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Mahi Pono: ‘We are not profiting off water’

Officials offer details of approach to vital resource

Water from the West Wailuaiki Stream flows through the Koolau Ditch in East Maui in late November 2017. Officials with the state Commission on Water Resource Management were taking a tour of the East Maui Irrigation system before making a decision on in-stream flow standards. -- The Maui News file photo

WAILUKU — Tim O’Laughlin said that since moving to Maui a couple months ago, he’s been to the beach only twice.

Still, the new chief operating officer of diversified agriculture company Mahi Pono gets plenty of water time.

O’Laughlin helped negotiate a recent settlement over key Wailuku waterways; he’s collaborating with Maui native Mark Vaught on upgrades to the East Maui Irrigation system; and he’s continuing to research cultural implications of water in Hawaii.

The new COO met with The Maui News this week to discuss Mahi Pono’s stance on water and goals for the new year. Also, the California water lawyer, who is not practicing in Hawaii, addressed muddier topics, such as rumors that the joint venture between Calif.-based Pomona Farms and Canadian pension fund PSP is working to privatize water on Maui.

“We are not profiting off selling water, and we have no plans to do so in the future,” O’Laughlin said. “Our water allocations from the state — in both East and West Maui — are highly regulated and 100 percent contingent on Mahi Pono using the water for agricultural and other reasonable and beneficial uses.

Mahi Pono’s Tim O’Laughlin and Mark Vaught talk about the company’s philosophy on water this week in Wailuku. The two echoed that the company is requesting water from the state for farming and that it is not aiming to privatize water. -- The Maui News / KEHAULANI CERIZO photo

“If we were to attempt to use the water for any other purpose that doesn’t meet this criteria, then water allocations would be terminated.”

Vaught, who has worked at EMI for more than two decades and is now Mahi Pono manager of water resources, agreed.

“One of the things I’d like to reiterate is that we’re committed to farming. We’re not trying to access water to develop the central valley. And that’s something that I know people are discussing in the public. That’s the commitment that our principals have made. That’s a commitment that Tim has made. That’s a commitment that Shan (Tsutsui, senior vice president of operations) has made. I’m going to stick by that as well. That is not our intent at all in accessing this water.”

This year, Mahi Pono is spending nearly $6 million on capital projects for EMI, not including operations or management funds, officials said. Additional gauges for canals and pipes, along with renovating infrastructure in waterways on the east and west sides, are in the works.

EMI: Past, present, future

EMI was part of the acquisition when Mahi Pono purchased 41,000 acres from Alexander & Baldwin a little over a year ago. The complex, engineering marvel of 75 miles (Vaught said 50 of those miles are underground) is fed entirely by gravity to transport East Maui water to Upcountry and Central Maui. When Mahi Pono purchased the land in December 2018, ownership of EMI’s ditches, siphons and tunnels was divided between Mahi Pono and A&B.

Historically, the water delivery system has been the focal point of conflict over water rights. A&B has diverted water for more than 150 years, mostly for sugar operations, which ceased in 2016. Diversions crippled taro farming, hurt native ecosystems and deterred Native Hawaiian cultural practices.

Decadeslong legal challenges by Native Hawaiian farmers and cultural practitioners pressured the state to mandate the return of water to East Maui streams through interim in-stream flow standards established in 2018.

On Thursday, O’Laughlin said that although he has only lived on Maui for a short time, he recognizes EMI’s cultural, historical and infrastructural complexities. He asked that the public be patient as the company transitions to a new era of agriculture.

“One of the things I would ask for, and I know this is hard, I would ask for people’s patience because this system has been in place for a long time, and it’s going to take some time to change,” he said. “We’re going to need to change how we order water, how we operate our system, gauging how we operate, our gauging within our canals and laterals, where we access water, how we access water.”

O’Laughlin said “the stream systems here are flashy — one day you’re way up and the next day you’re way down.” These extreme fluctuations, while meeting downstream demand without accessing more water than needed, add to the challenge.

“We’re going from a (historically) easy system to operate, which is take all the water you can,” he said. “Now, we’re going to a system where, no, we’re going to take as little water as possible, which even makes it more complicated. Just a little patience would go a long way.”

Vaught, who has worked for now defunct A&B subsidiary Hawaiian Commercial & Sugar Co., said he believes a balance can be struck with cultural, ecological and agricultural uses while meeting the stream flow standards.

“I think all those uses seriously can coexist — I really do,” he said.

O’Laughlin and Vaught said “transparency” is important to Mahi Pono. In a recent settlement with Hui o Na Wai `Eha over stream uses in the West Maui Mountains, the company committed to putting gauges in canals and laterals, and on the farms — with measurements placed on the company website for public access.

“The goal is to post that; I think it’s really important when we do these things that people are able to see what’s happening in the system,” O’Laughlin said.

The company is working with the state Commission on Water Resource Management to improve in-stream gauging, which is challenging no matter where the water delivery system is located in Hawaii.

“One day you’re sitting there, and it’s a nice little level streambed,” O’Laughlin said. “Next day, you go out, that’s all gone. You have a gauge that’s now 3 feet out on the water. So now, you can’t gauge.

“This is an ongoing problem that we have about trying to establish control points to get accurate measurements to let people know what is in the stream.”

Vaught said that because “Mother Nature changes things on a daily basis,” working with the commission to establish proper control points will be pivotal.

