Introduction

The Supreme Court of Hawaiʻi rendered a pivotal decision in the consolidated appeals of UNITE HERE! Local 5 v. PACREP LLC; City and County of Honolulu on February 21, 2025. At issue were the environmental review processes undertaken for two adjacent condominium hotel projects – located at 2121 Kūhiō Avenue and 2139 Kūhiō Avenue – developed by PACREP (a complex of related entities) in Waikīkī. The labor union, UNITE HERE! Local 5, contested the adequacy of the Final Environmental Assessments (FEAs) and, in particular, the alleged improper segmentation of the environmental review process.

The union, representing nearly 10,000 hotel and restaurant employees, argued that the FEAs were insufficient because they failed to disclose cumulative impacts, misrepresented potential changes in unit use (i.e., from hotel to permanent residence), and concealed the true scope of the projects by dividing environmental review segmentation of what was in essence a single, integrated project. PACREP and the City argued that the environmental review was appropriate, that no segmentation occurred, and, furthermore, that the case was moot due to the completed construction and issuance of permits. This decision marks a significant development in environmental law by clarifying the proper approach to segmentation and delineating the remedy available for violations under Hawaiʻi’s Environmental Policy Act (HEPA).

Summary of the Judgment

Justice McKenna, delivering the opinion for the Court, held that the consolidated cases are not moot; effective relief remains possible through proper environmental review even after project completion. The Court focused on two central issues:

• The environmental review for the two phases (2121 and 2139) was improperly segmented when evaluated under the “double independent utility test” of HAR § 11-200-7(2). The Court determined that 2139 would not have proceeded independently of 2121.
• The appropriate remedy for a HEPA violation is one determined in equitable discretion. This remedy does not require invalidation of permits or the destruction of completed projects, especially given that Local 5 did not move for injunctive relief.

Consequently, the Supreme Court vacated the circuit court's orders granting summary judgment for PACREP and the City and remanded the cases for further proceedings. On remand, the circuit court is tasked with determining whether the combined FEAs adequately address the environmental impacts of the Projects, and if not, whether a new Environmental Assessment (EA) or Environmental Impact Statement (EIS) is necessary.

Analysis

Precedents Cited

Inter alia, the Court reviewed and relied on well-established precedents including:

• Kahana Sunset Owners Ass'n v. County of Maui: This case addressed environmental segmentation by emphasizing that splitting a project into separate reviews is impermissible when doing so conceals the cumulative impact of a single integrated development.
• Kilakila ʻO Haleakala v. University of Hawaiʻi: The decision clarified that challenges to environmental review may extend beyond the administrative record and can include a broad inquiry into process sufficiency.
• Kiaʻi Wai o Waiʻaleʻale v. Department of Water: This lawsuit established the “double independent utility test” by asking whether each component of a phased project would have been constructed independently. The Court explicitly adopted and applied this test to the present facts.
• Additional references included cases such as Nuiqsut and various NEPA segmentation cases from the Ninth Circuit, which, while not directly binding, provided persuasive analogies for assessing “connected actions” under Hawaiʻi law.

Legal Reasoning

The Court’s reasoning pivots on two critical determinations:

• Non-Mootness of the Claims: Despite the fact that both projects were completed and permits had been issued, the Court emphasized that effective relief—achieved here by mandating a proper environmental review—is still available. The Court noted that voiding permits or ordering project destruction is an extreme and inequitable remedy, particularly when plaintiffs do not seek injunctive relief immediately.
• Improper Segmentation:

  The Court assessed whether the environmental reviews for 2121 and 2139 should have been conducted jointly. Applying the “double independent utility test” required the Court to determine whether each project could have proceeded independently. The record revealed that PACREP’s internal communications and building plans clearly demonstrated that the 2139 tower was integrally tied to the 2121 project and would not have proceeded on its own. The Court found that PACREP intentionally concealed phase two (2139) during the environmental review for phase one (2121), thereby justifying that the overall review was improperly segmented.

Impact

The decision is likely to have wide-reaching implications on future environmental reviews and permit issuances in Hawaiʻi:

• Phased Developments: Developers must now be cautious in segmenting large, connected projects. The decision sets a precedent that splitting environmental reviews to evade comprehensive analysis is not permissible.
• Regulatory Discretion and Remedies: Even when projects are fully completed, the availability of equitable remedies ensures that parties cannot bypass environmental safeguards simply because physical construction is complete.
• Future Litigation: Parties challenging environmental reviews may leverage the double independent utility test to argue that a proper, combined review was warranted. This may lead to more judicial scrutiny of how environmental assessments are structured, particularly in urban development projects.

Complex Concepts Simplified

Several legal and technical terms appear in this judgment that benefit from further explanation:

• Improper Segmentation: This refers to deliberately dividing a large, unified project into separate phases for the environmental review process. Doing so can result in failing to account for cumulative impacts. In this case, the Court held that dividing the review for the two towers was improper because the second phase (2139) was inextricably linked to the first (2121).
• Double Independent Utility Test: Rather than simply asking “would the project have happened on its own?” (the single independent utility test), the double test requires an analysis of both components. Each project must be evaluated to determine if it would have proceeded independently. Here, the Court concluded that the 2139 tower was contingent upon the 2121 tower.
• HEPA Violations and Equitable Remedies: A HEPA violation does not automatically warrant the nullification of permits or destruction of already-completed projects. Instead, the remedy may involve ordering a comprehensive reassessment of environmental impacts to inform future actions.

Conclusion

The Supreme Court of Hawaiʻi’s decision in Unite Here! Local 5 v. PACREP LLC; City and County of Honolulu is a landmark ruling that establishes stringent parameters against the improper segmentation of environmental reviews. By adopting the double independent utility test, the Court emphasized that environmental assessments must account for the total environmental impact of connected projects rather than permitting developers to parcel them out in ways that conceal cumulative effects.

The ruling underscores the importance of comprehensive environmental analysis under HEPA and reaffirms that even completed projects can be subject to judicial oversight if environmental review safeguards have not been fully met. Moreover, by acknowledging that remedies for environmental review deficiencies are subject to equitable considerations—and not automatically punitive—the decision provides clear guidance for future disputes and regulatory practices.

In summary, this judgment not only rectifies procedural missteps in the environmental assessment of the 2121 and 2139 projects but also sets a critical precedent for ensuring that development must be reviewed holistically to protect Hawaiʻi’s environment and public welfare.