Sierra Club of Haw. v. Anaergia Serv.

154 Haw. 398

550 P.3d 1256

SIERRA CLUB OF HAWAI‘I, MAUI GROUP, a non-profit organization, and Maui Tomorrow Foundation, a non-profit organization, Plaintiffs-Appellees/Cross-Appellees,

v.ANAERGIA SERVICES, LLC, a foreign limited liability company, Maui All Natural Alternative, LLC, a foreign limited liability company, Defendants-Appellees/Cross-Appellants,andDirector of Environmental Management, County of Maui, Defendant-Appellant/Cross-Appellee,

and

Does 1-27

NO. CAAP-19-0000503

(CONSOLIDATED WITH CAAP-19-0000485)

Intermediate Court of Appeals of Hawai‘i.

May 31, 2024

APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT (CIVIL NO. 18-1-0236(3))

On the briefs:

Caleb P. Rowe and Richelle K. Kawasaki, Deputies Corporation Counsel, County of Maui, for Defendant-Appellant/ Cross-Appellee

Lance D. Collins for Plaintiffs-Appellees/Cross-Appellees

LEONARD, ACTING C.J., AND WADSWORTH AND NAKASONE, JJ.

OPINION OF THE COURT BY WADSWORTH, J.

This appeal stems from a dispute involving a proposed project for renewable energy conversion and sludge processing at the Wailuku-Kahului Wastewater Reclamation Facility (WKWRF) in Kahului, Maui (the Project). Plaintiffs-Appellees/Cross-Appellees Sierra Club of Hawai‘i, Maui Group and Maui Tomorrow Foundation (collectively, Plaintiffs) sued Defendant-Appellant/Cross-Appellee Director of the Department of Environmental Management, County of Maui (the County) and Defendants-Appellees/Cross-Appellants Anaergia Services, LLC (Anaergia) and Maui All Natural Alternative, LLC (MANA) (together, the Anaergia Defendants, and collectively with the County, Defendants). Plaintiffs alleged, among other things, that Defendants violated the Hawai‘i Environmental Policy Act (HEPA), Hawai‘i Revised Statutes (HRS) chapter 343, by processing an environmental impact statement (EIS) for the Project as an "applicant action" rather than an "agency action."

The County appeals and the Anaergia Defendants cross-appeal from the Final Judgment (Judgment), entered in favor of Plaintiffs and against Defendants on June 7, 2019, by the Circuit Court of the Second Circuit (Circuit Court).¹ Defendants also challenge the following Circuit Court orders, entered on May 30, 2019: (1) "Order Granting in Part and Denying as Moot Plaintiffs’ Motion for Partial Summary Judgment (Counts VII and VIII)" (Order Granting Summary Judgment on Count VII); (2) "Order Denying Plaintiffs’ Motion for Partial Summary Judgment (Counts II and V) as Moot"; and (3) "Order Denying [the Anaergia Defendants’] Motion for Partial Summary Judgment on Counts VII and VIII."

On appeal, the County asserts four points of error, all apparently based on the same contention stated in its first point of error² - that the Circuit Court "erroneously ruled that the … [P]roject constituted an ‘Agency Action’ rather than an ‘Applicant Action’ for the purposes of environmental review" under HRS chapter 343.³ The Anaergia Defendants substantively join the County’s opening brief.

We hold that the Project is an "agency action" for purposes of environmental review under HEPA. First, the Project is a HEPA "action" because it is a "program or project" - namely, "a planned undertaking" - "to be initiated by an agency or applicant." HRS § 343-2 (2010); Umberger v. Dep’t of Land & Nat. Res., 140 Hawai‘i 500, 513, 403 P.3d 277, 290 (2017). Second, the County "initiated" the Project by issuing a request for proposals (RFP) and hiring MANA to execute the Project. Based on the plain language of HRS § 343-2, the Project is an "agency action." The Circuit Court did not err in so ruling.

Accordingly, we affirm the Judgment.

I. Background

On March 21, 2016, the County issued the RFP for the "design, construction, operation and maintenance of a gas turbine system with sludge dryer for the [WKWRF] under a power purchase agreement (PPA)[,]" i.e., the Project. (Formatting and capitalization altered.) The County’s purpose was to replace existing fossil-fuel generated electricity with locally-sourced, renewable energy to meet the power needs of WKWRF, and to reduce wastewater sludge management costs by drying the sludge.

Anaergia was awarded the Project on May 19, 2016, and subsequently formed MANA to execute the Project.

On December 16, 2016, the Maui County Council approved Resolution No. 16-171, authorizing the County to lease to MANA "approximately one-acre of the [WK]WRF property for the Project" under the terms of a 20-year site lease.

On February 14, 2017, MANA and the County entered into a services agreement, which included the supply of firm, renewable energy for the WKWRF and sludge drying service for all municipally generated waste-water sludge.

