Asato v. Procurement Policy Board, State of Hawaii.Â

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Electronically Filed
Supreme Court
SCAP-12-0000789
14-FEB-2014
10:03 AM

IN THE SUPREME COURT OF THE STATE OF HAWAI#I

---o0o---

LLOYD Y. ASATO,
Petitioner/Plaintiff-Appellee/Cross-Appellant,

vs.

PROCUREMENT POLICY BOARD, STATE OF HAWAI#I,
Respondent/Defendant-Appellant/Cross-Appellee.

SCAP-12-0000789

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CAAP-12-0000789, CIV. NO. 11-1-0173)

February 14, 2014

ACOBA, McKENNA, AND POLLACK, JJ.; WITH RECKTENWALD, C.J.,
DISSENTING, WITH WHOM NAKAYAMA, J., JOINS

OPINION OF THE COURT BY ACOBA, J.

We hold that Petitioner/Plaintiff-Appellee/Cross-

Appellant Lloyd Y. Asato (Asato) had standing to bring a claim

challenging the validity of Hawai#i Administrative Rule (HAR) §
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3-122-66 (2008), based on his status as an “interested person”

pursuant to Hawai#i Revised Statutes (HRS) § 91-7 (1993)1, and in

order to satisfy the “needs of justice.” See Life of the Land v.

Land Use Comm’n., 63 Haw. 166, 176, 623 P.2d 431, 441 (1981). We

also decide that HAR § 3-122-66 (2003)2 is invalid because it

exceeds the scope of authority given by the legislature to

Respondent/Defendant-Appellee/Cross-Appellee State of Hawai#i

Procurement Policy Board (the Board). See HRS § 91-7(b) (“The

court shall declare the rule invalid if it finds that it . . .

exceeds the statutory authority of the agency[.]”). Finally, the

court did not err in declining to invalidate all contracts issued

under HAR § 3-122-66, as requested by Asato.

I.

A.

On January 25, 2011, Asato filed a Complaint asserting

1
HRS § 91-7 provides as follows:

§ 91-7. Declaratory judgment on validity of rules. (a) Any
interested person may obtain a judicial declaration as to
the validity of an agency rule as provided in subsection (b)
herein by bringing an action against the agency in the
circuit court of the county in which petitioner resides or
has its principal place of business. The action may be
maintained whether or not petitioner has first requested the
agency to pass upon the validity of the rule in question.
(b) The court shall declare the rules invalid if it
finds that it violates constitutional or statutory
provisions, or exceeds the statutory authority of the
agency, or was adopted without compliance with the statutory
rulemaking procedures.

(Emphases added.)

2
The full text of HAR § 3-122-66 is set forth infra.

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two causes of action, one for declaratory relief (declaratory

action) and one for injunctive relief (injunctive action). In

his Complaint, Asato maintained that he brought the Complaint

pursuant to HRS § 91-7 and that he “also had the necessary

standing to prosecute this action under Federal Electric Corp. v.

Fasi [(Federal Electric)], 56 Haw. 57, 62, 527 P.2d 1284, 1289

(1974) and Iuli v. Fasi [(Iuli)], 62 Haw. 180, 186, 613 P.2d 653,

657 (1980)” as a taxpayer.

The Complaint asserted that HAR § 3-122-663 “is and has

always been contrary to the ‘minimum of three persons’

3
HAR § 3-122-66 provides in relevant part as follows:

§ 3-122-66 Waiver to Requirement for Procurement of Professional
Services.

(a) If the names of less than three qualified persons are
submitted pursuant to section 103D-304(g), HRS, the head of
the purchasing agency may determine that:
(1) Negotiations under section 103D-304(h), HRS, may be
conducted provided that:
(A) The prices submitted are fair and reasonable; and
(B) Other prospective offerors had reasonable opportunity to
respond; or there is not adequate time to resolicit through
public notice statements of qualifications and expressions
of interest;
(2) The offers may be rejected pursuant to subchapter 11 and
new statements of qualifications and expressions of interest
may be solicited if the conditions in paragraph (1) (A) and
(B) are not met;
(3) The proposed procurement may be cancelled; or
(4) An alternative procurement method may be conducted to
include but not be limited to direct negotiations with other
potential offerors if the head of the purchasing agency
determines in writing that the need for the service
continues, but that either the price of the offers received
are not fair and reasonable or that the qualifications of
the offerors are not adequate to meet the procurement needs,
and there is no time for resolicitation, or resolicitation
would likely be futile.

