State must pay Hanalei
legal fees of $100,000Three tour operators celebrate
a federal court ruling that keeps
their businesses afloat
HANALEI, Kauai >> The owners of the three surviving Na Pali tour boats based in Hanalei are rejoicing following a ruling by the 9th U.S. Circuit Court of Appeals that the State of Hawaii cannot shut them down.
On Monday a three-judge 9th Circuit panel upheld an earlier ruling by U.S. District Judge Helen Gillmor, who held that federal laws covering navigable waterways pre-empt any state laws. Since all three tour operators had boats that were licensed by the U.S. Coast Guard to operate in coastal waters, the state could not bar them from Hanalei Bay.
Gillmor held that the state does have a power of "reasonable regulation" to protect the environment. But she said the state's attempt to shut down three tour boats while allowing unlimited use of the bay by commercial fishing boats and private pleasure craft is not reasonable.
The court also ordered the state Department of Land & Natural Resources to pay the $100,000 legal costs of the three tour operators. They will have to seek the funds from the Legislature.
DLNR did not return calls seeking comment.
The tour company lawyers estimated that the state spent far more than they did in legal costs defending the case, possibly as much as $1 million.
"Hopefully, this is the end of it, and they won't try again," said Stephanie Butler, who with husband Bob owns Capt. Sundown cruises.
The "Hanalei Boating War" between the tourism industry and North Shore Kauai environmentalists who wanted the tour boats out of Hanalei Bay raged for two decades until 1998, when Gov. Ben Cayetano told the DLNR to throw the boats out of the bay.
The three companies that held state permits were allowed to stay until their permits expired. All the others moved to Port Allen on Kauai's South Shore, a much longer run to Na Pali.
In 2000 the DLNR issued an order banning the three remaining boats from Hanalei Bay. The three companies -- Capt. Sundown, Na Pali Catamaran and Hanalei Sport Fishing and Tours -- filed a lawsuit in Kauai Circuit Court.
Circuit Judge George Masuoka held that the DLNR did not have any statutes or rules on the books giving it the power to shut down the three companies.
The DLNR responded by hastily drafting rules giving itself the power to evict the boaters, and the state Land Board approved them.
The boaters sued in U.S. District Court and won a ruling that the state could not limit commerce in federal waterways.
That was what the 9th U.S. Circuit upheld Monday.
The 9th Circuit held that the state ban on tour boating in Hanalei Bay made it impossible for the three companies to operate businesses for which they held valid federal licenses. Since federal law pre-empts state law, the judges held that the state ban was illegal.
"It is really powerful. I have never seen a clearer pre-emption ruling before," said Jack Schweigert, attorney for the Butlers.
