There were still questions about whether it was legal for the City to levy any admission fee at the nature preserve—especially a fee that exempted local residents. In July 2001, a tourist from San Diego sued the City in federal court for charging her and other tourists the 3 admission fee at Hanauma Bay.²⁸ The suit alleged, fi rst, that the City was violating State law by charging for beach access, a right that she believed was protected under the Hawaii Constitution, and by restricting freedom of movement along a public right-of-way. Second, she argued that charging her but not residents also violated the U.S. Constitution because it discriminated against visitors on the basis of their residency. The suit further alleged that the City can only impose fees that the State government had authorized by statute, and the State had not authorized the City to charge an admission fee at Hanauma Bay.
Beach access in Hawaii has always been considered a fundamental right.
Hence, a representative of the American Civil Liberties Union of Hawaii (which was not a party to the suit) sided with the tourist, opining that
“Clearly the city cannot charge Hawaii’s residents to go to the beach. If they can’t charge state residents, I don’t see how they can charge out-of-state residents, either.”²⁹ The City countered with the argument that the main goal of the fee “is to preserve Hanauma Bay’s fragile and unique ecosystem.
. . . Giving preference to kama‘aina is a long-standing practice in Hawaii. We
believe charging non-residents is legal, and we will stick by it.”³⁰ U.S. Federal District Court judge Alan Kay ruled in favor of the City. He ruled that the admission policy did not violate Hawaii’s law granting free access to beaches because the admission fee was “only an incidental impediment to her enjoy-ment of the park.”³¹ Judge Kay further ruled that because residents already pay taxes that “underwrite” upkeep at the preserve, “it is appropriate to ex-empt or to preclude them from being charged an admission fee. . . . It is a permissible fee for a specifi c purpose, not an unauthorized tax.”³² However, the judge stipulated that the money collected must be set aside to be spent only on Hanauma Bay, and revenues previously diverted to other parks must be returned.³³ Judge Kay’s ruling was upheld by the Ninth Circuit Court of Appeals in October 2004.³⁴ Levying an admission fee at Hanauma Bay paved the way for similar fees at other parks. Diamond Head was next in line to levy an admission fee. The Hawaii Community Development Authority is considering user charges on commercial users (e.g., fi tness classes, fi lm-ing, etc.) at the Kakaako Waterfront Park.³⁵ User charges make a lot of sense when most or all of the benefi ts go to identifi able users and nonpayers can be excluded at a reasonable cost.³⁶
The number of visits to Hanauma Bay has declined since the entry fee was implemented in July 1995 (Fig. 6-1). For the same six months in 2005, total attendance was 456,398 compared to 568,673 in 1995, a decline of 19.7 percent. During the month of August 2005,³⁷ the average daily attendance was 3,725 compared to 4,213 in August 1995.³⁸ The decline in the number of visitors actually forced the City to raise the entry fee back up to 5 begin-ning July 1, 2003. Current revenues from admissions and the 1 parking fee average around 3.5 million per year, compared to the 2.3 million collected in just six months in 1995 when the City began levying an entry fee and commercial vehicle fee. By imposing a fee on tourists but not on residents, the City had hoped to encourage more locals to visit the preserve, but the number and percentage of local visitors actually declined.
Was the decline in visits (residents and tourists) to Hanauma Bay due to the entrance fee or to other factors? The sharp decline in the number of Japanese visitors to Hawaii (Oahu) since 1997 could have contributed to the decline in the number of nonresident visitors to Hanauma Bay. But that cannot explain the decline in the number of resident visitors who didn’t have to pay an entry fee. The nonprice rationing measures were no doubt a signifi cant reason for the decrease in demand by both tourists and resi-dents for visits to Hanauma Bay. Under the plan, it became more of a hassle to visit the nature preserve. Visitors can arrive late and be turned away at
the entrance; once in, they would have to stand in line at the ticket booth to pay, to verify state of residence, and then have to watch a fi lm on how to conduct themselves properly at the preserve (unless they had registered with the park on an earlier visit) before being allowed to go down to the beach. For people who are interested only in sunbathing or swimming and not snorkeling, it was simpler to go to one of the many other beaches on Oahu. Indeed, that’s precisely the message that the City has tried to send out to potential visitors: Hanauma Bay is a nature preserve, not just another beach park. Anecdotal evidence indicates that conditions at the park have greatly improved following the implementation of the City’s management plan. By most accounts, Hanauma Bay has been a success story in govern-ment intervention. Hanauma Bay, described by Dr. Beach as “a perfect little jewel,” was named the best beach in America in 2004.³⁹
Hanalei River Boating
The majestic Na Pali Coast on the North Shore of Kauai is a place of stun-ning beauty. Its remoteness and inaccessibility make a sightseeing trip along the coast even more desirable. For most tourists, the only way to see this
Fig. 6-1. Annual visitors to Hanauma Bay: 1995 – 2005.
