Thursday, March 26, 2009

Good Legal Review of Court's Act 2 Decision

Even though there is more significant detail in the actual decision, Attorney Robert Thomas does a good job reviewing the recent Act 2 decision by the Hawaii State Supreme Court in the following excerpts:


March 26, 2009

Hawaii Superferry II: Rooting Out Pretext In Legislative Actions

"Unlike Bulgo, in this case there is no evidence in the record that any company, other than Superferry, met the definition provided by section 2 when Act 2 was enacted."

Sierra Club v. Dep't of Transportation, No. 29035 slip op. at 36 (March 16, 2009) (emphasis added)

If you take away nothing else from the 124 pages of majority and concurring and dissenting opinions in the second "Hawaii Superferry" case, remember that sentence. It's the key to the case and understanding the Hawaii Supreme Court's recent willingness to put teeth into judicial review of legislation. In Superferry II, the court faced an interesting jurisprudential issue: whether Act 2, a statute most everyone who was paying attention just knew was designed to cover a single private entity was nonetheless a "general" law under the provision which requires that legislative power over state and county lands be exercised only by general laws, and therefore entitled to constitutional and judicial respect. Haw. Const. art. XI, § 5. In other words, whether Act 2's provisions providing benefits to all "large capacity ferry vessels" was merely a pretext to hide special benefit to the Superferry.

Superferry I Leads To Act 2

In Superferry I the court held the State DOT's exemption of the Superferry from the EA/EIS procedures in Hawaii Revised Statutes chapter 343 was erroneous, and that the ship could not continue sailing until the State completed at least an EA. Act 2 was a reaction by the other two branches of state government to that decision, exempting any "large capacity interisland ferry" from chapter 343, and creating an alternate review process which allowed the ferry to continue to operate while its environmental impacts were evaluated.

All five Justices joined the majority opinion authored by Justice Duffy, and held that Act 2 was not a general law, but one specifically designed to aid the Superferry. In doing so, the court pushed aside the usual deference courts pay to legislative judgments -- including the legislature's judgment about what it is doing and more importantly why -- and held that the legislature's intent in Act 2 was to benefit a single private entity. Justice Nakayama, joined by Chief Justice Moon, concurred in part and dissented in part on the limited issue of the state's liability for attorneys' fees...

Legislative Power, State Lands

The court held that Act 2 was the exercise of "legislative power over the lands owned by or under the control of the State and its political subdivisions" under article XI, § 5 because Act 2 purported to unwind the trial court's finding that the state-Superferry agreement by which the ferry used the harbor:

[s]ection 15 of Act 2 reauthorized Superferry to use the [state owned] lands at Kahului Harbor. The legal authority provided by DOT's exercise of executive power was removed by the circuit court's October 9, 2007 order rendering the operating agreement void as it related to the Kahului Harbor lands. Without the legal authority provided by Act 2 through an exercise of legislative power, the operating agreement would have remained void and unenforceable. Therefore, we hold that Act 2 was an exercise of legislative power over State lands.

Slip op. at 29-30.

Special Laws Measured by "Substance and Practical Operation"

Having determined article XI applied, the court next addressed what standard of review governed its analysis of whether Act 2 was a general or a special law:

Sierra Club contends that whether a law is special or general should be determined by its "substance and practical operation, rather than on its title, form or phraseology."

In contrast, DOT and Superferry argue that Act 2 is a general law that does not violate any provision of the Hawaii Constitution. They argue that the correct test for a general law is whether it creates a rationally based classification and whether the law applies to all members of the class created. For the following reasons, we agree with Sierra Club.

Slip op. at 30-31. In other words, the court rejected traditional "rational basis" review under which a court will uphold a law if there is any conceivable basis to support it.

Substance of a Statute is Found "In the Record"

Even thought Act 2 was facially neutral and did not expressly single out the Superferry for special treatment the Superferry II court held it was a special law. The critical holding is that courts should not defer to the legislature's assertion about what it was doing in Act 2 (providing a separate environmental review process for any "large capacity ferry vessel") but must examine the record in the case. The court rejected rational basis review, instead requiring an examination of facts before the court:

Unlike Bulgo, in this case there is no evidence in the record that any company, other than Superferry, met the definition provided by section 2 when Act 2 was enacted.

Slip op. at 36...

The Superferry II court did not discuss rational basis review, even though Act 2 surely can be classified as economic legislation which usually is subject to only cursory judicial review in which the facts of the case really are not all that relevant. Under rational basis review, what is important is whether the government's attorneys and the courts could "conceive" of any plausible rationale on which the legislature might have based the statute, not whether the legislature actually did so, or whether the legislation might actually fulfill its stated goals. Instead, the Superferry II court determined that the class of "large capacity ferry vessels" to which Act 2 purported to apply was "illusory" and could only apply to the Superferry.

After Superferry II and the cases noted above, governments defending challenges under the Hawaii Constitution no longer can rely upon creative lawyers to brainstorm after-the-fact rationales to support a statute. Instead, the facts of the case as developed in the record, and the court applying its own logic, resulted in the court holding that "[t]he benefits provided by Act 2 to a large capacity ferry vessel company were clearly intended to benefit only Superferry." Slip op. 63 (emphasis added).

The Achilles' Heel of Act 2 was the short time frame in which it applied; the court held that the "actual probability that the law will apply in the future" (slip op. at 45) must be considered, and it rejected the state's claim the record did not show that other ferries besides the Superferry might benefit from Act 2. Slip op. at 49-62. The court deconstructed the state's claim, and held that no other company but the Superferry could build or acquire a qualifying vessel, enter into an operating agreement with the state, and comply with all federal and state regulations within the 21 months of Act 2's life.

[Might add that the Achilles' Heel was not only the short timeframe. It was also more fundamentally in the narrow definition of a "large capacity ferry vessel" arbitrarily created in Act 2.--Ed.]

The briefs in the Superferry II appeal are posted here, and the archive of our live blog of the December 18, 2008 oral arguments is posted here. Our Superferry case page here.

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