Town v. Land Use Commission , 55 Haw. 538 ( 1974 )

OPINION OF THE COURT BY

KOBAYASHI, J.

Michael A. Town (hereinafter appellant), with his wife Bonnie, brings this appeal before this court after motion for summary judgment was granted to the Land Use Commission of the State of Hawaii (hereinafter appellee) and other named defendants, Daniel Fong and Haruo Fujitomo, by the circuit court of the second circuit in the State of Hawaii.

FACTS

On April 14, 1971, Ralph S. Yagi filed with the appellee a petition to amend the district designation for property located in the county of and on the island of Maui from its agricultural designation to a rural designation.

On April 15, 1971, the appellee informed Mr. Yagi by letter acknowledging the receipt of the petition, and stating, “After 45 but within 90 days following the public hearing the Land Use Commission is obliged to render a decision on your petition. ’ ’

On July 16, 1971, the appellee held a public hearing on Maui to consider the Yagi petition. Appellant, an adjoining landowner, and other interested parties were present at this hearing and spoke in opposition to the Yagi petition.

A subsequent meeting was scheduled for October 8,1971, on the island of Molokai to make a final decision on the Yagi petition. Appellant was present at the Molokai meeting; however, the decision on the petition was deferred at the request of Mr. Yagi.

Another meeting was scheduled for November 19, 1972, in Honolulu at which time the appellee scheduled a final decision on the Yagi petition. Appellant did not attend this meeting; however, he did write the appellee stating that it would be a violation of the Hawaii Administrative Procedure Act, HRS chapter 91, and a denial of due process if the petitioner were allowed to testify or give any further evidence on his petition. The decision on the petition was again deferred at the request of Mr. Yagi due to “some unforeseen circumstances ’ ’.

A meeting was scheduled for January 7, 1972, in Hilo. Appellant was not present at this meeting; however, he did write to the appellee, renewing his objection to the taking of any testimony or further evidence from the petitioner. Mr. Yagi made an appearance at this meeting and requested permission to speak in behalf of his petition. After being informed that he would be allowed to speak provided that he did not attempt to introduce any new evidence, Mr. Yagi proceeded to rebut all statements made by the opposition to his petition and submitted documents for the consideration of the appellee, said documents including an unofficial survey of the three largest distributors of vegetables and fruits on the island of Maui, indicating that there was little or no demand for Kula grown fruits, and a pamphlet published by the Federal-State Market News Service.

The appellee’s minutes of the January 7, 1972, meeting reveals that subsequent to the testimony given by Mr. Yagi, the following took place:

Since there was no further discussion, Vice-Chairman Tangen moved that this petition be approved on the following bases: matters of access and water can be worked out with the County; upon field investigation of the land under question, he was satisfied that this land is unsuitable for agricultural pursuits; and findings of the Maui County Planning Department regarding this request. He then elucidated that his motion for approval of the petition was “not based on anything that was said here today because these facts were made known to us before”.

The motion to approve this petition was carried.

On March 21,1972, appellant filed an appeal in the circuit court of the second circuit, State of Hawaii, Civil No. 1941, praying for reversal of the decision of the appellee on the Yagi petition. Both parties filed motions for summary judgment and the court granted the motion in favor of the appellee.

ISSUES

I. Whether the time period prescribed by HRS § 205-4 and Land Use Commission’s State Land Use District Regulation 2.35 stating that the appellee “shall” render a decision not less than 45 days after, but within 90 days of the public hearing, is mandatory or directory.

II. Whether the Land Use Commission acted properly under the applicable provision of the Hawaii Administrative Procedure Act, HRS chapter 91, at the January 7, 1972, meeting.

I. FORTY-FIVE TO NINETY DAYS TIME PERIOD

Appellant’s primary contention is that under Land Use Commission’s State Land Use District Regulation 2.35¹ and HRS § 205-4, prior to 1972 amendment,² the appellee was required as a matter of law to render a decision on the Yagi petition within the prescribed time period. Appellant contends that the sentence stating: “Within a period of not more than ninety days and not less than forty-five days after the hearing, the commission shall act upon the petition for change” (emphasis added), is a mandatory provision of the statute rather than directory and should the appellee fail to act within the prescribed period, any decision rendered thereafter is null and void.

