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Report On Residency Challenge Appeal: Is Intending To Live Somewhere Enough To Be "Residing" There?

In High court ruling on residency requested, the Maui News reports on Dupree v. Hiraga, No. 29464, the appeal of the decision by the State Board of Registration (County of Maui) which concluded that a Maui County councilperson who registered as a Lanai resident is actually a resident of Maui.

Attorneys for a Lanai man challenging County Council Member Sol Kaho'ohalahala's claim of Lanai residency are applying for the case to be transferred directly to the Hawaii Supreme Court.

Kaho'ohalahala's appeal of a ruling that he is actually a resident of Lahaina - not Lanai, from which he holds the residency seat on the council - is pending before the Intermediate Court of Appeals. But attorneys for his challenger, Michael "Phoenix" Dupree, said the importance of the case justifies a move to the Supreme Court, and asked for the case to be expedited.

"Whether an individual who is registered as a resident of one district may register in another district and vote in an election merely by declaring that he has an intent to make the new district his residence is an issue of fundamental importance," Dupree's attorneys wrote in court documents.

Disclosure: we represent the challenger.

As noted in the story, we recently applied to the Hawaii Supreme Court for a transfer of the case from the Intermediate Court of Appeals to the Supreme Court, and for expedited consideration pursuant to Haw. Rev. Stat. § 11-52 (1993). Transfer of an appeal from the ICA to the Supreme Court is mandatory if the appeal involves "a question of imperative or fundamental public importance." Transfer is discretionary if it involves "a question of first impression or a novel legal question." Haw. Rev. Stat. § 602-58 (1993). Appeals of residency issues are of great public importance and are subject to speedy resolution under section 11-52, which provides "[w]hen the appeal is perfected, the court shall hear the appeal as soon thereafter as may be reasonable."

More on the appeal here, including the briefs of the parties.

Election Law: Is Intending To Live Somewhere Enough To Be "Residing" There?

Yesterday, my Damon Key colleagues and I filed this brief on behalf of a Lanai voter, asking the Hawaii Intermediate Court of Appeals to affirm a decision by the State Board of Registration (County of Maui) which concluded that a Maui County councilperson who registered as a Lanai resident is actually a resident of Maui.

State law establishes the tests for determining residency for registration and other purposes, and includes "habitation," "permanent dwelling place," "physical presence," and a "present intention to establish the person's permanent dwelling place" in the district. See Haw. Rev. Stat. § 11-13 (1993). The councilperson registered as a resident of Lahaina, Maui, in 2006, but in 2008, the County Clerk determined the councilperson validly registered in the Lanai district. The Clerk determined only a registrant's stated intent is relevant. 

The Board overruled the Clerk, holding that both physical presence and intent are necessary under the statute, and the weight of the evidence showed no presence on Lanai. The Board issued these Findings of Fact, Conclusions of Law and Decision, and the Clerk and the councilperson appealed to the ICA. 

Here are the briefs filed so far:

• County Clerk's Opening Brief

• Councilperson's Opening Brief

• Lanai voter's Answering Brief

More to follow once briefing is complete.

Update: On June 10, 2009, we filed this application to transfer the case from the ICA to the Supreme Court, and for expedited consideration pursuant to Haw. Rev. Stat. § 11-52 (1993).

Materials And Links From Today's Water Law Seminar

To those who attended today's seminar "Integrating Water Law and Land Use Planning," thank you.  The materials from my session on "Water Rights, Property Rights and the Law of Settled Expectations" are below. 

• Kaiser Aetna v. United States, 444 U.S. 164 (1979) - the Hawaii Kai Marina case - physical invasions, regulatory takings, and interference with settled expectations.

• Haw. Const. art. XI, § 7  (the declaration of public trust).

• Hawaii's Takings Clause.

• U.S. Constitution, amend. V (federal takings clause).

• U.S Constitution amend. XIV (federal due process clause).

• 42 U.S.C § 1983 (federal civil rights statute).