The parties agree that the Project triggered "environmental disclosure document preparation" under HRS § 343-5. Accordingly:

• On June 23, 2017, the County submitted an Environmental Impact Statement Preparation Notice (EISPN) for the Project, which identified the Project as an "applicant action." On or about July 24, 2017, Plaintiffs submitted comments on the EISPN.

• On December 23, 2017, MANA’s draft EIS was published; it identified MANA as the "applicant." On or about February 6, 2018, Plaintiffs submitted comments on the draft EIS.

• On March 12, 2018, MANA transmitted the Final Environmental Impact Statement (FEIS) for the Project, which included responses to Plaintiffs’ comments. The FEIS was published on March 23, 2018, and the County’s acceptance of the FEIS was published on April 8, 2018.

On May 31, 2018, Plaintiffs filed their Complaint, alleging nine claims for relief. Count Seven (VII) alleged, among other things, that the County violated HRS Chapter 343 procedures by processing the EIS as an "applicant action" instead of an "agency action."

On February 27, 2019, Plaintiffs filed two motions for partial summary judgment, including a motion for summary judgment on Count VII. On April 4, 2019, the Anaergia Defendants filed a cross-motion for partial summary judgment, including for summary judgment on Count VII.

The Circuit Court heard the motions on April 24, 2019, and announced its decision on April 30, 2019, as follows:

As a matter of law, this Court concludes that the application should have been processed as an agency action[;] instead it was processed as an applicant action, … contrary to the requirements of [HRS] Chapter 343 … and the rules and regulations that relate to that.

Accordingly, the … Court grants summary judgment in favor of plaintiffs as to count seven and denies … defendant’s cross-motion for summary judgment.

On May 30, 2019, the Circuit Court entered the Order Granting Summary Judgment on Count VII, which stated in relevant part:

The proposed action is an agency action because it involves both the use of County land and the disposal of sludge generated from wastewater management, a government function that in part is being sourced to a private entity. The proposed action’s final environmental impact statement was accepted as an applicant action instead of an agency action. The different types of actions are classified and processed differently. Therefore, the proposed action’s final environmental impact statement is invalid.

The Court further ruled that "[t]he granting of summary judgment in favor of Plaintiffs as to Count Seven moots all other counts raised in the Complaint filed May 31, 2018."

Accordingly, on June 7, 2019, the Circuit Court entered the Judgment.

II. Discussion

[1] HEPA requires an environmental assessment "if three conditions are satisfied: (1) the proposed activity is an ‘action’ under HRS § 343-2 (2010); (2) the action proposes one or more of the nine categories of land uses or administrative acts enumerated in HRS § 343-5(a) …; and (3) the action is not declared exempt pursuant to HRS § 343-6(a)(2) (2010)." Umberger, 140 Hawai‘i at 512, 403 P.3d at 289. "HEPA defines ‘action’ as ’any program or project to be initiated by any agency or applicant.’" Carmichael v. Bd. of Land & Nat. Res., 150 Hawai‘i 547, 568, 506 P.3d 211, 232 (2022) (quoting HRS § 343-2). "It follows from this definition that there are two types of HEPA ‘actions’: agency actions and applicant actions." Umberger, 140 Hawai‘i at 512 n.17, 403 P.3d at 289 n.17 (citing Sierra Club v. Dep’t of Transp., 115 Hawai‘i 299, 306, 167 P.3d 292, 299 (2007)).

Here, the parties do not dispute that the Project required the preparation of an EIS pursuant to HRS § 343-5. Rather, their dispute concerns the proper processing of the EIS. As to this issue, the parties disagree as to what precisely the "action" was that triggered the environmental review provisions of HEPA, and whether that action is properly considered an "agency action" or an "applicant action" under HEPA.

[2] A HEPA "action," again, is "any program or project to be initiated by an agency or applicant." HRS § 343-2. "‘Program’ is generally defined as ‘a plan or system under which action may be taken toward a goal[ ]’ [and] ‘[p]roject’ is defined as ‘a specific plan or design’ or ’a planned undertaking.’" Carmichael, 150 Hawai‘i at 568-69, 506 P.3d at 232-33 (quoting Umberger, 140 Hawai‘i at 513, 403 P.3d at 290). "‘Agency’ is defined as ‘any department, office, board, or commission of the state or county government which is a part of the executive branch of that government’ and ‘applicant’ is defined as ‘any person who, pursuant to statute, ordinance, or rule, officially requests approval for a proposed action.’" Id. at 568 n.36, 506 P.3d at 232 n.36 (quoting HRS § 343-2). "An important preliminary step in assessing whether an ’action’ is subject to environmental review is defining the action itself." Sierra Club, 115 Hawai‘i at 306 n.6, 167 P.3d at 299 n.6.

[3] Relying in part on these definitions, Defendants contend that the Circuit Court erred in concluding that the Project was an "agency action" rather than an "applicant action." First, Defendants argue that "the ‘action’ which triggered the need for an EIS is the actual implementation of the … [P]roject to be...