“Once water gets into the ditch system, we would at our entry points gauge so that we would know exactly how much water is coming in, and we would make use of that exact amount of water; we’d be able to track and trace where that water goes,” he said. “That would also help us find inefficiencies in the system and then we’d be able to address that as well.”

Long-term water lease

A&B and EMI are requesting a 30-year lease from the state Board of Land and Natural Resources that would allow for “developing, diverting, transporting and using government-owned waters” through EMI’s existing ditch system in the Nahiku, Keanae, Honomanu and Huelo areas.

The lease would allow EMI to enter state-owned lands to maintain and repair existing access roads and trails that are part of its system. It also would allow the company to deliver water to some 36,000 domestic and agricultural users Upcountry, including the Kula Agricultural Park and its 262-acre planned expansion; the Nahiku community, which through the county draws up to 20,000 to 45,000 gallons per day from the ditch system; and Mahi Pono’s 30,000 acres of former sugar cane lands in Central Maui.

Mahi Pono officials said they are currently working on drafting responses to the hundreds of comments submitted during the public comment period of the draft environmental impact statement, which closed in November.

The company emphasized that it is not profiting from selling water to the county, which reimburses Mahi Pono at a rate of 6 cents per 1,000 gallons of water provided.

“This rate has been held constant since the 1970s, and the corresponding payments cover only a small portion — less than 8 percent — of EMI’s operating budget,” according to Vaught.

Other EMI work includes finishing work spelled out in the framework of the in-stream flow standards decision, Vaught said, which requires a group of diversions grouped into four categories to be “completely shut off.”

Category one diversions are complete; the final permit for category two is in the works; category three is a little more involved due to construction; and category four was completed in 2007, with the intent that paperwork would be finished later, according to Vaught.

“There was stuff out there that needs to be removed,” O’Laughlin added. “We are going up there this year and making sure it’s removed.”

From California to Maui

Some online posts in California refer to O’Laughlin as “the hammer,” which he shrugs off.

“I have no idea where the label came from, but it never really gained any legitimate traction,” O’Laughlin said. “That’s not an accurate reflection of how I operate, and the recent stipulation agreement with Hui o Na Wai `Eha and Office of Hawaiian Affairs in the West Maui contested case is proof of that.”

O’Laughlin is the founder of the Sacramento-based legal firm O’Laughlin & Paris LLP, and has many years of experience working on water law with large irrigation districts, farming entities and organizational structures.

He said he’s kept affiliation with his California firm but does not practice law in Hawaii, adding that Mahi Pono has a “very reputable law firm,” and he’s happy with the work they’re doing.

O’Laughlin has worked as a consultant for Mahi Pono principals for years. He bought into the idea of becoming COO and relocated to Maui, despite a track that had him “sailing toward retirement.”

“When you’re a lawyer, you really don’t get to see the fruits of your labors very much,” he said. “That’s what’s great about this job — you can actually see something tangible being done and being produced. It’s really rewarding from that standpoint.”

O’Laughlin said he tells clients that litigation should always be “the last resort” because results are not in their hands.

Instead, he emphasized working on settlements, such as the one Mahi Pono recently reached with the Hui over the company’s access to streams that the community group works to protect.

“To me, it’s always been imperative that if you can get a community to coalesce around a settlement. You may not get everything you want, but at least you can control the destiny of where that ends up,” O’Laughlin said.

And the “beauty of a settlement” is that it is a lot less expensive and time consuming than the alternative, he added.

O’Laughlin said he arrives weekdays to the One Main Plaza, Wailuku, office around 7:30 a.m. and leaves at about 4:30 p.m. His COO role is “extremely varied” and includes “a myriad of things,” covering contracts, personnel, farming and negotiations.

“And literally every day in every hour I’m dealing with a different issue, which makes it really mentally stimulating,” he said.

Vaught said O’Laughlin often defers to those with more experience.

“It’s been great,” Vaught said. “He’s been giving us the opportunity to voice opinions, and let us help him navigate the landscape here, the cultural landscape, the social landscape you know, the farm, etc. It’s very helpful to work with someone who’s open-minded and allows us to share.”

O’Laughlin said he works well with Tsutsui and views the two to be “one and the same.”

“I know it’s been mentioned that . . . I’m here to replace Shan. Nothing could be further from the truth. Shan is not a number two. In my mind, Shan and I are indivisible. We work extremely well together. We both have our strengths and weaknesses. But as a team we’re pretty dynamic.”

O’Laughlin has a home in Kula, which he “absolutely loves.” On weekends, he puts in about four to five hours of work per day.

During downtime, he said he’s read six books since his move to Maui, including “Hawaii’s Story by Hawaii’s Queen,” and watched the water rights film, “E Ola I Ka Wai” — per the direction of Mahi Pono community relations director and local activist Tiare Lawrence.

At the end of the day, O’Laughlin said he hopes the community will see that Mahi Pono is committed to Maui’s people and values.

He pointed to a Pukalani concern about dust from tractors, which he said were true, and the company altered “the whole program” on how it approaches dust.

“If you see something and you have a question, let us know,” he said. “We want to be good neighbors. We’re here for the long haul. We want people on Maui to be proud of us and we want to be a part of the community.”

* Kehaulani Cerizo can be reached at kcerizo@mauinews.com.

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