The Public Utilities Commission of the State of Hawai`i (PUC) issued an order last Friday imposing stringent controls on the ongoing operations of Wailuku Water Company (WWC), formerly the Wailuku Sugar plantation, which sold off its farmlands for development and now seeks to profit from continued diversions of public streams. The PUC imposed these restrictions as part of an order suspending its docket regarding WWC’s application to operate as a “public utility,” until the state Commission on Water Resource Management (Water Commission) resolves in pending proceedings how much water, if any, WWC may divert from Na Wai `Eha — “The Four Waters” of Waikapü, `Iao, and Waiehu Streams and Waihe`e River on the island of Maui. The restrictions are intended to prevent WWC from expanding its unlawful operation as an unregulated public utility pending a final decision on its PUC application.

The PUC’s order includes:  requiring WWC to maintain current rates charged to customers; prohibiting WWC from adding any new customers; prohibiting WWC from selling, leasing, or transferring any of its assets; and requiring WWC to file periodic financial statements, status reports on the Water Commission proceedings, and a new or amended application after the Water Commission issues its decisions. Such restrictions were requested by Maui community groups Hui o Na Wai `Eha and Maui Tomorrow Foundation (Community Groups), represented by public-interest environmental lawfirm Earthjustice; the Office of Hawaiian Affairs (OHA); and the County of Maui, a major WWC customer.

“For too long, WWC has monopolized Na Wai `Eha streamflows belonging to the public trust for its own private gain,” said John V. Duey, longtime `Iao Valley resident and President of Hui o Na Wai `Eha. “We’re glad that the PUC has cracked down on WWC’s water profiteering while the Water Commission determines whether WWC can take any water in the first place.”

“We applaud the PUC for not allowing just ‘business as usual’ by WWC, while deferring to the Water Commission regarding the fundamental question whether WWC should be diverting Na Wai `Eha streams at all,” said Irene Bowie, Executive Director of Maui Tomorrow.

The current battle over Na Wai `Eha streamflows began in earnest in June 2004, when Earthjustice filed a petition requesting that the Water Commission amend the instream flow standards (IFS) of the streams and restore flow for instream purposes such as the protection of native ecosystems and cultivation of the Native Hawaiian staple, taro. Hearings on the IFS petition extended from December 2007 to October 2008, and the Water Commission is expected to issue a decision later this year. In the meantime, in March 2008, the Water Commission granted Earthjustice’s petition to designate Na Wai `Eha as a surface water management area under the State Water Code, which requires existing Na Wai `Eha water users, including WWC and its customers, to apply to the Water Commission for permits by April 30, 2009.

The PUC began investigating WWC’s operations in September 2006 after receiving complaints that WWC was unlawfully operating as a “public utility” selling water to the public without necessary PUC approvals. After repeated delays, WWC applied for such approvals in February 2008.  Numerous parties intervened in the docket, including the Community Groups and OHA, after which the PUC inquired whether it should suspend its docket until the Water Commission resolved the underlying dispute over the water resources. In the end, the PUC decided to suspend the docket pending the Water Commission’s decision in both the IFS and water permitting proceedings, but imposed stringent restrictions on WWC’s ongoing operations during the suspension period, as the Community Groups, OHA, and Maui County requested.

WWC has long been aware of the prospect of PUC regulation and has sought to avoid it.  Many of the water agreements between WWC and its customers, which were finally disclosed during the Water Commission hearings, expressly prohibit WWC customers from seeking or supporting regulation of WWC by the state, including the PUC in particular.

“WWC’s unregulated water profiteering has been an ongoing affront to the public, and the PUC has taken the first, bold step of holding WWC accountable,” said Earthjustice attorney Isaac Moriwake. “We hope that the state, including the Water Commission, will continue to take the steps necessary to bring this former plantation diverter into the 21st century and under the rule of law.”