In Hawaii Corporation v. Kim, 53 Haw. 659, 500 P.2d 1165 (1972), a case involving the failure of the appellant to give notice of its intention to bid on a state contract by the specified statutory deadline which was not to be later than six days prior to the opening of bids, we held:

We are of the opinion that the time specified in HRS § 103-25, as implemented, is mandatory and not subject to waiver by the appellee. HRS § 103-25 clearly provides “. . . he shall, not less than six calendar days prior to the day designated for opening bids, give written notice . . . .” (Emphasis added.) The language of the statute is plain and unambiguous that the prospective bidder must meet the time specified in the statute in giving his written notice of his intention to bid to have his bid considered by the officer charged with letting the contract for the construction .... [53 Haw. at 666, 500 P.2d at 1169]

In Territory v. Fasi, 40 Haw. 478 (1954), this court stated at 484:

The language is clear and explicit. The language “Within twenty days following any election, each candidate * * * shall file * * * an itemized statement of his * * * expenses * * * showing each amount expended, the purpose or object for which each expenditure was made, and the person or persons to whom made. Such statement shall be sworn to by each person making the expenditures and shall be open to public inspection’ ’ is as mandatory as The Ten Commandments. (Emphasis added.)

See also, Maui County v. do Rego, 24 Haw. 608 (1919).

The language of appellee’s Regulation 2.35 and HRS § 205-4 with regard to the time provision is plain and unambiguous with no implication of a contradiction in its intent. As stated in Territory v. Fasi, supra, at 483-84, citing Nichols, Ltd. v. Vannatta, 33 Haw. 602, 606 (1935), with approval:

“* * * neither official construction nor usage, no matter how long indulged in, can be successfully invoked to defeat the purpose and effect of a statute which is free from ambiguity, nor will the courts be influenced by the construction placed upon a statute by the officials whose duty it is to execute it where such construction is manifestly incorrect.”

We are of the opinion that the time period requiring a decision to be rendered after 45 days and before 90 days has elapsed following the public hearing clearly is a mandatory requirement and not merely directory, subject to the waiver by the applicant.³

We are of the further opinion that the argument by counsel for appellee during oral argument contending that since appellant’s only interest in the case was in preserving the status quo and that any delay on the decision by the commission was to his advantage and, therefore, the time limitation may be waived solely by the applicant, is without merit. An interested party to a proceeding for a change in boundary, especially where he is an adjoining property owner, has an inherent interest in the decision no matter what that decision may be and he is entitled to have that decision within the specified period of time. The impact that the change in boundary will have, if approved, to the use and value of adjoining property are factors that must be considered. The interested party should not be placed in a state of limbo at the discretion of the applicant or the appellee, and the time limitations prescribed by HRS § 205-4 and LUC Regulation 2.35 insures the protection of both the applicant and the adjoining landowners at both extremes.

Furthermore, HRS § 205-4, prior to 1972 amendment, provides, inter alia: “. . .a public hearing to be held on the appropriate island in accordance with the requirements of Section 205-3”, and the appropriate island in the instant case is the island of Maui. Neither § 205-3 nor § 205-4 provides for any ex parte appearances by the applicant before the appellee after the initial public hearing.

The facts of the instant case give a clear indication of the consequences which will result should the argument of counsel for the appellee prevail. The first meeting for rendering a final decision on the Yagi petition was scheduled on Molokai on October 8, 1971, 84 days after the public hearing and within the 45-90 days time prescribed by statute and appellee’s own rules. After the appellant, in good faith and at his own expense, made an appearance at the Molokai hearing, the decision on the Yagi petition was postponed at the written request of petitioner Yagi.

The next meeting date was scheduled for November 11, 1971, 118 days after the public hearing and beyond the 45-90 days time limit. Upon being notified that a final decision would be rendered on the Yagi petition at the meeting in Honolulu, appellant again made a good faith effort to protect his interest by informing appellee by letter that he objected to the taking of any further testimony by the commission without an opportunity to be heard. Again, at the request of the petitioner, the decision was postponed.

The meeting at which the actual decision was made fell on January 7, 1972, in Hilo, island of Hawaii, 175 days after the public hearing and well beyond the 45-90 days time period. Appellant again wrote the appellee, reiterating his request that further testimony not be taken without his being present.