Source: Hanauma Bay Nature Preserve; data kindly provided by Alan Hong (manager).
nature’s bounty is by boat. A number of entrepreneurs began operating commercial boats along the Na Pali Coast in the mid-1970s, ferrying small groups of campers who wanted to avoid the arduous 11-mile trek by land to the Kalalau Valley. The best known among the boat operators was Clancy Greff (famously known as Captain Zodiac), who started his Na Pali Coast tours using small, motorized rubber boats in 1976; for a time, he became the biggest operator.⁴⁰
Running commercial boating tours of the Na Pali Coast requires gov-ernment permission. Regulations governing boating in Hawaii are quite complex as they involve both the counties and the State government. Under the State’s Coastal Management Act (HRS Chapter 205A), the counties were given the responsibility for regulating coastal development on lands above the high-water mark via their authority to issue special management area (SMA) permits. Special controls were placed on development in these SMAs to protect the state’s natural resources and to ensure adequate access to beaches, recreation areas, and preserves. The State Department of Land and Natural Reources (DLNR)—or simply the “Land Board”—regulates commercial activities in the conservation district and on State land (beaches fall under both areas). People who apply for permission from the DLNR to conduct commercial activities along the Na Pali Coast must also get Kauai County SMA permits or a waiver from the County before the DLNR will process their applications.
The rapid growth of boating tours during the 1980s triggered alarms among residents of Hanalei who felt that too many boats and too many passengers would overcrowd the river mouth and harm its ecology, and they wanted the government to place limits on the growth of the industry.
Boat operators saw any government-imposed restriction as a threat to their survival. Some operators maintained that the County had no authority to regulate boating on the Hanalei River since parts of it are a navigable wa-terway and thus open to the public under U.S. law. One operator (Ralph Young) contended that his business predated the 1975 SMA law and peti-tioned the Planning Commission to exempt him from SMA regulations.⁴¹ In response to concerns expressed by residents, the State House of Repre-sentatives passed a resolution in 1985 directing the Department of Trans-portation (DOT) to examine the numerous confl icts over the use of coastal waters and beaches on Kauai and suggest a plan to resolve the confl icts.⁴² The DOT plan, presented to the 1986 Legislature, essentially recommended keeping the level of boating activity at the 1985 level. The Land Board re-jected the recommendation.
In 1985, there were an estimated twenty-two boating companies oper-ating on the North Shore, most of them from the mouth of the Hanalei River at the Black Pot Beach Park. A careful study by the State Department of Business, Economic Development and Tourism found that in 1990, the tour boat business on Kauai generated direct revenues of 12.5 million per year and employed 340 persons, of which 57 percent of the revenues and 54 percent of the employees were derived from boat tours based in Hanalei.
In that year about eighty-fi ve thousand tour boat passengers took boating trips out of Hanalei, or an average of three to fi ve hundred people per day, depending on the season.⁴³
The mouth of the Hanalei River lies within the SMA; hence it lies within County jurisdiction. In 1987 the Kauai Planning Commission approved a request for a permit from Michael and Patricia Sheehan to open a boat-yard along the Hanalei River to serve as a launching base. The County had encouraged them to build the yard across from Black Pot Beach Park so it could make the boatyard the key to the regulation of the North Shore boating industry.⁴⁴ Among the conditions of approval, the Sheehans could allow only operators with valid State permits to use their facilities.⁴⁵ In the meantime, the DOT also took over DLNR’s umbrella SMA permit issued by the County. The umbrella permit allowed the DOT to issue permits to boat operators to conduct business from Sheehan’s boatyard.⁴⁶ The DOT also instituted new rules that allowed no future growth of the industry and restricted boats to certain landing times.
In October 1988, frustrated by the hassles of applying for a renewal of its umbrella SMA permit from the County, the DOT withdrew its application, leaving thirty-one boat operators without permits. At issue was whether the DOT had to prepare an environmental impact statement as one of the conditions for extending its permit; the environmental group Wai Ola had previously sued the County for issuing permits to boat operators without an environmental impact statement. The DOT then decided that it didn’t need a permit because the DOT’s new rules aimed to limit and reduce the number of boats operating out of Hanalei and not to encourage new devel-opment. A fl urry of lawsuits ensued involving the State, the County, en-vironmentalists, and boat operators. The most important outcome from these lawsuits was a ruling and injunction issued by Fifth Circuit Court judge George Masuoka (April 5, 1989) that boating under Chapter 205A can be construed as development, thus requiring boat operators to ob-tain county SMA permits to operate within the SMA of the Hanalei River mouth.⁴⁷ The fi fteen tour boat operators named in the County suit were
enjoined “from ordering, initiating, conducting, performing or executing any tour boat activity within the Special Management Area that includes the Hanalei River mouth area.”⁴⁸ Violators would be subject to a civil fi ne of up to 10,000 and up to 500 per day.