• 42 U.S.C § 1988 (prevailing party attorney's fees statute).

• Maui Tomorrow v. State of Hawaii, 110 Haw. 234, 131 P.3d 517 (2006) - Hawaii water law is not a federal case.  Summary of the decision here.
  

• The State zoning law, Haw. Rev. Stat. ch. 205.

• The Hawaii State Planning Act, Haw. Rev. Stat. ch. 226.

• The Hawaii Water Code, Haw. Rev. Stat. ch. 174C.

• Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926), the case in which the U.S. Supreme Court first upheld the segregation of land uses in an Ohio suburban town into districts against a substantive due process challenge. Law students study the case, land use lawyers and planners know it intimately, and "Euclidean" zoning has become the shorthand for district-based single use zoning.

• Hadachek v. Sebastian, 239 U.S. 394 (1915) - the government's police powers can be used to protect against nuisances.

• Joseph L. Sax, The Public Trust Doctrine in Natural Resource Law: Effective Judicial Intervention, 68 Mich. L. Rev. 471 (1970).  Copy available here.  

• In re Water Use Permit Applications (Waiahole), 94 Haw. 97, 9 P.3d 409 (2000) (the mother of all Hawaii water law cases -- the decision so vast it required its own table of contents)

• In re Waiola O Molokai, Inc., 103 Haw. 401, 83 P.2d 664 (2004) (burdens of proof).

• State and local government agencies have public trust duties - Kelly v. 1250 Oceanside Partners, 111 Haw. 205, 140 P.3d 985 (2006).

• A counterpoint to Waihole: David L. Callies & Calvert G. Chipchase, Water Regulation, Land Use and the Environment, 30 U. Haw. L. Rev. 49 (2007).  Copy posted here.

• Hawaii vested rights: Arrow of Time - Vested Rights, Zoning Estoppel, and Development Agreements in Hawaii - 2006 U. Hawaii Law Review article. Drop me an email, and I will email you a pdf, or send you a hard copy (tell me which).

• Upsetting settled expectations in shoreline law - accretion and erosion: Maunalua Bay Beach Ohana 28 v. State of Hawaii, No. 28175 (Haw. ICA) - here's the brief we filed which illustrates the principle that the legislature (or a court) cannot simply change the settled law without raising takings concerns. The issue in that case is whether the state or littoral landowners are entitled to ownership of accreted land. In "Act 73," the legislature declared that shoreline land naturally accreted belongs to the State of Hawaii and is public property.  The act overturned the age-old rule of shoreline accretion and erosion, which held that beachfront owners lose ownership of land when it erodes, but gain it when it accretes.  Instead of these balanced rules, Act 73 made the erosion/accretion equation one-sided: the State wins every time. 

• Compensation for regulatory taking of water rights - Casitas Municipal Water District v. United States, No. 2007-5153 (Mar. 3, 2009).

New Cert Petition - Corps' Clean Water Jurisdiction Determination Is Reviewable Now

An Alaska borough has sought Supreme Court review of the Ninth Circuit's determination in Fairbanks North Star Borough v. U.S. Army Corps of Engineers, 543 F.3d 586 (9th Cir. 2008) (a decision we analyzed here). The cert petition is posted here (No. 08-1052).

The Ninth Circuit held a property owner has two choices when faced with what it believes is an erroneous determination by the Corps of Engineers that property contains wetlands: either (1) apply for a very expensive Clean Water Act permit, or (2) don't get a permit and challenge the Corps' jurisdiction when the federal government brings criminal or civil charges. The court held that since the Corps' jurisdictional determination is not a final agency action, the property owner cannot immediately challenge it under the Administrative Procedures Act. 

