The HSCT’s Holding
At the heart of this case was a dispute over whether
short-term vacation rentals could be allowed in farm dwellings in
the agricultural district. The Rosehill Petitioners argued that their farm
dwellings should be allowed to operate as short-term vacation rentals, pointing
to the absence of a specific minimum rental period in the governing statutes. They claimed that their use of the dwellings as rentals for 30 days or fewer
should qualify as a permissible use under HRS § 205-4.5(a)(4), which permits
farm dwellings in agricultural districts.
However, the HSCT disagreed, siding with
the Land Use Commission (LUC) and the County of Hawai’i. Both argued that
allowing short-term vacation rentals would undermine the purpose of the
agricultural district. The HSCT held that farm dwellings must be used in
connection with a farm or involve income from agricultural activity, and
short-term vacation rentals are incompatible with this requirement.
Preserving Agricultural Land Use
The HSCT emphasized that the primary goal of the
agricultural district is to preserve land for agricultural use. The decision
reinforces the legislative intent behind the state’s land use law, which, in sum, prevents agricultural land from being repurposed for non-agricultural uses that could
erode the long-term viability of Hawai’i’s agricultural economy.
The HSCT pointed to the clear language of HRS § 205-4.5(b),
which restricts any unpermitted uses in the agricultural district. Since
short-term vacation rentals are not listed as a permitted use, they are
prohibited. The HSCT further rejected the petitioners’ argument that farm
dwellings could serve both agricultural and transient accommodation purposes,
stating that short-term vacation rentals would undermine the agricultural focus
of the land.
In re Kanahele and the Issue of Jurisdiction
In addition to the substantive land use issues, the case highlighted an important procedural point regarding the jurisdiction of appeals from agency declaratory orders under HRS § 91-8. Citing its recent opinion, In re Kanahele, the HSCT held that Rosehill Petitioners should have directly appealed the LUC’s declaratory order to the HSCT, not the circuit court.
This jurisdictional rule stems from Act 48, which amended Hawai’i’s land use laws to provide for the HSCT’s direct review of certain contested cases. In Kanahele, the HSCT expanded its jurisdiction to hear direct appeals to agency declaratory orders. Consequently, the Rosehill Petitioners’ case was transferred to the HSCT; however, the HSCT held that “the circuit court’s findings of fact and conclusions of law have no weight.” This highlights the importance of navigating the correct procedural path when appealing agency decisions.
HSCT Defers to Agencies
In its decision, the HSCT addressed the issue of agency deference, affirming that it will generally defer to an agency’s interpretation of ambiguous statutes unless that interpretation is “plainly erroneous or inconsistent with the underlying legislative purpose.” The HSCT upheld the LUC’s interpretation of HRS § 205-4.5, emphasizing that the LUC’s reading aligned with the statute’s goal of protecting agricultural lands. In doing so, the HSCT explicitly noted that its approach to administrative deference differs from recent shifts in federal jurisprudence, particularly the U.S. Supreme Court’s (SCOTUS) overruling of Chevron v. Natural Resources Defense Council in Loper Bright Enterprises v. Raimondo. The HSCT pointed out that unlike the federal courts, which have moved away from deferring to agencies in cases of statutory ambiguity, Hawai’i courts continue to respect agency expertise in interpreting complex regulatory schemes when consistent with legislative intent. This approach underscores Hawai’i’s commitment to preserving judicial deference in administrative matters.
Key Takeaways
- Short-Term Rentals in Agricultural Districts Are Prohibited. The HSCT’s decision firmly establishes that short-term vacation rentals are incompatible with farm dwellings in agricultural districts.
- Enforcement of County Ordinances. The County of Hawai’i’s ordinance prohibiting short-term rentals on lots created after June 4, 1976, in the agricultural district was upheld. Counties can enforce such ordinances, even when they impose stricter limitations than state law.
- Direct Appeals Under Act 48. The HSCT’s citation to In re Kanahele reminds us that appeals from LUC declaratory orders must go directly to the HSCT, bypassing the circuit court.
- Agency Deference. The HSCT expressly stated that it recognizes the principle of agency deference and disagrees with SCOTUS’s overruling of Chevron.