HAWSCT: Demand A Contested Case, And There's A Good Chance You'll Get One

...or at least an appeal from a contested case.

by Robert Thomas, InverseCondemnation.com December 14, 2013

The Hawaii Supreme Court has issued its latest opinion in the apparently eternal metaphysical question of the circuit courts' appellate jurisdiction to review decisions under the Hawaii Administrative Procedures Act, Haw. Rev. Stat. § 91-14 of state and county agencies acting in their quasi-judicial capacities. 

As we've discussed many times, that statute gives the circuit courts jurisdiction to review agency final decisions in "contested cases" (agency hearings which are required "by law," i.e., rule, statute, or due process requirements, and that determine the "legal rights, duties, or privileges of specific parties").

"Contested cases" do not need to be labeled as such, but are fairly easy to identify: for the most part, they look like trials (witnesses, evidence, and the like). But not always so: pretty much any agency ruling in a that is the result of a hearing in the agency's non-legislative capacity could be deemed a "contested case," as the decision we discuss below confirms. If an agency holds a contested case and makes a final decision, then any person aggrieved by that decision has the ability to go to circuit court for appellate review of the administrative record.

But what about agency decisions that are not actually the product of a contested case? The Hawaii Supreme Court previously held that someone who demands a contested case can appeal the denial pursuant to § 91-14. And in Kilakila O Haleakala v. Board of Land & Natural Resources, No. SCWC-11-0000353 (Dec. 13, 2013), the court has now concluded that an appeal lies from an agency's decision to grant a use permit even though it did not hold a contested case, if it has not resolved a third-party's demand for a contested case.

This case involved a challenge to the University of Hawaii's plans for a high-tech telescope up on the top of Maui's Haleakala. To build the telescope, UH needed a Conservation District Use Permit from the Board of Land and Natural Resources. It applied for a CDUA, but a group "dedicated to the protection of the sacredness of the summit of Haleakala" asked the agency to hold a contested case on the application. The agency did not grant or deny the request, but instead held a public hearing, after which it issued the CDUA, without acting on the contested case demand.

The opposing group appealed to the circuit court under § 91-14, but after the appeal was filed and the agency sought dismissal (for lack of jurisdiction), the agency granted the request for a contested case. When the circuit court "expressed concerns regarding the implementation of the permit in light of the pending contested case hearing," the agency responded that issues regarding a stay of the permit could be addressed in the agency's contested case hearing. The circuit court dismissed the appeal, "but it encouraged [the agency] to stay the permit until the contested case hearing concluded."

The opponents went to the court of appeals, which affirmed the circuit court's dismissal for lack of jurisdiction. The court concluded that the agency had not held a contested case, and thus § 91-14 jurisdiction could not be invoked. The Supreme Court agreed to review the case.

The court rejected UH's argument that the case was moot because the agency eventually granted the demand for a contested case, and thus the relief requested by the opponent group (hold a contested case) has been granted. The opponents argued that the appeal was not moot, because they also wanted to court to halt the construction of the telescope. The Supreme Court agreed, and held that because "the permit remains in effect [and] UH can still build on Haleakala," the issue was not moot.

On the merits, the court held that the lack of a "formal" contested case hearing was no impediment to the circuit court exercising administrative § 91-14 jurisdiction. It concluded that the agency public hearing was, in fact, a "contested case" determining the "rights, duties, and privileges" of UH because the university could not go forward with building the telescope without a CDUA, and thus an appeal lay from the agency's "final decision" issuing the permit to UH. The agency's failure to act on the opponents' demand for a contested case "became an effective denial" when the agency issued the permit. Finally, the court concluded that by requesting a contested case, the opponents were "involved" in a contested case, and, given its doctrine of wide-open standing in cases such as these, concluded that the opponents had alleged a sufficient interest to allow them to appeal. 

Two justices (Acoba and Pollock) concurred separately, concluding that the state constitutional provision protecting native Hawaiian rights and the public trust would independently give the court jurisdiction over the opponents' claims.

So here are you takeaways from this decision:

• It doesn't matter what the agency labels its process: if a hearing is required by rule, statute, or due process -- even a public hearing -- that's going to qualify as a "contested case."
• The circuit courts' administrative appellate jurisdiction under § 91-14 is read very broadly by the Hawaii Supreme Court. A case like this might have been better treated (at least conceptually) under the circuit courts' original jurisdiction, since the relief the opponents sought reminds us of that in a mandamus or declaratory action, and rather than going somewhere we're not sure the Legislature intended to go in § 91-14, the parties and the court shoehorned it into the Administrative Procedures Act. But no matter: it is now well-established under Hawaii decisional law that circuit courts have very broad and nearly plenary jurisdiction to review decisions by state and county agencies, even if there has not been a "formal" contested case.
• So here's your strategy: when in doubt, demand a contested case. If granted and you lose on the merits after the contested case, appeal. If denied a contested case, appeal. If the agency doesn't act on your request, appeal. Got it? 
• The interesting issue left open to be resolved in a future case is whether someone who challenges an agency's action must do so under the Administrative Procedures Act (and its short 30-day statute of repose) as the court just held she may, or whether she also has the option of seeking declaratory or injunctive relief in an original jurisdiction action. We'll see.  
• Agencies: don't issue permits and only afterwards act on requests for contested cases. You may have had some reason for doing so in this case, but it just looks bad, man. You don't win appeals by sitting on these requests until after you have already issued the permit being challenged, and then arguing in court that either the court has no jurisdiction because there was no contested case, or in the alternative that the case is moot because we now are holding one. We still can't figure out why that happened here.

As for the telescope project? The case was sent back to the circuit court for a ruling on the opponents' request for a stay. 

LINK: Kilakila O Haleakala v. Bd of Land and Natural Resources, No. SCWC-11-0000353 (Haw. Dec. 13, 2013)