The borough wanted to develop a parcel for a playground, athletic fields, and associated infrastructure, and asked the Corps for a determination whether any of the property was "wetlands."  The Corps replied that the entire parcel was wetlands and was subject to regulation under the CWA.  In other words, before the borough could place any fill material on the property, it was required to obtain a section 404 permit from the Corps. The borough exhausted its administrative remedies, then challenged the determination in federal court asserting the wetlands determination was erroneous. The district court granted judgment on the pleadings to the Corps, holding that the jurisdictional determination was not "final agency action" under the APA and the court therefore had no jurisdiction.

The Ninth Circuit held the Corps' jurisdictional determination was not "tentative" or "interlocutory" and satisfied the first part of the two-part test for whether an agency action is judicially reviewable.  Slip op. at 12745 - 12748.  However, the Ninth Circuit held the Corps' action did not satisfy the second part of the test because it did not "impose an obligation, deny a right, or fix some legal relationship."  Slip op. at 12744 - 12745 (quoting Ukiah Valley Med. Ctr. v. FTC, 911 F.2d 261, 264 (9th Cir. 1990)). The court held "Fairbanks' rights and obligations remain unchanged by the approved jurisdictional determination. The court agreed that if the borough were to stick to its guns and developed its property without a 404 permit, "now that Fairbanks is on the Corps' radar screen," it is at least plausible that Fairbanks would be subject to an enforcement action.  "Whatever Fairbanks now chooses to do, it will be no more or less in violation of the CWA than if it had never requested an approved jurisdictional determination."  Slip op. at 12753.

The cert petition contains a single Question Presented:

Is a Jurisdictional Determination under the Clean Water Act, finding that Petitioner's property is subject to that Act's strictures, a "final agency action" subject to judicial review under the Administrative Procedure Act, where the Jurisdictional Determination: (1) affords the landowner a viable estoppel defense in a future enforcement action; (2) decides whether a CWA permit is necessary; and (3) subjects the landowner to elevated penalties?

The federal government's response is due March 23, 2009. More on the case from a local newspaper here.

Zoning Permit Case Update

Here's the latest on the Kauai Springs cases. As reported in The Garden Island (Kauai's daily), the Kauai Planning Commission issued the remaining zoning permit -- "Final Kauai Springs permit approved." 

More than three years after first submitting permit applications for its Koloa bottling facility, The Kaua‘i Springs water company finally left the Planning Commission with approved permits Tuesday.

The commission, complying with a fall 2008 order from 5th Circuit Judge Kathleen Watanabe, approved a special permit four weeks after doing the same for a use permit and a Class IV zoning permit. The three documents go a long way toward lifting the cloud that had been hovering over the company as it operated on the strength of a temporary injunction since May 2007.

The final permit approval came with caveats. Conditions were attached based on representations made by the applicant in the September 2005 permit application and agreed to Tuesday by Kaua‘i Springs owner Jim Satterfield and attorney Robert Thomas, according to David Minkin, special counsel for the county in the matter.

For more information about the case, here are some links to earlier media coverage:

• "Kauai Springs wins lawsuit against Planning Commission" (The Garden Island, Aug. 20, 2008)

• A May 2006 story about the case from the Honolulu Star-Bulletin

• A story from the Kauai newspaper about the TRO that halted the County's attempt to shut the business down while the appeal was being considered.

Materials From Hawaii Land Use Law Conference

To those who attended Thursday's and Friday's conference, thank you.  Here are the cases and other materials I mentioned in my portion:

• Shoreline setbacks and equitable estoppel - Brescia v. North Shore Ohana 115 Haw. 477, 168 P.3d 929 (2007) 

• State shoreline setback - Haw. Rev. Stat. § 205A-43

• Counties have authority to enact their own setbacks - Haw. Rev. Stat. § 205A-45

• No private right of action to enforce zoning - The Hawaii Intermediate Court of Appeals, in Pono v. Molokai Ranch, Ltd., 119 Haw. 163, 194 P.3d 1126 (2008), held that a private party had no standing to enforce the state's land use laws. The Hawaii Supreme Court rejected certiorari review of the case.  Disclosure: we represent the landowner. More here.

