Surf school owners relieved by judge’s ruling to temporarily halt lottery-chosen permits at Kahalu‘u Bay

Kahalu‘u Bay in Kona is considered the best spot in West Hawai‘i to safely teach a beginner how to surf.

Surfers aren’t forced to navigate boulders and the reef, which are commonly found at Big Island beaches, said Tifani Stegehuis, owner of Hawai‘i Lifeguard Surf Instructors. The easy access from the road to the water also makes it a great location.

The surf spot also is part of Kahalu‘u Beach Park, which is equally popular for snorkeling due to its reef. And, it’s home to Kahalu‘u Bay Education Center, where onsite education is offered regarding the reef’s fragile ecosystem and how to protect it. The park closes every year to allow for coral spawning.

For all these reasons, the bay has become overcrowded with parking issues. Many of the surf companies park on the shoulder of Ali‘i Drive next to a busy bike lane with their trucks or vans, where they unload boards and provide instruction on the side of the road.

For the past five years, the state has been trying to regulate the number of surf schools teaching at the bay. During the summer, there are typically a manageable three schools, but winter swells lure up to 10 companies, Stegehuis said.

In its latest attempt, the Hawaiʻi Department of Land and Natural Resources decided it would issue — by lottery — four designated permits for surf schools to operate at the bay. But instead of solving the issue, it created an uproar and court case when three of the winning Limited Liability Companies, out of a pool of 17, went to one owner, Wesley Moore, who has only one surf school.

Three of the losing schools banned together and on Thursday filed an application for a temporary restraining order to halt the issue of the permits that would have gone into effect on Dec. 4, effectively shutting out all other surf schools except the one other lottery winner from teaching at the bay.

At a hearing on Thursday afternoon, 3rd Circuit Court Judge Robert D.S. Kim granted the temporary restraining order, saying this is a public interest case because confidence in the state systems must be based on transparency and fairness.

“It’s skyrocketed because of the concern that the entity [the Department of Land and Natural Resources] knew the system could be gained,” Kim said. “I’m not saying it was fixed but it wasn’t up and up.”

In the hearing, it was noted that Moore owned eight of the 17 companies in the lottery, but had only one school. Moore, a longtime Kona resident, has been operating Kona Town Surf Adventures for years. But all the other LLCs were created within the past couple of years.

The companies owned by Moore that won the lottery are Kauakea LLC, Hinaea Iliahi LLC and Kona Town Adventures LLC, none of which are operating as a school.

According to the plaintiff’s court document, the “flawed lottery permitting system” effectively created a monopoly for surf instruction.

According to the Kona Town Surf Adventures’ website, Moore is a father of four who brings his extensive knowledge and surf competition experience to first-time and intermediate riders alike. On Instagram, Moore goes by the name ktown_legend and describes himself as a future Hawai‘i County council member.

Despite repeated requests over multiple days, Moore declined to comment.

Kim has scheduled a new hearing for Jan. 12, when he will hear arguments about granting an injunction, effectively taking the permitting process back to the drawing board.

“Really just a sigh of relief knowing the eight affected small businesses shut out by the unjust permit results, including their employees and families, are all able to operate and sustain their businesses through the holidays and end of the year,” said Stegehuis, a plaintiff in the case.

During the hearing, Deputy Attorney General Joseph M. McGinley, who appeared virtually to represent the state, argued there was not illegal rule-making because the Department of Land and Natural Resources is allowed discretion on how to issue the four coveted permits; and that no official rules were established when the state decided on the lottery system.

McGinley didn’t know what amount of community input went into the department’s decision to choose the lottery system.

Other options considered in selecting schools for the permits were going by seniority and first-come first-serve. Respectfully, McGinley told Kim, every system would create different challenges.

McGinley said all options presented their own issues but the lottery was deemed the fairest by the department.

Kim’s decision keeps things status quo where schools are technically teaching at the bay illegally without a permit.

In the state’s filing in opposition to the temporary restraining order, it said: “This is not a scenario in which previously lawful commercial operators have had the proverbial rug pulled from beneath their feet. As discussed, the Plaintiffs have never been issued permits for commercial surf school instruction in Kahalu‘u Bay waters by the DLNR. Rather, the Plaintiffs have apparently engaged in unsanctioned commercial surf instruction in Kahalu‘u Bay.”

Plaintiffs’ lawyer Alex A. Edrenkin, who appeared in court over Zoom, said the lawsuit isn’t about damages. It’s about establishing a fair and transparent process.

Edrenkin also argued the central point of the state’s opposition is that the status quo is technically illegal according to the current rule which allows for only four permits. The practice on the ground is schools are still teaching despite not having a permit.

“They have known about this and allowed it,” Edrenkin said of the state. “There have been no notices of violation that we’re aware of.”

Kim said the Department of Land and Natural Resources knew the system could be gamed and noted gambling is illegal in the State of Hawai‘i. He asked McGinley if the department looked into whether a lottery was legal to conduct.

Kim said the state filed no affidavit indicating the schools chosen were in existence for the required five years: “I have no information that the DLNR complied with their own criteria.”

The Department of Land and Natural Resources released a statement saying it respects the court’s ruling and “as stated previously would have preferred to award permits on the basis of seniority.”

In 2022, the department’s Division of Boating and Ocean Recreation sought to have the State Legislature amend the law that would issue permits to companies with the longest standing and in order of seniority.

House Bill 1090 was adopted in 2023, but the measure was vetoed by Gov. Josh Green.

“The DLNR Division of Boating and Ocean Recreation (DOBOR) will continue to assess and monitor the situation at Kahalu’u Bay to ensure public safety,” said a statement issued by department spokesperson Dan Dennison. “We are assessing our options, including proposed legislation, rule-amendments, or some alternative means of issuing commercial surf permits. We also appreciated the coordination with the Hawai’i County Parks Department.”

Lawmakers in West Hawai‘i are also looking forward to resolving this issue.

State Rep. Nicole Lowen said the state department didn’t come to the legislators or the voting community about HB 1090, saying: “It was under the radar.”

After the bill was passed and constituents got wind of it, Lowen said people were upset. This sweeping bill also would have affected hundreds of commercial ocean access across the state including dive boat operators, fishermen and manta ray dive tours. Being too late to change anything in the bill, Green vetoed it.

Rep. Kristin Kahaloa knows a permitting process needs to be ensured but believes the application for a permit should be more thoughtful.

“The bay deserves the right stewardship,” said Kahaloa, adding the process should include looking at how the schools can give back to the ocean and the community.