In 1989, Mayor JoAnn Yukimura tried to resolve the confl ict between boat operators and residents via mediation. That quickly fell apart when boat operators walked out of the meeting with County and environmental repre-sentatives.⁴⁹ In mid-1991, the DOT announced that it would begin to enforce its Ocean Recreation Management rules.⁵⁰ That lasted only eight days, as an order from higher-ups in the DOT halted all enforcement activities, much to the dismay of Mayor Yukimura. The County realized that it did not have the ability to control boating on the Hanalei River and was counting on the State to enforce both State and County boating regulations.⁵¹
With State enforcement dead in the water, Mayor Yukimura then di-rected the County Planning Department to organize a community planning eff ort to craft a plan for a boating industry that would not have signifi -cant negative impacts on the Hanalei River Estuary. In September 1992, the day before Hurricane Iniki struck Kauai, the Hanalei Estuary Management Plan (HEMP), which came out of a series of town meetings, was put into ef-fect. HEMP’s intent was not to make commercial boating a “growth indus-try.” HEMP recommended allowing up to six commercial boat operators to operate from the Hanalei River, each running a maximum of two trips per day with no more than seventeen passengers per boat. In the end, permits were issued to seven operators from among twenty-six applicants.⁵² The seven permitted operators included two kayak companies, three sailing companies, and two motorized tour operators, carrying a maximum of 180 persons per day. Among the many conditions, the sailing and powerboats were required to moor their boats in Hanalei Bay and not in the river, and passengers had to be shuttled to the boats in crafts using electric motors or human power. HEMP put some operators out of business and spawned lawsuits, but it did not eliminate the illegal boat operators because, as one resident put it, “Our fi ne government didn’t enforce the rules.”⁵³
Hurricane Iniki devastated Kauai in late 1992. By 1994, only four of the seven permitted operators were still in business. The four who had County permits found it diffi cult to compete against the illegal boaters. Indeed,
“dozens” of boats were cruising up and down Hanalei River illegally in 1994, and their operators made no attempt to hide their activities. The four permitted companies were restricted by their size and hours of operation,
while the illegal companies were working out of the Hanalei River without restrictions. The permitted companies had to pay 2 percent of their gross receipts to the State, while the unlicensed companies did not. The unli-censed operators were estimated to serve up to a thousand customers per day, compared to the 120 allowed the four permitted companies.⁵⁴ Ralph Young, owner of Hanalei Sport Fishing and Tours (one of the permittees), complained that the two trips per day he was legally allowed to operate were not enough to keep him competitive with the illegal boaters; the illegal operators had more business and thus deeper pockets. Young further noted that the controversy over Hanalei boating was not even an environmental issue: “The fi sh aren’t dying, the limu’s still alive. What you’ve got is a traf-fi c problem.”
In 1993, Mayor Yukimura wrote to Governor John Waihee, asking him to vigorously enforce State boating regulations, which included requiring boat operators to obtain County SMA permits as a condition of obtaining State permits. About a year later, the State issued one hundred citations, but they were quickly withdrawn because the State found it diffi cult to prosecute violators.⁵⁵ Shortly thereafter, a new mayor—Maryanne Kusaka—came into offi ce, and she initially asked the State to withhold enforcement of its boat-ing regulations. But by mid-1996, she too became frustrated by the lack of State enforcement. In an interview with the Honolulu Advertiser (July 1996), she said, “We had a commitment from [Land Board chairman] Mike Wilson and the governor to enforce county regulations. With the [State’s]
Kauai offi ce of the Marine Patrol having been shut down, there was no en-forcement at all.”⁵⁶ At a meeting held at Kauai Community College on June 10, 1997, chairman Wilson announced that there would be no State enforce-ment until at least 1998 and until new regulations were drafted. He told the audience, “We will let the boaters know when we’re coming to enforce.”⁵⁷ He opined that ultimately, “This is a county issue.”⁵⁸
In 1996, three of the permitted boaters took matters into their own hands by suing more than thirty boat companies and hotel activity desks for “un-fair competition” by illegally promoting and selling Na Pali Coast tours operating from the Hanalei River. Their lawyer explained, “The legal boat operators just got tired of waiting for the government to put a stop to this blatant disregard of the law.” ⁵⁹ But the suit was unsuccessful; it never went to trial. Then in June 1996, the State Supreme Court denied a petition fi led by lawyers for the four legal boat operators asking the court to order the County Prosecuting Attorney’s Offi ce to prosecute the illegal boaters.⁶⁰
