Ka Wai Ola - Office of Hawaiian Affairs, Volume 27, Number 4, 1 April 2010 — Water Commission should focus on laws protecting East Maui communities, not commercial interests of A&B [ARTICLE+ILLUSTRATION]

Water Commission should focus on laws protecting East Maui communities, not commercial interests of A&B

By Alan T. Murakami and Oamille Kalama n his Sunday, March 7, Honohihi Advertiser opinion article, "The case for saving HC&S: Jobs — nearly 800 — are reason enough to keep working sugar," Hawaiian Commercial & Sugar (HC&S) Co. President Chris Benjamin played on the fears of his workers and the puhlie to make his case for "saving" HC&S. In doing so, he ignores basic eeonomie reality. AH the water in East Maui can't save HC&S' sugar operations. HC&S plants sugar on about 27,000 acres in fields irrigated with an average of 166 million gallons per day of East Maui stream water. That's as mueh as Honolulu's Board of Water Supply provides all of 0'ahu's residents, with 80 percent of the state populahon. It diverts an additional 50 million gallons per day from streams in Central Maui. (For more information on the Nā Wai 'Ehā case, see the March issue of Ka Wai 01 a.) HC&S prides itself in committing to staying open for another year, even when it suffered "$45 million of drought-induced losses over two years" in 2008 and 2009. In a blatant attempt to inhuenee the deliberations of the state Commission on Water Resource Management, the board of Alexander & Baldwin, the parent company of HC&S, publicly trumpeted its decision just days prior to the commission's December 2009 meeting on restoring East Maui streamflows. The A&B board deferred its final decision on closing the plantation, effectively holding the commission hostage in returning a favorable result. HC&S is diverting attention from its real issues. The reality is that no amount of water ean save these jobs in the long run. Lower labor and production costs in Asia are the key reasons why a half dozen former Hawai'i sugar plantation operations abandoned operations in Hawai'i over the past 30 years. Alexander and Baldwin's HC&S is no different financially, except it benefits from using eheap water from 33,000 acres of former Crown Lands taken from the Hawaiian Kingdom in East Maui, amounting to state corporate welfare. Instead of dealing with this reality, the company continues to pit its 800 HC&S sugar workers against East Maui kalo farmers and cultural practitioners. The state should be making policy decisions based on the best interests of the puhlie and respect for the constitutional rights of East Maui kalo farmers, subsistence gatherers and those who fish. If those uses are accommodated, the commission should then be guided by only the aeiual needs of diverters. DR0UGHTIS N0ĪĪHEMAIN CAUSE 0F RECENT HC&S L0SSES HC&S's $45 million combined loss for 2008 and 2009, during whieh

its diversion of puhlie trust water was unrestricted and sugar prices reached record highs, was not, as Benjamin claimed, "drought-induced." It was self-induced. In 2007, to correct for low yields caused by crop mismanagement, Steve Holaday, then-president of HC&S, testified under oath in the Nā Wai 'Ehā case that HC&S decided to reduce its harvest in 2008 and 2009 "to allow for an increase in crop age, so as to improve yields." He indicated that "the short term result will be diminished revenues both from reduced sugar production and reduced production of bagasse to fuel the power plant." Although drought may have contributed to losses, HC&S cannot explain how it made money during the drought in 2006, when A&B's agribusiness operations made $7 million in profits, and in 2007, when it made $200,000 in profits. Conversely, when the drought seemed to abate - if flow in Honopou Stream is any indication - in 2009, A&B posted its greatest annual loss in profits that year, $32 million. Something other than water availability is making the profit line glow red. If anything, we agree with the notion that facts, not myths, are important. » MYTH: HC&S is an 1efficient water user » FACT: HC&S takes far more water from Maui's streams than it actuaiiy needs Sugar is simply not a waterefficient crop. Other crops use far less water - 2,500 gallons per acre per day. HC&S claims to use only "drip irrigation throughout (its) 35,000 acres to maximize use of water, andrecycling systems in (its) factory to use water muhiple times before irrigating our crops with it." If a ehanee inspection is any indication, it established a distorted view of drip irrigation. Benjamin claims "(s)ome seepage occurs in the 90 miles of mostlylined ditches," in order to supply users who otherwise "would have no water." In fact, the dilapidated state of the East Maui Irrigation Co.'s diversion system leaks like a sieve, with undocumentedlosses of millions of gallons of water per day. Most of the loss is unmetered. Moreover, A&B pays the State of Hawai'i less than 1/4 of a penny for every 1,000 gallons it uses, a tremendous disincentive to investing in conservation measures to reduce waste, because the relative cost of conservation is high. Wasting