The appellant was placed in an impossible position, which worked only to the advantage of the petitioner. Petitioner was allowed to pick and choose the meeting at which he felt his petition would receive the most favorable treatment, or wait until such time as the other interested parties, either for financial reasons or for sheer lack of time, had given up on making an appearance at a meeting at which there was no guarantee that a decision would be reached.

The approval of the Yagi petition was rendered in violation of HRS §§ 205-3 and 205-4 as well as Land Use Regulation 2.35 and is therefore null and void.

II. HAWAII ADMINISTRATIVE PROCEDURE ACT

Appellant has raised several procedural questions which give rise to the issue of whether appellee acted properly under the applicable provisions of the Hawaii Administrative Procedure Act (hereinafter HAPA), as enacted in HRS chapter 91, prior to any amendment in 1973. Specifically, appellant contends that the testimony given by petitioner Yagi and the statement made by Commissioner Tangen at the January 7, 1972, meeting in Hilo were in violation of the procedure which is required to be followed in a “contested case”.

APPLICABILITY OF HAPA

As stated in the 1961 Hawaii House Journal — Standing Committee Reports, Standing Committee Report No. 8, HAPA was adopted to “provide a uniform administrative procedure for all state and county boards, commissions, departments or offices which would encompass the procedure of rule making and the adjudication of contested cases.” We find nothing in HRS chapter 205, the enabling statutes of the Land Use Commission (appellee), which would exempt the appellee from the procedures set by HAPA. Thus, as a State agency, appellee must conform to the requirements of HAPA when acting in either a rule making capacity (quasi-legislative), or in the adjudication of a contested case (quasi-judicial).

RULE MAKING

The appellee contends that the procedure for the adoption of and amendment to district boundaries is strictly a rule making process and that therefore the actions of the appellee at the January 7, 1972, meeting were within the authority of the appellee in its rule making capacity and therefore no error was committed.

HRS § 91-1(4) defines “rule” as follows:

(4) “Rule” means each agency statement of general or particular applicability and future effect that implements, interprets, or prescribes law or policy, or describes the organization, procedure, or practice requirements of any agency. The term does not include regulations concerning only the internal management of an agency and not affecting private rights of or procedures available to the public, nor does the term include declaratory rulings issued pursuant to section 91-8, nor intraagency memoranda.

We are of the opinion that the adoption of district boundaries classifying lands into conservation, agricultural, rural or urban districts, or the amendment to said district boundaries is not a rule making process within the meaning of the above cited definition. See Aguiar v. Hawaii Housing Authority, 55 Haw. 478, 522 P.2d 1255 (1974). HRS § 205-3⁴ and §205-4 (see footnote 2) empower the appellee to effectuate the setting of boundaries under the scheme provided by HRS § 205-2.⁵ It logically follows that the process for boundary amendment is not rule making or quasi-legislative, but is adjudicative of legal rights of property interests in that it calls for the interpretation of facts applied to rules that have already been promulgated by the legislature.

CONTESTED CASE

Appellant, on the other hand, argues that this is a “contested case”, and that all of the provisions of HAPA with regard to contested cases are applicable.

HRS § 91-1(5) defines “contested case” as:

proceeding in which the legal rights, duties, or privileges of specific parties are required by law to be determined after an opportunity for agency hearing.

We are of the opinion that the instant case is a “contested case” within the definition cited above. The appellant has a property interest in the amending of a district boundary when his property adjoins the property that is being redistricted. East Diamond Head Association v. Zoning Board, 52 Haw. 518, 479 P.2d 796 (1971); Dalton v. City and County of Honolulu, 51 Haw. 400, 462 P.2d 199 (1969). Therefore, any action taken on the petition for boundary change is a proceeding in which appellant has legal rights as a specific and interested party and is entitled by law to have a determination on those rights.⁶

Turning now to the specifications of error made by the appellant, HRS § 91-9(c) states:

§ 91-9 Contested cases; notice; hearing; records. . . .

(c) Opportunities shall be afforded all parties to present evidence and argument on all issues involved.

HRS § 91-10(3) states:

§ 91-10 Rules of evidence; official notice. . . .

