WAILUKU » Some native Hawaiians and environmentalists are praising a decision by the state Public Utilities Commission to bar a major water provider on Maui from expanding its business or selling off its assets.

Wailuku Water Co. LLC, formerly a part of Wailuku Agribusiness and Wailuku Sugar Co., has also been ordered to halt any increase in diverting stream water.

In issuing the order this month, the commission also suspended its consideration of whether the company should become a public utility and establish rates for users.

The commission said it would have difficulty proceeding with the company's request until there is adequate information about the amount of water Wailuku Water Co. will be allowed to divert from the streams.

The state Commission on Water Resource Management is determining the in-stream flow standards for streams at Iao, Waihee, Waiehu and Waikapu - streams that have diversions operated by Wailuku Water Co.

Wailuku Water Co. applied in 2008 to become a public utility, following complaints that the company was acting as a public utility by selling water even though it was not authorized as a public utility.

The Earthjustice law firm, representing citizen groups, said the restrictions on Wailuku Water will prevent the company from expanding its “;unlawful operation as an unregulated public utility.”;

“;The community has long tried to hold Wailuku Water Co. publicly accountable. ... This action by the Public Utilities Commission itself is the first concrete step by the state to hold Wailuku Water Co. accountable, and we're expecting it won't be the last,”; Earthjustice attorney Isaac Moriwake said.

The Office of Hawaiian Affairs said the decision moves toward protecting native rights to water.

“;This case highlights the need to ensure that future development on Maui is done in a way that does not disregard native Hawaiian rights and our way of life,”; Maui trustee Boyd Mossman said.

Avery Chumbley, president of Wailuku Water Co., said the company anticipates a decision on in-stream flow standards to be made this year, probably by late summer.

Chumbley said the company still provides up to 3.2 million gallons of untreated water for “;reasonable beneficial use”; to the county as well as Hawaiian Commercial & Sugar Co. for irrigating 5,300 acres.

He said his company was using less water than it did 20 years ago when it operated Wailuku Sugar Co., including its macadamia nut orchards, and provided water for pineapple cultivation.

Wailuku Sugar's water system extends from Kahakuloa to Maalaea. Parts of the company's water system were developed as far back as the 1870s when growers began cultivating sugar cane.