When LBD Coffee requested a permit to build a facility to sell cigars and coffee on its Kapaa agriculture land in 2014, it might have seemed like a straightforward request.

Two years before, the Legislature had adopted a state law to economically boost agriculture by letting farmers do just what the company was proposing: operate a retail establishment selling farm products on agriculture land.

Although the law left room for the counties to pass ordinances tweaking their rules for such so-called accessory agriculture uses, Kauai County hasn’t adopted one.

LBD Coffee

To LBD, that meant the company could move ahead with plans for a retail shop selling coffee and cigars made from Hawaii-grown tobacco and coffee beans. But the matter has proved to be anything but simple.

Three years later, Kauai County still hasn’t issued LBD’s requested zoning permit, and LBD has filed a lawsuit asking a state court essentially to require the county to permit the retail operation.

“All we’re looking for here is for enforcement of the law the Legislature passed; we want it to mean something,” said Jake Delaplane, LBD’s attorney. “It doesn’t appear the county’s respecting state law.”

Kim Tamaoka, a spokeswoman for Kauai County, said the county had not seen the suit and therefore declined to comment.

How the court resolves the flap may have significant implications for the relative power of state and local governments, as well as the use of agricultural land.

Marti Townsend, director of the Sierra Club of Hawaii, said the organization has concerns about the 2012 statute both in terms of county sovereignty, or “home rule,” and the conservation of farmland.

Although Townsend said it’s important to find solutions to help farmers bring products to market, she said, “It definitely does not serve Hawaii’s sustainable food goals to turn valuable agricultural districts into faux-farm amusement parks.”

The Kauai dispute shows that “complex, even competing state laws and county ordinances, create unnecessary challenges for legitimate farming practices to remain compliant and successful,” she said.

Law Encourages Commercial Activities

The dispute appears to turn on the extent to which Kauai must defer to the state’s land-use statute.

In Hawaii’s unique land-use regime, a form of statewide zoning, land is divided into four categories: urban, rural, agricultural and conservation. State law then outlines uses allowed in the various districts.

But counties also get a say in how land can be used through local zoning laws, such as Kauai’s Comprehensive Zoning Ordinance. When it comes to ag land, the state and counties jointly regulate use. The question is how much leeway the court gives the county.

One point seems clear: Legislators wanted to encourage agriculture-related commercial activities on farmland when they adopted Senate Bill 2375 in 2012.

LBD Coffee

Agriculture is so important to Hawaii’s aina-oriented culture and island economy that the state constitution requires the state government to “conserve and protect agricultural lands, promote diversified agriculture, increase agricultural self-sufficiency and assure the availability of agriculturally suitable lands.”

Accordingly, the state keeps a substantial amount of Hawaii’s property set aside for agriculture. In fact, ag lands make up 47 percent of the state’s land area, according to “Regulating Paradise: Land Use Controls In Hawaii,” a legal treatise by University of Hawaii law professor David Callies.

Policymakers such as the 2012 bill’s sponsor, Sen. Donovan Dela Cruz, have sought ways to use such lands for economic development. The purpose of the bill, according the Senate Committee on Agriculture, was “to allow for agricultural-based commercial operations in agricultural districts.”

It amended the state land use law to allow agriculture-based commercial operations on ag land, including retail activities to display and sell produce grown in Hawaii as well as “value-added products that were produced using agricultural products grown in Hawaii, logo items related to the producer’s agricultural operations, and other food items.”

Dela Cruz’s bill was supported by farmers and Kamehameha Schools, the state’s largest private landowner, which said it could help farmers make money and thus continue to farm.

But opponents said it could lead to excessive development.

Among them was David Tanoue, then director of the Honolulu Department of Planning and Permitting. Tanoue testified the measure could have the unintended consequence of encouraging out-of-state producer-operators to buy ag land for retail purposes and drive local farmers out.

“The effect of this could be land speculation, driving up the general price of all agricultural lands,” Tanoue said. “The rural character of an area could change from green open spaces to paved parking lots supported by traffic congestion.”

Despite the opposition, the Legislature adopted the measure and then-Gov. Neil Abercrombie signed it into law in June 2012.

Courtesy of LBD Coffee

No County Law To The Contrary

About two years later, LBD’s complaint says, the company asked the Kauai Planning Department for a zoning permit to build a warehouse, storage, packaging, retail and visitor center on agriculture land the company had bought for that purpose.

LBD grows coffee and tobacco and sells products under the brands Coffee Times, Blair Estate Farm and the Kauai Cigar Company. LBD also has announced plans to start growing corn and to open a distillery.

Company owner Les Drent referred questions to LBD’s attorney, Delaplane, who said the company’s position was stated in the lawsuit.

The suit provides a detailed description of talks and correspondence between LBD and the county.

Central to the dispute is whether LBD is entitled to an over-the-counter “zoning permit” for purposes generally allowed by Kauai’s ordinance, or whether it must obtain a “use permit,” a more laborious process in which the county has more discretion.

A table in Kauai’s zoning law describes which activities require which type of permit when conducted on agriculture land, but doesn’t say anything about retail activity on ag land.

The ordinance does say single-family homes and warehouses for plant products qualify for the easy-to-get zoning permits, while the harder-to-get use permit applies to commercial activities like golf courses, day care centers and “any other use or structure” that the county planning director finds is similar to the ones that require the use permit.

Relying on this part of the ordinance, Kauai County has decided that a retail store needs a use permit, correspondence quoted in the complaint indicates.

In response, LBD asks why it should have to go through the laborious use-permit process when the outcome is set by state statute: Kauai must allow retail operations, and it has not passed ordinances further defining what restrictions can be placed on such operations, as the statute allows.

“It seems antithetical to the idea of efficient and effective governing to require folks to expend the time, energy and resources to go through the formal permitting process when this type of use is expressly permitted by Statute,” LBD says in the suit.