(3) Every party shall have the right to conduct such cross-examination as may be required for a full and true disclosure of the facts, and shall have the right to submit rebuttal evidence.

Under the facts of the instant case, the testimony of petitioner Yagi received by appellee at the January 7, 1972 meeting was in violation of the sections cited above and further violative of the provisions of HRS §§ 205-3 and 205-4. Appellant was not given the opportunity to present argument or rebuttal evidence of his own to counter the ex parte arguments presented by petitioner Yagi. Nor was he given the opportunity to cross-examine petitioner Yagi. Thus, prejudicial error was committed.

Similarly, appellee’s receipt of Commissioner Tangen’s field investigation “view” without a prior proper notice to appellant violates the provisions of HAPA in a contested case.

HRS § 91-10(4) states:

§ 91-10 Rules of evidence; official notice. In contested cases:

(4) Agencies may take notice of judicially recognizable facts. In addition, they may take notice of generally recognized technical or scientific facts within their specialized knowledge; butpariies shall be notified either before or during the hearing, or by reference in preliminary reports or otherwise, of the material so noticed, and they shall be afforded an opportunity to contest the facts so noticed. (Emphasis added.)

The statement conflicts with the requirements as prescribed in the cited section above. The “view” qualifies as technical facts within the specialized knowledge of Commissioner Tangen and amounts to what could be characterized as uncontroverted testimony in favor of appellant. The record reveals that appellant was not given any notice that a “view” was even contemplated, and was never afforded an opportunity to contest the facts so noticed.

Michael A. Town, attorney pro se, for appellants. E. J ohn McConnell, Jr., deputy attorney general (George Pai, attorney general, of counsel; Benjamin M. Matsubara, deputy attorney general, on the brief), for appellee Land Use Commission, State of Hawaii. Walter T. Shimoda for appellees Daniel Fong and Haruo Fujitomo.

Reversed.

1 State Land Use District Regulation 2.35 reads as follows:

2.35 Decision.

Within a period of not more than 90 days and not less than 45 days after such hearing, the Commission shall act upon the petition for change. The Commission may approve the change with six affirmative votes.

2 HRS § 205-4, prior to 1972 amendment, reads:

§205-4 Amendments to district boundaries. Any department or agency of the State or county, or any property owner or lessee may petition the land use commission for a change in the boundary of any district. Within five days of receipt, the commission shall forward a copy of the petition to the planning commission of the county wherein the land is located. Within forty-five days after receipt of the petition by the county, the county planning commission shall forward the petition, together with its comments and recommendations, to the commission. Upon written request by the county planning commission, the commission may grant an extension of not more than fifteen days for the receipt of any comments and recommendations. The commission may also initiate changes in a district boundary which shall be submitted to the appropriate county planning agency for comments and recommendations in the same manner as any other request for a boundary change.

After sixty days but within one hundred and twenty days of the original receipt of a petition, the commission shall advertise a public hearing to be held on the appropriate island in accordance with the requirements of section 205-3. The commission shall notify the persons and agencies that may have an interest in the subject matter of the time and place of the hearing. Within a period of not more than ninety days and not less than forty-five days after the hearing, the commission shall act upon the petition for change. The commission may approve the change with six affirmative votes. No change shall be approved unless the petitioner has submitted proof that the area is needed for a use other than that for which the district in which it is situated is classified, and either of the following requirements has been fulfilled:

(1) The petitioner has submitted proof that the land is usable and adaptable for the use it is proposed to be classified, or

(2) Conditions and trends of development have so changed since the adoption of the present classification, that the proposed classification is reasonable. (Emphasis added.)

Note: The Sixth State Legislature, 1972, by Act 187 amended the above emphasized phrase to read “appropriate county”.

3 The letter of appellee to Yagi on April 15,1971, stating “After 45 but within 90 days following the public hearing, the Land Use Commission is obliged to render a decision on your petition” is a good indication that the appellee recognizes this provision as mandatory.

It appears that at one point, the deputy attorney general handling the defense of appellee may have been willing to concede that the time requirement is mandatory when he stated in his Memorandum in Support of Motion for Summary Judgment at page 5, in Civil No. 1941, second circuit court, “Within a period of not more than ninety days.and not less than forty-five days, the LUC must act upon the petition.” (Emphasis added.)

