Sierra Club of Hawai'i v. Anaergia Services, LLC. Consolidated with CAAP-19-0000503.

FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
31-MAY-2024
08:19 AM
Dkt. 39 OP

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

–––O0O–––

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,
and
DIRECTOR OF ENVIRONMENTAL MANAGEMENT, COUNTY OF MAUI,
Defendant-Appellant/Cross-Appellee,
and
DOES 1-27

NO. CAAP-XX-XXXXXXX
(CONSOLIDATED WITH CAAP-XX-XXXXXXX)

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

MAY 31, 2024

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-
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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), Hawaii 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"

1/
The Honorable Joseph E. Cardoza presided.
On July 3, 2019, the County filed a notice of appeal from the
Judgment, initiating appellate case number CAAP-XX-XXXXXXX. On July 11, 2019,
the Anaergia Defendants filed a notice of appeal from the Judgment, initiating
appellate case number CAAP-XX-XXXXXXX. The latter notice was actually a
notice of cross-appeal. See Hawai#i Rules of Appellate Procedure (HRAP) Rule
4.1. On September 3, 2019, this court entered an order consolidating
appellate case numbers CAAP-XX-XXXXXXX and CAAP-XX-XXXXXXX under CAAP-19-
0000503.
2/
The County presents no separate, discernible argument supporting
points of error 2, 3, and 4. See HRAP Rule 28(b)(7) ("Points not argued may
be deemed waived.").

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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.

3/
HRS § 343-5(b) and (e) (Supp. 2016) state, in relevant part:
(b) Whenever an agency proposes an action in
subsection (a), other than feasibility or planning studies
for possible future programs or projects that the agency has
not approved, adopted, or funded, or other than the use of
state or county funds for the acquisition of unimproved real
property that is not a specific type of action declared
exempt under section 343-6, the agency shall prepare an
environmental assessment for the action at the earliest
practicable time to determine whether an environmental
impact statement shall be required; provided that if the
agency determines, through its judgment and experience, that
an environmental impact statement is likely to be required,
the agency may choose not to prepare an environmental
assessment and instead shall prepare an environmental impact
statement that begins with the preparation of an
environmental impact statement preparation notice as
provided by rules.
. . . .
(e) Whenever an applicant proposes an action specified
by subsection (a) that requires approval of an agency and
that is not a specific type of action declared exempt under
section 343-6, the agency initially receiving and agreeing
to process the request for approval shall require the
applicant to prepare an environmental assessment of the
proposed action at the earliest practicable time to
determine whether an environmental impact statement shall be
required; provided that if the agency determines, through
its judgment and experience, that an environmental impact
statement is likely to be required, the agency may authorize
the applicant to choose not to prepare an environmental
assessment and instead prepare an environmental impact
statement that begins with the preparation of an
environmental impact statement preparation notice as
provided by rules. The final approving agency for the
request for approval is not required to be the accepting
authority.

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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 wastewater 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

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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.

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II. Discussion

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.
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

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environmental review is defining the action itself." Sierra
Club, 115 Hawai#i at 306 n.6, 167 P.3d at 299 n.6.
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 undertaken by the Anaergia Defendants in response
to the County's RFP," not the RFP itself. Relatedly, Defendants
assert that the RFP included no "specific plans, systems, designs
or undertakings[.]" Second, Defendants argue that the Project is
an "applicant action" under former Hawai#i Administrative Rules
(HAR) § 11-200-6, because the Project (1) requires agency
approval from the County, and (2) is being implemented entirely
by the Anaergia Defendants.
Plaintiffs, on the other hand, contend that wastewater
and waste management are "traditional government functions," and
"[t]he [C]ircuit [C]ourt correctly identified municipal waste
management as the action under review." (Formatting altered.)
Plaintiffs argue: "[T]he [P]roject . . . is a public wastewater
system that includes a subprocess – sludge drying – that would be
operated by a private entity – Anaergia. That the County
privatizes one subprocess in the wastewater system to a private
entity does not turn the public wastewater system into a private
one." Based on the definition of "action" in HRS § 343-2,
Plaintiffs further argue that the Project is an "agency action"
because the County "initiated" it.
In reaching its decision, the Circuit Court reasoned in
part: "At its core the activity itself involves the processing
and disposal of waste. The technology may be new and innovative
and arguably more efficient, . . . [but] regardless of . . . what
technology is used, the project does involve the disposal of
sludge generated from wastewater management, a government
function that in part is being sourced to a private entity,
MANA." The County does not directly refute this conclusion,
focusing instead on "the unspecified and open ended nature of the
RFP," which the County contrasts with "the actual implementation