water is simply cheaper to endure, especially when there is no agency demanding efficiency. Incidentally, this below-market price for East Maui stream water deprives the Office of Hawaiian Affairs significant revenues for the use of ceded land resources while depriving its beneficiaries of water. If the next lowest price for irrigation water in the state is 39 cents per thousand gallons, it goes without saying that there is a significant prospect for increasing revenues to the OHA trust. Instead, A&B enjoys corporate welfare fromthis subsidy amounting to hundreds of millions of dollars over the decades this practice has occurred. Finally, the commission's staff has concluded that HC&S' water use is "excessive," by standards established by the University of Hawai'i. If true, then 40 percent to 70 percent of HC&S's admitted use is "excessive." See Fig. 1 - Comparison of Reasonable and Actual Water Use (data provided by Commission on Water Resource Management staff submittal September 2008). According to U.S. Geological Survey studies, this difference alone could likely restore 90 percent of stream habitats in the 19 East Maui streams that are targeted for restoration. Thus, the evidence refutes Benjamin's elaim that HC&S efficiently uses the water it takes from Maui streams, all of whieh he contends "is consumed by the plant or retums to Maui's aquifers for use by the broader community." » MYTH:HC&S'water 2use is supported by the law » FACT: The law does not allow commercial use to liump stream heallh, traditional and customary rights, or the state's duty to protect a puhlie trust resource for the benelil of all Benjamin's assertion that "our constitution protects agriculture just as it does traditional and customary Hawaiian rights" is a fundamental misunderstanding of the law. The Hawai'i Supreme Court

affirms that the "agricultural use of water is recognized both by our laws and the state constitution" and "in the puhlie interest." Nevertheless, traditional and customary Hawaiian rights have superior standing to "commereial private interests" to use water. The diversions from East Maui streams undeniably deprive East Maui aquifers of an equivalent amount of recharge. This recharge also is the source of downstream springs (punawai), many of whieh feed taro lo'i or restore downstream reaches now left dry by the EMI's massive diversions. Also, the flow of fresh water into the East Maui coast is critical to the fish and other marine populations that depend on the resulting estuarine environments. Moreover, Hawai'i's Water Code allows only "reasonable-beneficial," uses of water, not excessive use. » MYTH:A&B/HC&S are eommitted to agriculture 3» FACT: Agriculture is only a small fraction of A&B's otherwise profitabie businesses A&B highlights its designation of 27,000 acres on Maui (out of the 35,000 acres it currently cultivates) as "important agricultural lands" to prove its commitment to agriculture. One must remember, however, that this designation provides significant tax credits for A&B, some of whieh ean be devoted to paying attomeys' fees to fight Maui residents trying to enforce their superior rights by restoring streams to support Hawaiian culture, produce food for loeal eonsumption and enhanee food security. Nevertheless, by A&B's own reports from 2008, shipping and real estate operations comprise the majority of its revenues (94 percent) and profits ($255 million), whieh dwarf all of its agribusiness operations (6 percent of total revenues; $13 million profit loss). This loss occurred even without restoring water. In 2009, it lost more than double than the previous year on its agribusiness ($32 million), when more rain fell. » MYTH: HC&S is expioring an energy future » FACT: HC&S is 4exploring an energy future using a puhlie trust resource Although HC&S may be exploring an energy future, sustainability is part of that goal and should include producing crops that are far less thirsty than sugar. With its water priced so cheaply, there has been no incentive to pursue such crops. More fundamentally, as trustee of the public's water resources, the commission may not subsidize HC&S at the expense of puhlie trust purposes. Sustainable energy cannot be built upon puhlie subsidies of eheap water. It must also include sustainable uses. Moreover, HC&S's definition of "renewable" energy is obviously

different than the general public's. Benjamin boasts that HC&S provides 7 percent of Maui's electricity needs, "primarily throughrenewable resources," but its annual report for 2008 discloses that it burned 26,600 barrels of oil and 96,400 short tons of eoal to produce that electricity. » MYTH: The Water Commission has accommodated all known taro growers 5» FACT: Many taro growers are still without sufficient or any water. Benjamin's allegation that the Water Commission accommodated all known taro growers is misleading. The Water Commission in September 2008 flow standards for eight streams in East Maui at a combined total of 12 million gallons per day for taro cultivation and increasing habitat for native species. In other words, restoration of flow in addition to the existing flows should equal 12 million gallons per day. HC&S has failed to achieve this flow standard, especially on Honopou Stream, where the Kekahuna/ Wallett 'ohana still suffer from low flow, whieh has rarely if ever, according to USGS measurement near the interim instream flow standard point, reached the 2.0 euhie feet per second standard set for that stream for over the past year. In fact, in the past 18 months, the Water Commission staff, with its severely depleted resources has not been able to establish a calibrated measurement standard to eheek whether the Honopou standard has been met. C0NCLUSI0N The bottom line is that A&B is trying to make this about HC&S and its 800 workers versus taro farmers, claiming that the return of any water will cause its demise. The commission raised this issue in December when it refused to accept its own staff's recommendation to restore water to only one of 19 streams in East Maui, requesting information on a host of issues, including whether taro growers in East Maui have enough water. The reality is that HC&S is losing millions of dollars every year even while it continues its diversion of almost 200 million gallons per day from Maui's streams. Let's have some perspective here. The commission must look at the larger issue of sustainability on Maui and decide both how it's going to fulfill its duties under the law and protect the best interests of all of Maui's citizens. ■ Alan T. Murakami is the litigation director for the Native Hawaiian Legal Corp. Together with Camille Kalama of NHLC, they represent Nā Moku Aupuni O Ko 'olau Hui, centered in Wail-uanui-Ke'anae, and Beatrice Kekahuna and Marjorie Wallettwho farm and live in Honopou Valley.

kūkākūkāCDmmUnlty tDrUm

featuring native hawaiian news, features and eve ts | ka wai ola | the living water of OHA

Alan Murakami

Camille Kalama