Kona Circuit Court Judge Robert D.S. Kim on Thursday granted a temporary restraining order which will halt the issuing of permits by the DLNR for surf school operators at Kahalu‘u Bay.
Surf schools Kona Mike’s Surf Adventures, Surf Lessons Hawaii, Kona Adventure and Tifani Stegehuis filed an application for TRO against the DLNR and its Chair Dawn Chang on Tuesday to prohibit the issuance of the permits for surf instruction “based on an ambiguous, arbitrary, and unjust lottery system utilized by Defendants to award such permits on November 17, 2023.”
The application to the court stated the flawed lottery permitting system resulted in three of the four permits being awarded to entities owned by only one individual, effectively creating a monopoly for surf instruction in one of the few, if not the only, suitable locations for instruction available on the Big Island.
In total, the DLNR approved 17 applicants for inclusion in the lottery. Although the DLNR had requested and obtained each applicant’s articles of organization or articles of incorporation, the DLNR failed or refused to notice that eight of the 17 qualified entities were owned or controlled by one person. Permits were to be issued on Monday.
The state’s attorney Joseph McGinley said they do not believe there was anything done inappropriately and the rules were followed.
Kim asked if it was the department’s position that knowing a single person could potentially win all the slots, there was a possibility of a monopoly being created.
“Yes, but the lottery was deemed the fairest process,” answered McGinley.
Kim replied that the individual who was awarded three of the slots knew the system could be manipulated because they gamed the system.
Kim also brought up another legality.
“Isn’t a lottery illegal? There is no allowance for gambling in Hawaii,” said Kim. “This is a public interest case because of the lack of transparency, the lottery gives the public the impression it was not on the up and up. The higher the public interest, and the interest in this is exceedingly high, there is a prima facie case with the creation of the lottery as unfair.”
Kim also noted the plaintiffs were not seeking any money, just fairness and transparency.
He said he shared that thought and issued the TRO, placing the whole lottery process on hold. A preliminary injunction hearing will be held on Jan. 12, 2024.
The DLNR, Hawaii County and other stakeholders have been discussing since at least 2015 the issue of regulating commercial surf instruction at Kahalu‘u Bay, though the issue comes up in West Hawaii Today archives as early as 2004-05.
Initially, Hawaii County was to take the lead in limiting access to Kahalu‘u Bay ocean waters and enforcing those limitations. The county proposed – and the DLNR accepted – a limit of four permits for commercial surf schools for the beach park and bay.
Amendments to Hawaii Administrative Rules were drafted and adopted in 2016 to allow for four commercial surf instruction operators to receive permits for activities at Kahalu‘u.
Moving forward with its Kahalu‘u Beach Park Commercial Surfing Instruction Program, the county selected nonprofit The Kohala Center in 2017 to manage the program. In spring 2018, bids were solicited, however, no permits were awarded and operators were left in the dark until the county said it was not the permitting authority and the state confirmed it was handling permits.
The state then took the lead on permitting commercial surf schools at Kahalu‘u Bay in 2019.
In November 2022 the Board of Land and Natural Resources (BLNR) approved amended rules for commercial surfing instruction at Kahalu‘u Bay. On Oct. 23, DNLR published the intent to hold the lottery on Nov. 17 and gave applicants 11 days to submit the questionnaire and application process.
To qualify for the lottery, a school had to have a GET license, certificate of compliance from the Department of Taxation, be in good standing with DCCA and have liability insurance and documentation proving at least five years experience providing surfing instruction.