• Maunalua Bay Beach Ohana 28 v. State of Hawaii, the appeal now pending in the Intermediate Court of Appeals.  The issue in that case is whether the state or littoral landowners are entitled to ownership of accreted land. In "Act 73," the legislature declared that shoreline land naturally accreted belongs to the State of Hawaii and is public property.  The act overturned the age-old rule of shoreline accretion and erosion, which held that beachfront owners lose ownership of land when it erodes, but gain it when it accretes.  Instead of these balanced rules, Act 73 made the erosion/accretion equation one-sided: the State wins every time.  We filed an amicus brief in the appeal, a copy of which is available here.

• Substantive due process in the Ninth Circuit after Lingle - The Ninth Circuit Rediscovers Substantive Due Process in Land Use Cases

• County of Hawaii v. C & J Coupe Family Limited Partnership, No. 28882 (Dec. 24, 2008) - public use, pretext, and damages for failed taking

The majority opinion by Justice Acoba, joined by Justices Nakayama and Duffy is posted here:

We hold that (1) a landowner in a condemnation action is entitled to damages under HRS § 101-27 where the property at issue is not finally taken in the context of a particular condemnation proceeding, irrespective of whether the government attempts to take the land through subsequent condemnation proceedings; (2) abatement does not apply where the relief sought in two concurrent actions is not the same; and (3) although our courts afford substantial deference to the government's asserted public purpose for a taking in a condemnation proceeding, where there is evidence that the asserted purpose is pretextual, courts should consider a landowner's defense of pretext.  Therefore, (1) automatic denial of statutory damages under HRS §101-27 in Condemnation 1 is vacated and the case remanded for a determination of damages, (2) the court's conclusion that Condemnation 2 was not abated by Condemnation 2 is vacated and the case remanded for a determination of whether the public purpose asserted in Condemnation 2 was pretextual.

Slip op. at 5. Here's the concurring and dissenting opinion by Chief Justice Moon joined by Justice Levinson. The briefs in the case are available here:  Opening Brief, Answering Brief of the County of Hawaii, Reply Brief. Disclosure: we represent the property owner.

• "Arrow of Time, Vested Rights, Zoning Estoppel, and Development Agreements in Hawaii' (published by the U. Hawaii Law Review in Feb. 2006). Drop me an email, and I will email you a pdf, or send you a hard copy (tell me which).

2008 Land Use In Review: Contested Cases Refined

The Hawaii Supreme Court clarified when an agency hearing will be deemed to be a "contested case" in E & J Lounge Operating Co. v. Liquor Comm'n of the City & County of Honolulu, No. 27940 (July 29, 2008). The issue was whether, as the caption of the case indicates, a public hearing before the Honolulu Liquor Commission was a contested case under Haw. Rev. Stat. § 91-1(5). The court also held that under the automatic approval statute, Haw. Rev. Stat. § 91‑13.5, an agency must act to grant or deny a permit application within a certain time period, but is not required to make a "legally effective" decision, at least procedurally.  Slip op. at 64-65. More here.

2008 Land Use In Review: Zoning

A round up of interesting and notable zoning decisions:

• Zoning inspectors need a warrant - The US Court of Appeals for the Sixth Circuit, in  Jacob v. Township of West Bloomfield, 531 F.3d 385 (6th Cir. July 3, 2008), held that  zoning inspectors are required by the Fourth Amendment's search and seizure clause must obtain a warrant if the zoning ordinance they are purporting to enforce can lead to criminal prosecution. Full post here.

• Zoning can regulate use of property, not ownership - In City of Wilmington v. Hill, 657 S.E.2d 670 (N.C. Ct. App. 2008), the court struck down a local ordinance that required the owner of a garage apartment to reside either in the main residence or the apartment.  When his permit to build a garage apartment was denied and he was cited for violation of the ordinance, the property owner asserted the owner-occupancy requirement was an unconstitutional regulation of his ownership of the property. The court held that while the zoning power extends to regulating the use of property, it does not allow the government to control "the manner in which property is owned."  More here.