Without vigorous enforcement, HEMP was doomed to fail. Finally, in late 1997, the State heeded the County’s plea for help.⁶¹ In December Gov-ernor Cayetano told the County to “Get out of the way, and we’ll take care of it.”⁶² Kauai Mayor Maryanne Kusaka said gladly, “It is to Kauai’s advan-tage that Cayetano has fi nally realized this as a state issue.”⁶³ The State’s fi rst step was to try to amend HEMP. DLNR (the Boating Division had been transferred back to DLNR from the DOT) recommended the number of permits be increased to fi fteen for an interim three-year period, dur-ing which a carrydur-ing capacity study would be conducted. There would be no limits on the number of boats, but there would be a maximum of 750 passengers permitted per day. The limit applied only to Hanalei River and not to Anini Beach or the Tunnels, which would be allocated additional permits.⁶⁴ Many North Shore residents opposed the DLNR’s proposed plan and demanded to know why the existing HEMP rules that permitted only two tour boat companies operating out of the estuary with a maximum of eighty-four passengers were never enforced.⁶⁵ Land Board chairman Mike Wilson subsequently announced that the State would scrap its proposed rules and adopt the County rules.⁶⁶
In January 1998, Kauai Mayor Maryanne Kusaka, who had earlier indi-cated that the County was going to step back from the controversy and let the State handle the hot issue, announced that the County and DLNR would begin prosecuting boaters who violated County boating rules.⁶⁷ In the same month, Michael Sheehan announced that the family would close its Hana-lei boatyard, from which some of the nonpermitted boaters launched their boats, forcing them to look for new launching sites. The yard, which was built to handle fourteen hundred people per day, was seeing only a fraction of that number, and it wasn’t profi table to keep it open.⁶⁸ By the summer of 1998, all the illegal boat operators had left Hanalei, most of them relocating to Port Allen on the southern coast of Kauai. The run from Port Allen to the Na Pali Coast, however, is close to 70 miles round-trip versus less than half that distance from Hanalei, and it is also less scenic.⁶⁹ If all of this is not confusing enough, there is more!
During the election campaign of 1998, Governor Ben Cayetano visited Hanalei and was “appalled” by the commercialism that he saw there. He subsequently ordered a ban on all commercial boating on the Hanalei River, a decision that prompted yet another round of lawsuits.⁷⁰ First, three boat-ers with County permits took the State to Kauai Circuit Court and won a suit against DLNR, holding that it was acting in violation of the State
Administrative Procedures Act. Then in 2000, the DLNR adopted new rules to outlaw all commercial boating on the Hanalei River. The three boaters sued the State in federal court. In August 2001, U.S. District judge Helen Gilmore issued a permanent injunction prohibiting the Department of Land and Natural Resources from closing down the three remaining boat-ers operating regularly out of Hanalei Bay. She ruled, “No state has the right to prohibit commercial vessels properly licensed by the U.S. Coast Guard from operating in navigable waters of the United States—including Hanalei Bay.”⁷¹ Her ruling applied to any federally licensed boating company. Judge Gilmore’s ruling, however, did not address the question of whether boaters had a right to load and unload passengers and launch and retrieve their boats from lands adjoining Hanalei Bay. The County may still be able to limit the number of boaters and boats by its authority over land use. County planning director Bee Crowell observed, “Tour boats may be able to sail in Hanalei Bay, but if they want to use the land, they’re going to need permits for a launch site, parking areas, restroom facilities. We can still limit the number of boats able to use the land.”⁷² The bizarre story has come full circle.
No issue has taken so long to resolve or spawned more lawsuits on Kauai than the fi ght over the regulation of boating on the Hanalei River.⁷³ Why did government intervention succeed at Hanauma Bay but fail in Hanalei?
To be sure, Hanalei’s problems were more complex. In Hanalei, there was bitter confl ict between residents and tourist businesses that was not pres-ent at Hanauma Bay. There were also two governmpres-ents involved in the dis-pute in Hanalei, not one as at Hanauma Bay. In Hanalei, emotions ran high and positions became hardened; as time went on, legal remedy became the remedy of choice rather than hard bargaining and compromise. Early and more Solomon-like leadership on the part of the State and County govern-ments might have defused the dispute and produced a political equilibrium.
That did not happen. It is obvious that in this case, the State and County governments dropped the ball. Hanalei River boating is not an example of market failure but of government failure. There was little cooperation between the State and the County to address problems arising from over-lapping jurisdiction. Indeed, at times one level of government seemed to be working against the other. There was also never any clear statement of the objectives of regulation. Nor was there any systematic, well thought out plan to enforce regulations. An editorial in the Honolulu Star-Bulletin was right on the mark when it said, “The state, in conjunction with the county,