The Hawai'i Supreme Court has killed an application by Molokai Properties Ltd. for water for the closed Kaluakoi Hotel, The Maui News reported.

The decision, handed down on Dec. 26, turned on timing. The court found that the predecessor company, Kukui (Moloka'i) Inc., was late in submitting a permit application, not only for the hotel but for other Moloka'i Ranch uses in west Moloka'i.

The decision may have broader implications of "use it or lose it" for other entities that have long had access to surface water.

The Office of Hawaiian Affairs called the decision a "substantial victory" that may bolster OHA's arguments in a contested case over access to the waters of Na Wai Eha in West Maui. Hearings in that case were held for two weeks in December and will resume this month.

Dan Orodenker of Molokai Properties said that the ruling actually helps that business's planning because it clarifies the situation.

The original application was filed with the state Commission on Water Resource Management in 1993.

"None of us were involved, and we are not sure exactly what happened. A lot has changed," Orodenker said.

Haunani Apoliona, chairwoman of OHA, said in a statement Wednesday that "OHA is hopeful this Supreme Court ruling will reinforce our position as it relates to the contested case before the state water commission for Maui County at Na Wai Eha."

OHA and Hui O Na Wai Eha are seeking to force the commission to establish in-stream flow standards for 'Iao, Waihe'e, Waiehu and Waikapu streams. The major users, Wailuku Water Co. and Hawaiian Commercial & Sugar Co., are, like Molokai Properties, old agricultural users.

Whether they can continue to have access to as much water as they have had will be determined by the case.

Orodenker said he was not sure how the decision in the Moloka'i case would apply to Na Wai Eha.

When potential users ask the commission for permits to withdraw water, they can justify them as existing or new uses. The law gives existing uses an advantage in dealing out water.

Jon Van Dyke, a University of Hawai'i law professor who is representing the county in the Na Wai Eha case and who represented OHA in the Moloka'i contested case and later the appeal, said, "As a result of the court's ruling, the allocation of water permits on Moloka'i is back to square one, and it can be anticipated that another protracted contested-case hearing will probably be held in the future to determine how much water Molokai Properties Ltd. is entitled to."

He added that since the court killed the original application, Molokai Properties will have to reapply. Its new application will be for a new use, in legal terms, even if some of the uses have a history.

The commission had approved Kukui's request in 2001 for 936,000 gallons per day for existing uses and 82,000 gpd for new uses.

However, between the 1993 application and 2001, the Kaluakoi Hotel and Golf Course closed. The golf course has since reopened, but the hotel has not.

The court ruled that the late application meant that Kukui (for a time owner of Molokai Ranch) had abandoned its existing uses, so it must apply for the water as new uses.

The court remanded the case to the commission. Since the old application is dead, the commission now has nothing to consider until Molokai Properties files a new application.

Orodenker said this will not delay the company's plans because it is already undergoing a complete review and an environmental impact statement in connection with plans to develop luxury housing at La'au Point.

As for abandonment, Orodenker said that over the past 15 years, some uses that Molokai Ranch has served have increased and some, like the closed hotel, have decreased.

The Molokai Irrigation System is managed under contract by the ranch, but the ranch serves as a public utility and serves other customers, like public schools, as well as its own needs.

In August, an opinion from the state Department of the Attorney General said that Molokai Ranch should stop using the state-owned irrigation system until a new contract can be awarded. But the state lawyers opined that the contract could not be renewed without an environmental impact statement.

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