on April 12, 2013 (the "TMT CDUP"), including performance of all mitigation conditions set forth therein, and any amended or subsequent Conservation District Use Permit. Sublessee shall not at any time during the term of this Sublease construct, place, maintain, or install on the Subleased Premises any other building, structure, or improvement without the prior written approval of Sublessor and Lessor and upon such conditions as Sublessor or Lessor may impose. For purposes of the foregoing sentence, any other "improvement" means improvements that are not specified in or contemplated by the TMT CDUP and not contained within the building envelop of TMT observatory plans approved in accordance with Section 37 below.

         Concerning the rights of Native Hawaiians with respect to the subleased premises, the Sublease provides:

The Constitution of the State of Hawaii mandates the protection of recognized customary and traditional native Hawaiian rights subject to State regulation. This Sublease shall be subject to the right of Native Hawaiians to exercise protected traditional and customary practices as provided in the [Comprehensive Management Plan] and consistent with the laws of the State of Hawaii.

         A. BLNR Administrative Proceedings

         On June 13, 2014, BLNR held a public meeting addressing, inter alia, the University's request for BLNR's consent to the Sublease (first public meeting). At the first public meeting, Flores provided oral and written testimony on the numerous reasons underlying his position that BLNR should not consent to the Sublease, and orally requested that BLNR hold a contested case hearing before rendering a decision on the University's request. No action was taken on Flores's request for a contested case hearing at the first public meeting.

         Ultimately, BLNR did not rule on the University's request for BLNR's consent to the Sublease at the first public meeting. Instead, BLNR deferred the issue for consideration at a later date to allow the University to address the questions and issues raised during the public testimony on the matter.

         BLNR revisited the University's request for BLNR's consent to the Sublease at a public meeting held on June 27, 2014 (second public meeting). At the second public meeting, Flores provided further oral testimony and submitted additional written testimony explaining the reasons why, in his view, BLNR should not consent to the Sublease. Flores also orally renewed his request for a contested case hearing and submitted a written petition for a contested case hearing.

         Following the completion of public testimony at the second public meeting, BLNR approved the University's request for its consent to the Sublease. However, BLNR provided that the effect of its consent was "stayed . . . until administrative proceedings on any contested case requests are concluded." No action was taken regarding Flores's request for a contested case hearing at the second public meeting.

         On July 3, 2014, Flores filed his written petition for a contested case hearing. Flores stated that his interest in BLNR's consent to the Sublease, which entitled him to a contested case hearing, stemmed from, inter alia, his interest in participating in "traditional and customary practices" on the subleased premises.

         Following the receipt of Flores's request, the Acting Administrator of BLNR completed a staff report recommending that Flores's request be denied. According to the staff report, no statute or administrative rule required BLNR to hold a contested case hearing prior to consenting to a sublease of public lands. The staff report also concluded that the due process clause of the Hawai'i Constitution did not mandate BLNR to hold a contested case hearing, as Flores did not demonstrate that he had a property interest in BLNR's consent to the Sublease. Lastly, the staff report stated that BLNR was not required to hold a contested case hearing before consenting to the Sublease because such action "is a matter of internal land management, and not subject to a contested case."

         BLNR addressed Flores's request for a contested case hearing at a public meeting held on July 25, 2014 (third public meeting). At the third public meeting, Flores orally testified that BLNR's approval of the Sublease at the second public meeting was invalid, and submitted further written testimony on the matter. After hearing all of the public testimony on the matter, BLNR approved the staff report's recommendation, and denied Flores's request for a contested case hearing.

         BLNR issued its formal written consent to the Sublease on April, 9, 2015 (Consent).

         B. Appellate Proceedings at the Environmental Court

         On August 25, 2014, Flores appealed the denial of his request for a contested case hearing to the Circuit Court of the Third Circuit. The case was transferred to the environmental court on October 2, 2015.[1]

         In his pro se opening brief, Flores argued, inter alia, [2] that BLNR erred in denying his request for a contested case hearing because, among other reasons, Flores "is a traditional and customary practitioner whose rights this Court should acknowledge by allowing his participation in the requested contested case hearing." Additionally, Flores argued that BLNR infringed upon his constitutional right to due process by consenting to the Sublease before resolving his request for a contested case hearing.

         In their answering briefs, BLNR and the University countered that BLNR properly denied Flores's request for a contested case hearing because his request was not supported by statute or any administrative rules, and because Flores did not have a due process right to a contested case hearing insofar as he did not demonstrate that he had a constitutionally cognizable property interest in the Sublease. Further, BLNR and the University argued that Flores was not entitled to a contested case hearing because BLNR's consent to the Sublease was a matter of internal agency management, and fell outside the purview of HRS Chapter 91.

         After the answering briefs were filed, this court issued its opinion in Mauna Kea Anaina Hou. At issue in Mauna Kea Anaina Hou was whether BLNR violated the appellants' due process rights by issuing a Conservation District Use Permit (CDUP) authorizing the TMT's construction before holding a contested case hearing on the matter. 136 Hawai'i at 380, 363 P.3d at 228. This court first held that the appellants were entitled to a contested case hearing, reasoning:

Given the substantial interests of Native Hawaiians in pursuing their cultural practices on Mauna Kea, the risk of an erroneous deprivation absent the protections provided by a contested case hearing, and the lack of undue burden on the government in affording Appellants a contested case hearing, a contested case hearing was "required by law" regardless of whether BLNR had voted to approve one on its own motion at the February 25, 2011 meeting.

Id. at 390, 363 P.3d at 238 (quoting Sandy Beach Def. Fund v. City & Cty. of Honolulu, 70 Haw. 361, 378, 773 P.2d 250, 261 (1989)). The Mauna Kea Anaina Hou court then concluded:

In sum, BLNR put the cart before the horse when it approved the permit before the contested case hearing was held. Once the permit was granted, Appellants were denied the most basic element of procedural due process-an opportunity to be heard at a meaningful time and in a meaningful manner. Our Constitution demands more.

Id. at 391, 363 P.3d at 239. Accordingly, this court vacated the circuit court's decision affirming BLNR's order granting a CDUP for the TMT project. Id. at 399, 363 P.3d at 247. The case was remanded to the circuit court to further remand the case to BLNR, so that another contested case hearing could be conducted before BLNR or a new hearing officer. Id.

         On January 13, 2016, Flores filed his reply brief. Flores requested that the environmental court take judicial notice of this court's decision in Mauna Kea Anaina Hou, which, he argued, further supported that BLNR should have held a contested case hearing before consenting to the Sublease.

         At the oral argument regarding Flores's appeal, the environmental court took judicial notice of this court's opinion in Mauna Kea Anaina Hou and the order of remand that was filed in that case. Subsequently, the environmental court orally ordered that the case be remanded to BLNR so that BLNR may consider the opinion and the order.

         On April 5, 2016, the environmental court filed an order remanding the case to BLNR pursuant to HRS § 91-14(e).[3] The environmental court ruled that the fact that the CDUP had been vacated was "material because the Sublease and Consent are premised upon the existence of the TMT CDUP," and noted that "[t]his fact could not have been presented to [BLNR] when it considered the application for the consent to the Sublease because the fact did not exist at that time." Therefore, the environmental ...


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