The state Department of Land and Natural Resources is seeking reconsideration of a recent 2nd Circuit Court order that enjoins the issuance and renewals of all commercial use permits in Kaanapali ocean waters — an action that could cause the closure of some 30 Kaanapali businesses leading to direct and indirect job losses for more than 200 Maui residents.

DLNR’s action is in response to Maui 2nd Circuit of Hawaii Judge Peter T. Cahill’s Dec. 3 order, which favored the plaintiffs in Na Papa‘i Wawae Ula‘ula etal v. DLNR. That case, which goes back to 2017, was brought forward by Na Papa‘i Wawae ‘Ula‘ula, an unincorporated association; a person, Randal Draper (now deceased); and the West Maui Preservation Society, a Hawaii nonprofit corporation.

DLNR initially prevailed when the 2nd Circuit Court ruled in 2018 that the permitting system was not subject to environmental review processes. However, the plaintiffs’ attorney, Lance Collins, said the groups appealed, and in April the state appeals court ruled that the commercial permitting system “facilitated a deliberate and coordinated effort for each permittee to engage in commercial activity in Ka‘anapali waters for profit through the use of authorized equipment such as thrill craft and other vessels, procedures and techniques.”

Collins said that the appeals court sent the case back to Maui for the appropriate environmental review.

In his order, Cahill remanded the case to DLNR “to initiate and complete an environmental assessment for any future commercial use permits (CUPs) that authorize the engagement of commercial activity in Ka‘anapali waters or determine these actions are exempt from preparation of such an assessment under HRS §343-6(a)(2) and in accordance with the analysis posited in Umberger v. Dep’t of Land &Natural Res., 140 Hawai‘i 500, 403 P.3d 277.”

He enjoined DLNR “from issuing or renewing any further commercial use permits for uses in Ka‘anapali waters” until the agency determines “whether these actions are exempt from preparation of an environmental assessment in accordance with the test in Umberger v. Dept. of Land &Natural Res., supra, and if not, to prepare an environmental assessment as required by law.”

Cahill’s order also noted that the 2nd Circuit Court “may retain jurisdiction over this matter, and to that extent denies in part Plaintiffs’ Motion, until Defendant Department of Land and Natural Resources completes an environmental assessment or makes a determination as to whether these actions are exempt from preparing an assessment and the parties file the appropriate motions to end this case.”

DLNR’s request, filed Tuesday by the state Department of the Attorney General, asked Cahill to lift the injunction or modify it to only affect the renewal of the six commercial use permits that were challenged in the lawsuit rather than “encompassing all commercial use permits issued for Ka‘anapali waters, which will have significant negative impacts on thirty businesses in Ka‘anapali.”

“Without these permits, many businesses that operate in Ka‘anapali waters will likely need to shutter their doors,” DLNR’s motion said.

Moreover, DLNR said it did not have sufficient time to determine whether an exemption applies or prepare an environmental assessment before any of the permits expire as the first permit expired Tuesday.

The state’s motion included supporting declarations from Bryan Shaw, owner of Absolute Charters Inc.; Denver Coon, owner of Trilogy Excursions; Peter O’Riordan, owner of Fun Charters Inc.; Gabriel Miranda, general manager of Island Scuba Inc; Michael Kelley, owner of Ka‘anapali Kai Charters Inc.; Peter Wood and Inca Julia Robbin, owners and operators of Kapalua Kai Sailing Inc.; Philippe Le Blanc, partner and chief operating officer of Sea Maui LLC.; Thomas Brown, president of ‘Au‘Au Ka Inc.; and Sands Dyer, owner of Sailing Shipps Ltd.

Collins filed a motion Thursday for the court to find the DLNR in contempt of court for renewing at least four commercial use permits in open defiance of Cahill’s injunction. Court documents show that permits were issued to Alihilani Yacht Charters Inc., Diver Dan’s Specialty Charters Inc. and Sailing Shipps Ltd.

The parties are expected to come before Cahill again on Feb. 12 in Courtroom 2 in Wailuku at 8:15 a.m.

DLNR said in a statement Thursday that it “has every intention of following the recent court order but is hoping the court will reconsider or stay its injunction. This would give the DLNR more time to find solutions that comply with the law.”

The state agency added that it is “looking into a solution that addresses the environmental concerns of the plaintiffs and concerned community members, while recognizing the economic impact the court’s order has on Ka‘anapali permittees and those businesses that rely on these activities to support their families and employees, as they recover from the Lahaina wildfires.”

Collins said interim solutions may be negotiated, but added that “one thing that’s very important to keep in mind is that the West Maui shoreline and Native Hawaiian groups have been trying to find a solution with DLNR for at least the last 10 years.”

“Of particular concern to the groups was the discharge of wastewater into nearshore waters, the misuse of required public beach access parking at hotels by tour operator customers and the danger of thrillcraft and large vessels striking paddlers, surfers and divers,” he said. “The environmental impacts of these operations has never been studied or reviewed.”

Coon, who is president of the Ocean Tourism Association and owner of Trilogy, said Kaanapali CUP holders have been operating under the same rules for about 40 years.

“Since the early 1980s nothing has changed, and yet now they want to see what the impact is,” he said. “I don’t discount people have their concerns, but the operators already are doing everything that they can to minimize possible impacts for parking and discharge as well.”

Coon said Triology, a third-generation family business that has been operating on Maui for 51 years and was instrumental in rescuing Lahaina fire victims, has two of the six permits that were challenged in the lawsuit.

“Our permits expire on Sept. 30, so if this moves forward, as of Oct. 1 we would no longer be in business,” he said. “The permits are on a different schedule. Some of the major operators like Sea Maui have permits that are expiring on March 31, so by then there already will be significant employee impacts.”

Coon worries that shutting down Kaanapali CUP holders will confuse recent marketing attempts to assure visitors that post-fire Maui has reopened for business, and will result in lost revenue and a slower recovery.

“They are estimating to rebuild Lahaina harbor is going to cost $30 million, and a lot of the money that DLNR needs is going to come from operators like us who pay 3% of our gross revenue to the state,” he said. “In order to rebuild, we need operators to stay operating.”

He added that conducting environmental reviews will be hard for the businesses to do “if they are have no money coming in and have laid off all their employees.”

Toni Marie Davis, executive director of the Activities & Attractions Association of Hawaii Inc., said she hopes DLNR’s request for reconsideration is upheld. Davis estimated that the ending of the CUP program at Kaaanapali would “result in the loss of over 230 jobs to a community that has already not come back completely from COVID and not come back completely from the fires.”

The state Department of Business, Economic Development and Tourism reported Thursday that 2,117,488 visitors came to Maui in November 2024, down 7.8% from the first 11 months of 2023 and 24% below the first 11 months of 2019.

Jerry Gibson, president of the Hawai‘i Hotel Alliance, said if DLNR ends its CUP program in Kaanapali, it will lead to enormous negative trickle-down economic impacts.

“We are still in recovery mode not only in Kaanapali, but all the way up to Kapalua,” Gibson said. “We are still way far behind. The surrounding hotels and small businesses are still having a difficult time, and losing activities would be devastating for their recovery.”

Keith Vieira, principal of KV &Associates, Hospitality Consulting, said Maui’s ocean activities are a huge draw for visitors.

“The incredible beaches and ocean experiences are an important part of the Maui experience,” Vieira said.

He added that Kaanapali’s ocean activities provide public benefits by supporting jobs for local people and providing reasons for visitors to stay longer, which helps grow tourism through spending rather than arrivals.

“We need to help Maui’s recovery, not hurt Maui’s recovery,” he said.