4 HRS § 205-3 reads:

§205-3 Adoption of district boundaries. The land use commission shall prepare district classification maps not later than January 1, 1964 showing all the proposed boundaries of conservation, agricultural, rural, and urban districts. At least one public hearing shall be held in each county prior to the final adoption of the district boundaries for that county. Notice of the time and place of the hearing shall be published in the same manner as notices required for public hearings by the planning commission of the appropriate county. If there is no planning commission, then the notice shall be published at least twenty days prior to the hearing in a newspaper of general circulation within the county. The notice shall indicate the time and place that the maps showing the proposed district boundaries within the county may be inspected prior to the hearing.

At the hearing, interested owners, lessees, officials, agencies, and individuals may appear and be heard. They shall further be allowed at least fifteen days following the final public hearing held in the county to file with the commission a written protest or other comments or recommendations. The district boundaries within a county shall be adopted in final form within a period of not more than ninety days and not less than forty-five days from the time of the last hearing in the county; provided that district boundaries for ail counties shall be adopted in final form no sooner than May 1,1964, nor later than July 1,1964. The county concerned shall be furnished with copies of any written protest, comment, or recommendation. The commission shall prepare and furnish each county with copies of classification maps for the county showing the district boundaries adopted in final form.

5 HRS § 205-2 reads:

§205-2 Districting and classification of lands. There shall be four major land use districts in which all lands in the State shah be placed: urban, rural, agricultural, and conservation. The land use commission shall group contiguous land areas suitable for inclusion in one of these four major districts. The commission shall set standards for determining the boundaries of each district, provided that:

(1) In the establishment of boundaries of urban districts those lands that are now in urban use and a sufficient reserve area for foreseeable urban growth shall be included;

(2) In the establishment of boundaries for rural districts, areas of land composed primarily of small farms mixed with very low density residential lots, which may be shown by a minimum density of not more than one house per one-half acre and a minimum lot size of not less than one-half acre shall be included;

(3) In the establishment of the boundaries of agricultural districts the greatest possible protection shall be given to those lands with a high capacity for intensive cultivation; and

(4) In the establishment of the boundaries of conservation districts, the “forest and water reserve zones” provided in section 183-41 are renamed “conservation districts” and, effective as of July 11, 1961, the boundaries of the forest and water reserve zones theretofore established pursuant to section 183-41, shall constitute the boundaries of the conservation districts; provided that thereafter the power to determine the boundaries of the conservation districts shall be in the commission.

In establishing the boundaries of the districts in each county, the commission shall give consideration to the master plan or general plan of the county.

Urban districts shall include activities or uses as provided by ordinances or regulations of the county within which the urban district is situated.

Rural districts shall include activities or uses as characterized by low density residential lots of not more than one dwelling house per one-half acre in areas where “city-like” concentration of people, structures, streets, and urban level of services are absent, and where small farms are intermixed with the low density residential lots. These districts may include contiguous areas which are not suited to low density residential lots or small farms by reason of topography, soils, and other related characteristics.

Agricultural districts shall include activities or uses as characterized by the cultivation of crops, orchards, forage, and forestry; farming activities or uses related to animal husbandry, and game and fish propagation; services and uses accessory to the above activities including but not limited to living quarters or dwellings, mills, storage facilities, processing facilities, and roadside stands for the sale of products grown on the premises; and open area recreational facilities. These districts may include areas which are not used for, or which are not suited to, agricultural and ancillary activities by reason of topography, sods, and other related characteristics.

Conservation districts shall include areas necessary for protecting watersheds and water sources; preserving scenic and historic areas; providing park lands, wilderness, and beach; conserving endemic plants, fish, and wildlife; preventing floods and soil erosion; forestry; open space areas whose existing openness, natural condition, or present state of use, if retained, would enhance the present or potential value of abutting or surrounding communities, or would maintain or enhance the conservation of natural or scenic resources; areas of value for recreational purposes; and other related activities; and other permitted uses not detrimental to a multiple use conservation concept.

6 See East Diamond Head Assn v. Zoning Board, supra, and Dalton v. City and County of Honolulu, supra.