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of the . . . [P]roject as proposed by the Anaergia Defendants in
the service agreement . . . ." Thus, it appears that the County
is attempting to separate and silo the RFP from the Project the
County intended to initiate through the RFP, and despite the fact
that the County is a party to the operative services agreement
with MANA.
The County's narrow construction of the relevant HEPA
"action" does not comport with HEPA's statutory language or
mandate. At bottom, the County issued the RFP to initiate a
"program" or "project" (HRS § 343-2) – the "design, construction,
operation and maintenance of a gas turbine system with sludge
dryer for the [WKWRF] under a [PPA]." The later EIS, which the
County approved, repeated the County's purpose in issuing the
RFP, as follows:

The County . . . desires to supplant existing fossil fuel
generated electricity at its [WKWRF] with locally sourced,
renewable energy for the community. In addition, the County
. . . seeks an outcome that reduces wastewater sludge
(biosolids) management costs by drying the sludge. The
County . . . issued [the RFP] to address these needs and
engaged [MANA] as a result of the RFP.

In short, the County hired MANA to execute the County's "planned
undertaking" of the Project. Umberger, 140 Hawai#i at 513, 403
P.3d at 290. The Project is the HEPA "action."
Further, the Circuit Court did not err in concluding
that the Project was an "agency action" rather than an "applicant
action" for purposes of environmental review under HRS chapter
343. The County "initiated" the Project by issuing the RFP and
engaging MANA to execute the Project. Based on the plain
language of HRS § 343-2, the Project qualifies as an "agency
action." HRS § 343-2 (defining an "action" as "any program or
project to be initiated by any agency or applicant"); Umberger,
140 Hawai#i at 512 n.17, 403 P.3d at 289 n.17 (noting that this
definition distinguishes "agency actions" and "applicant
actions"). In addition, as the Circuit Court reasoned, the
Project involves the use of County land and wastewater
management, which is not only a traditional government function,
but one which the County has undertaken at WKWRF. The Project is
an "agency action" for purposes of environmental review under

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HEPA.
The County's reliance on former HAR §§ 11-200-5 and -6
is misplaced. HAR §§ 11-200-5 and -6, which addressed the
applicability of HRS chapter 343 to agency actions and applicant
actions, respectively, were repealed, effective August 9, 2019.
That was before the County filed its opening brief asserting that
these rules control in determining whether an action is an agency
or applicant action. It appears that these repealed rules were
replaced in part by HAR §§ 11-200.1-8 and -200.1-9, but the new
rules contain substantively different language from the old
rules, and, importantly, do not contain the language relied on by
the County. In any event, we reject the County's interpretation
and application of former HAR § 11-200-6, as inconsistent with
the plain language of HRS § 343-2.
For the reasons discussed above, the Final Judgment
entered on June 7, 2019, by the Circuit Court of the Second
Circuit, is affirmed.

On the briefs:
/s/ Katherine G. Leonard
Caleb P. Rowe and Acting Chief Judge
Richelle K. Kawasaki,
Deputies Corporation Counsel,
County of Maui, /s/ Clyde J. Wadsworth
for Defendant-Appellant/ Associate Judge
Cross-Appellee

Lance D. Collins /s/ Karen T. Nakasone
for Plaintiffs-Appellees/ Associate Judge
Cross-Appellees

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