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Hoping to spur a resolution of a yearslong dispute over stream water in West Kauai, the state Agribusiness Development Corporation approved a five-year lease to the Kauai Island Utility Cooperative for its Puu Opae hydropower project.

The lease is subject to any conditions that may result from the dispute resolution process and must be issued no later than Dec. 30.

The decision, made at the ADC board’s Nov. 16 meeting, brings KIUC closer to securing control over the land and water resources needed for its pumped storage hydropower project that utility representatives say may one day supply 10 percent of the island’s electricity.

In addition, they say, the project will improve and maintain valuable irrigation infrastructure at no cost to the state, while bringing much-needed water to land the Department of Hawaiian Home Lands wants to see cultivated and developed.

The lease, which may be extended to 65 years, covers the upper portion of the Kokee Ditch, four stream intakes and the Mana reservoir. Together with the Kekaha Ditch, the Kokee system feeds the ADC’s 12,500 acres of agricultural lands in Kekaha.

Securing the lease by Dec. 30 will be a tall order, with the ADC and its tenant co-op, the Kekaha Agriculture Association, in the midst of a fight over the stream water diverted by the two ditch systems.

In July 2013, a community group represented by Earthjustice filed a petition and complaint with the state Commission on Water Resource Management calling for the end of water waste by the ADC and KAA, as well as amendments to the interim instream flow standards of Waimea River and its tributaries. The group, Poai Wai Ola: the West Kauai Watershed Alliance, argued that the ADC’s Kekaha tenants required much less stream water than the former sugarcane plantation and that they were simply dumping the excess rather than returning it to its streams of origin.

Parties to the case have been in mediation for more than a year, hoping to avoid a drawn-out, expensive contested case hearing. Meanwhile, the petition has suspended KIUC’s plans for the Puu Opae project, which company representatives have said will require 11 million gallons of water a day.

With the petition and complaint still unresolved, “we had to pull the trigger to force the parties to really come together,” said deputy attorney general Myra Kaichi at the ADC’s board meeting last month. “If (the petition) goes into contested case, we’ll be in it for 20 more years. We can’t afford that. Everyone has to come to an agreement. Everybody has to give up a little.”

Earthustice attorney David Henkin questioned the utility’s claimed need of such a large amount of water (especially for a project that simply shuffles water back and forth between two reservoirs), but told Environment Hawaii that he would welcome a 21st century hydropower project that has a minimal impact on the environment.

“We think there’s enough water for justified offsteam use, but don’t want wasteful technology to generate power and not food,” he said.

He added that while he and his client would like to resolve the water dispute sooner than later, they’re not going to allow an artificial deadline to force an agreement.

“Whatever moves forward has to address the needs of the river and the needs of the local community,” he said.

Contingencies

Under its Puu Opae project, KIUC plans to use solar power to pump water from the Mana reservoir on ADC lands to the DHHL’s high-elevation Puu Opae reservoir during the day. During peak demand hours at night, it will release the pumped water downhill through a powerhouse to generate electricity. In addition, KIUC plans to deliver water to the ADC’s tenants, the DHHL, and taro farmers fed by one of the smaller ditches.

“More than sufficient water for the ADC Mana plain tenants will be stored in the Mana reservoir for irrigation purposes at all times. A separate irrigation pumping station will be installed that will allow the ADC and the (KAA) to control irrigation releases independent of the project operations and based on irrigation needs,” states an ADC staff report to the board.

Before any of that can happen, several obstacles — in addition to the mediation resolution — must be cleared first. Foremost among them is the fact that the KAA, which has managed all of the ADC’s infrastructure in the area for nearly a decade, has 11 years remaining on its license to operate and maintain the Kokee Ditch and Mana reservoir.

Before the lease to KIUC can be issued, the ADC must renegotiate its memorandum of agreement with the KAA that spells out the terms under which the co-op maintains and operates the irrigation infrastructure. Because the Mana reservoir sits on lands currently included in Syngenta’s license, the ADC must also work with the company to remove the reservoir and some surrounding lands from its license.

Renegotiating the agreement with the KAA, Kaichi said, “is also a delicate balance. We have to make sure KAA tenants … have benefits and use of that project and the KIUC project can still function.”

She hinted that KIUC could direct royalties from its project to the KAA to fund infrastructure improvements on those parts of the ditch system it still controls or to be used to purchase electricity from KIUC.

The right to divert water from the streams feeding the Kokee Ditch must also be transferred from the ADC to KIUC, which must obtain a water lease from the state Board of Land and Natural Resources. Although Kaichi said that the Department of Land and Natural Resources seems to support the idea, it’s not guaranteed that KIUC would succeed in securing a water lease. Such leases are generally awarded via a public auction. And in the case of East Maui, the lease applicant has been tasked with conducting a full environmental impact statement beforehand.

Although the ADC determined that no environmental review is required before it issues KIUC a land lease — because the lease will merely continue existing diversions — it found that the utility must conduct an environmental review of the electricity generation facilities it plans to add to the system.

Reservations

Before voting to approve the lease, ADC board member and Kauai resident Sandi Kato-Klutke stressed that the renewable energy portion of the project should be secondary to the agriculture irrigation part.

“The land out there is specifically for agriculture. It is not for a power plant. Unless you are going to give our ag people a benefit … I think we need to look at it a little closer,” she said.

KIUC president David Bissell assured her that his organization’s management of some of the irrigation infrastructure will benefit the farmers.

“The utility will be there, arguably, forever, taking care of the ditch so there’s more capacity … It’s long-term agriculture security for Kauai,” he said.

Board member Margarita Hopkins expressed her concern that once KIUC takes over control of the water in the Kokee Ditch, it might one day charge the Kekaha farmers a lot of money to deliver it.

“I know it is very, very hard to farm with no water or not affordable water. Is there any chance as time goes by the rate of the water is going to go up to the point where it’s not going to be affordable for farmers to farm?” she asked.

Bissell replied that that will depend on the final cost of the project, but preliminary modeling of costs shows that “it looks like it’s going to be good,” he said.

Syngenta station manager Josh Uyehara, representing the KAA, offered his tentative support of the project.

“We have water, we have land, we have willing partners. It would be a shame if we can’t come to agreement on a project like this,” he said. However, he seemed concerned about how water allocations will be dealt with given that a number of parties have “overlapping claims to water.”

With the Water Commission poised to amend interim instream flow standards so that some of the diverted water is returned to streams, Uyehara said, “We won’t know what water will be available to parts of the system.”

He assured the board that despite the recent loss or downsizing of seed companies in the area, the current tenant mix at Kekaha supplies enough funds to maintain the agricultural infrastructure under the KAA’s control. Still, he added, “We are taking another look at our structure as an organization, looking at the longer term picture of how do you make partnerships more sustainable to withstand ups and downs.”

“We know the amount of water that could be diverted will be reduced as a part of the (IIFS) process. There’s nothing we can do about that,” he said. “We no longer will have so much leeway that we could guarantee [adequate water] without thinking about it. … Now we have to be a little more careful,” he said.

Reprinted with permission from the current issue of , a non-profit news publication founded in 1990. All issues published in the last five years are available free to Environment Hawaii subscribers at. Non-subscribers must pay $10 for a two-day pass. All issues older than that are free to the public.