• No private right of action to enforce zoning - The Hawaii Intermediate Court of Appeals, in Pono v. Molokai Ranch, Ltd., 119 Haw. 163, 194 P.3d 1126 (2008), held that a private party had no standing to enforce the state's land use laws. The Hawaii Supreme Court rejected certiorari review of the case.  Disclosure: we represent the landowner. More here.

• No "property" interest in enforcement of zoning regulation - The Ninth Circuit held that there is no property right in the government's enforcement of historic preservation laws, and that a municipality's alleged failure to enforce its zoning laws was not a violation of the Fourteenth Amendment..  Shanks v. Dressel, No. 06-35665 (Aug. 27, 2008).  More here.

• Agency can tell landowner how to remain a nonconforming use - The planning department has the ability to inform a landowner whose use of property is a legal nonconforming use what it needs to do in order to remain so.  Save Diamond Head Waters LLC v. Hans Hedemann Surf, Inc., No. 27804 (Haw. ICA Dec. 19, 2008).  Details here.

Cal. Court of Appeals: No Record And No Findings By Coastal Commission = No Consideration

Section 30010 of California's Public Resource Code provides that the California Coastal Commission may grant a development permit that otherwise could not be granted in order to avoid a taking:

The Legislature hereby finds and declares that this division is not intended, and shall not be construed as authorizing the commission, port governing body, or local government acting pursuant to this division to exercise their power to grant or deny a permit in a manner which will take or damage private property for public use, without the payment of just compensation therefor. 

In a lengthy (51 page) opinion, the California District Court of Appeal (Sixth District) in McAllister v. California Coastal Comm'n, No. H031283 (Cal. Ct. App. Dec. 30, 2008) held that this statute requires the Coastal Commission to make specific findings that denying a coastal development permit would result in a taking. As summarized by the court:

The appeal raises myriad issues, one of which implicates two coastal development policies. One policy protects environmentally sensitive habitat areas—in this case, habitat for the Smith’s Blue Butterfly and coastal bluff scrub—by restricting development in those areas to uses that are dependent on habitat resources. Another policy protects property owners from the application of development policies in a way that deprives them of beneficial or productive use of their land and causes an unconstitutional taking without compensation. Under applicable regulations, where the strict application of a development policy would require the denial of a permit, but a denial would cause a taking, the permitting agency may relax the policy and grant a permit if it makes the required findings.

As we explain below, strict application of the policy restricting development in habitat areas to resource-dependent uses would have required the Commission to deny the permit. Nevertheless, the Commission granted it. The Commission now claims that it did so to avoid a taking. However, the Commission did not make the findings necessary to justify that action or even consider whether denying a permit would constitute a taking. Thus, in granting the permit, the Commission failed to proceed in the manner required by law and abused its discretion.

Slip op. at 1-2. No court held: no record and no findings by the Commission does not allow the reviewing court to reasonably infer that the Commission actually considered the "threshold question" of whether the proposed development was permissible. Slip op. at 30. The portion of the opinion which deals with regulatory takings begins on page 26.

HAWSCT: Separation of Powers Prohibits Legislative Transfer of Agency's Regulatory Fees to General Fund

How often in an appellate opinion does the court use the term "glom?" 

[The Appellee] gloms onto the "police power" aspect of the definition [of regulatory fees] in arguing that "Medeiros plainly concern[ed] the 'police power' of 'criminal investigative services,' not a user fee as suggested by [the state]."

No matter what you may think of the phraseology of Hawaii Insurers Council v. Lingle, No. 27840 (Haw. Dec. 18, 2008), the decision is important because who can take your money,  how they go about doing it, and what happens to your money afterwards, matters. As Chief Justice John Marshall famously wrote in McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819), "the power to tax is the power to destroy," and that may be even more true today where the power to regulate and impose fees may be the same thing.

