HONOLULU — On Tuesday, the Hawaii Supreme Court unanimously upheld a state Land Use Commission declaratory order that held that farm dwellings in an agricultural district cannot be used as short-term vacations rentals under Hawaii law.
In so doing, the court also ruled that courts must generally defer to agencies when interpreting vague or ambiguous laws, in direct conflict with the U.S. Supreme Court’s overturning of the so-called Chevron deference in June.
“Using agricultural lands for genuine agricultural purposes and ensuring that housing is allocated for our residents are two of the most crucial issues facing our state today,” said Gov. Josh Green in a statement issued on Wednesday. “I commend that Hawaii Supreme Court for making the right decision for the people of Hawaii.”
Under state law, farm dwellings are defined as single-family dwellings on or used in connection with a farm or where agricultural activity provides income to the household occupying the dwelling. In 2019, Hawaii County amended its zoning code to require that owners who wanted to use a farm dwelling as a short-term rental first get a nonconforming use certificate. Only lots that existed before June 4, 1976 are eligible for such a permit.
A dozen owners of agricultural plots created after the cutoff date who were denied nonconforming use certificates petitioned the LUC in 2020 for a determination on whether the denials were proper under state law. The county also petitioned the LUC for clarification.
The LUC ultimately determined that the use of farm dwellings as short-term vacation rentals was incompatible with their intended use.
The landowners appealed to the Circuit Court of the Third Circuit, which ruled in their favor that such use was not incompatible.
On Tuesday, the state Supreme Court upheld the LUC’s determination and vacated the circuit court’s ruling.
The court specifically acknowledged that “Hawaii’s approach to administrative deference now differs sharply from federal precedent.”
In its ruling on Loper Bright Enters v. Raimondo this year, the U.S. Supreme Court effectively overturned the 40-year-old doctrine known as the Chevron deference, which held that when Congress delegates a federal agency to administer a federal statute, courts will defer to that agency’s interpretation of the statute if it is ambiguous or unclear and may not substitute their own interpretation. In a 6-3 decision, the court ruled that courts should be allowed to act on their own interpretations.
The Hawaii Supreme Court, however, retained the core philosophy of the Chevron defense.
In its ruling, the court stated, “In Hawaii, we defer to those agencies with the naauao (knowledge/wisdom) on particular subject matters to get complex issues right.”
Hawaii law does allow for courts to affirm that agency interpretations are not “palpably erroneous.” In Tuesday’s ruling, the state Supreme Court held that LUC’s interpretation of state law “was not palpably erroneous and was consistent with the underlying legislative purpose of the statute.”
“Today’s decision makes clear that deference to administrative agencies is a principle with continued vitality in Hawaii,” Lopez said. “This decision reaffirms the importance of agency expertise under Hawaii law.”
Michael Tsai covers local and state politics for Spectrum News Hawaii. He can be reached at michael.tsai@charter.com.