Under Hawaii law, only the state Legislature and the various County Councils can impose taxes: the Legislature has the general taxation power, and the Councils have -- at least according to a recent decision by the Hawaii Supreme Court -- the exclusive power to determine property taxes. In Hawaii Insurers Council, the Hawaii Supreme Court held that assessments imposed by the state Insurance Commissioner were not unconstitutional "taxes" when imposed -- they were "regulatory fees" -- but the Legislature's transference of $3.5 million of the collected funds into the general fund violated separation of powers. 

The facts of the case are relatively straightforward and are set out in the opinion, so we won't repeat that effort. Read the slip opinion for the details. The short story is that the State of Hawaii no longer funds the Department of Commerce and Consumer Affairs from the general fund, but by user fees and fees imposed on regulated industries, including the insurance industry. The Insurance Regulation Fund contained the monies collected by the Insurance Commissioner. By statute, the money in the IRF could not be transferred to the state's general fund. Included in the insurance division's budget was a "reserve of surplus funds" to be used to cover expenses and contingencies that may  arise in the insurance industry (the rehabilitations, insolvencies, etc., we have all become very aware of recently on a national level). In 2004, the Legislature decided to change the statute and transfer $4 million of this money into the general fund, but that amount was cut by the Governor's line-item veto to $2 million. The following year, the Legislature transferred an additional $1.5 million to the general fund.

A lawsuit by the Hawaii Insurers Council followed, and eventually the Intermediate Court of Appeals held, among other things, that the assessments were "taxes" because they were not allocated to defraying the costs of providing services to the insurance industry and were not proportionate to the benefits received. See Hawaii Insurers Council v. Lingle, 117 Haw. 454, 459-60, 184 P.3d 769, 775 (Haw. Ct. App. 2008). The Hawaii Supreme Court partly agreed, and partly did not. The court first discussed its earlier opinion in State v. Medeiros, 89 Haw. 361, 973 P.3d 736 (1999), which identified two permissible types of fees: user fees (those charged for the use of an item of facility), and regulatory fees which include those imposed by an agency to cover the expenses of regulating an industry. At the end of the day, the Hawaii Supreme Court disagreed with the ICA and held that the fees imposed by the DCCA were not illegal "taxes" or "user fees," but were constitutional "regulatory fees" Ben Lowenthal does a good job of summarizing the court's reasoning here.

The most interesting part of the opinion, however, is not the minutiae of the different legal tests for taxes or user fees or regulatory fees, but the court's conclusion that the transfer of the funds by the Legislature to the General Fund violated the separation of powers doctrine. The court recognized that "separation of powers" is not formally a part of the Hawaii Constitution, but is an implied requirement, and concluded:

The legislature's promulgation of the transfer bills amounted to an impermissible blurring of the distinction between the executive power to assess regulatory fees and the legislative power to tax for general purposes. We therefore hold that the transfer bills unlawfully sought to transform $3,500,000 of legitimate regulatory fees into general tax revenue....As such, the $3,500,000 that was moved into the general fund pursuant to the transfer bills must be returned to the CRF so that they may be used for the regulation or benefit of the parties upon whom the assessments were imposed.

Slip op. at 41-42 (footnote omitted). While the opinion does not expressly say so, what seems to animating the court's decision is that the Legislature's raid of the funds crossed some indistinct and not-quite-defined line because when the IRF funds were placed into the General Fund, they could be spent in the same way as collected taxes. The court established a bright-line rule: agencies collect fees and legislatures tax, and never the twain shall meet. In other words, if the government collects a fee in order to regulate an industry, it better use the money collected to regulate the industry.

Finally, the court easily disposed of the equal protection class-of-one disparate treatment claim, holding there was a rational basis for requiring a regulated industry to pay for the costs of regulation. The court also rejected the State's claim that HIC did not exhaust administrative remedies, holding that the administrative process cannot make constitutional determinations, and consequently, there were no administrative remedies to exahust.