(Emphases added.)

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requirement [in] HRS § 103D-304(g)4 and is therefore invalid, and

4
HRS § 103D-304 (Supp. 2010) provides in relevant part as follows:

§ 103D-304 Procurement of professional services

(a) Professional services shall be procured in accordance
with sections 103D-302, 103D-303, 103D-305, 103D-306, or
103D-307, or this section; provided that design professional
services furnished by licensees under chapter 464 shall be
procured pursuant to this section or section 103D-307.
Contracts for professional services shall be awarded on the
basis of demonstrated competence and qualification for the
type of services required, and at fair and reasonable
prices.

(b) At a minimum, before the beginning of each fiscal year,
the head of each purchasing agency shall publish a notice
inviting persons engaged in providing professional services
which the agency anticipates needing in the next fiscal
year, to submit current statements of qualifications and
expressions of interest to the agency. . . .

(c) The head of the purchasing agency shall designate a
review committee consisting of a minimum of three persons
with sufficient education, training, and licenses or
credentials for each type of professional service which may
be required. . . .
The committee shall review and evaluate all submissions and
other pertinent information, including references and
reports, and prepare a list of qualified persons to provide
these services. . . .

(d) Whenever during the course of the fiscal year the agency
needs a particular professional service, the head of the
purchasing agency shall designate a selection committee to
evaluate the statements of qualification and performance
data of those persons on the list prepared pursuant to
subsection (c) along with any other pertinent information,
including references and reports. The selection committee
shall be comprised of a minimum of three persons with
sufficient education, training, and licenses or credentials
in the area of the services required. . . .
(e) The selection criteria employed in descending order of
importance shall be:
(1) Experience and professional qualifications relevant to
the project type;
(2) Past performance on projects of similar scope for public
agencies or private industry, including corrective actions
and other responses to notices of deficiencies;
(3) Capacity to accomplish the work in the required time;
and
(4) Any additional criteria determined in writing by the
selection committee to be relevant to the purchasing
agency's needs or necessary and appropriate to ensure full,
(continued...)

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must be declared void ab initio and permanently enjoined from all

further use.” Further, the Complaint alleged that “[a]ccording

to internet listings of contract awards on the State Procurement

Office website[,] . . . the previous City and County of Honolulu

Administration has awarded at least twenty six (26) professional

service contracts for architects and engineers or for other

professionals with less than three (3) persons on the list

submitted to the selection committee” and that “[a]ll contracts

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(...continued)
open, and fair competition for professional services
contracts.

(f) The selection committee shall evaluate the submissions
of persons on the list prepared pursuant to subsection (c)
and any other pertinent information which may be available
to the agency, against the selection criteria. . . .

(g) The selection committee shall rank a minimum of three
persons based on the selection criteria and send the ranking
to the head of the purchasing agency. . . .

(h) The head of the purchasing agency or designee shall
negotiate a contract with the first ranked person, including
a rate of compensation which is fair and reasonable,
established in writing, and based upon the estimated value,
scope, complexity, and nature of the services to be
rendered. If a satisfactory contract cannot be negotiated
with the first ranked person, negotiations with that person
shall be formally terminated and negotiations with the
second ranked person on the list shall commence. The
contract file shall include documentation from the head of
the purchasing agency, or designee, to support selection of
other than the first ranked or next ranked person. Failing
accord with the second ranked person, negotiations with the
next ranked person on the list shall commence. If a contract
at a fair and reasonable price cannot be negotiated, the
selection committee may be asked to submit a minimum of
three additional persons for the head of the purchasing
agency to resume negotiations in the same manner provided in
this subsection. Negotiations shall be conducted
confidentially.

(Emphases added.)

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that have been issued based on HAR § 3-122-66 are void ab

initio.” Therefore, Asato’s declaratory action requested that

“the court declare as a matter of law that HAR § 3-122-66 has

never been valid and has always been ultra vires because it is

contrary to and violates the “minimum of three persons

requirement in HRS § 103D-304(g)[.]”

Correlatively, Asato’s injunctive action requested that

“all existing contracts in which HAR § 3-122-66 was used in

violation of the ‘minimum of three persons’ requirement in HRS §

103D-304(g) be rescinded as being void ab initio.” Asato also

asked that “a preliminary injunction, and after hearing, a

permanent injunction be entered enjoining and restraining [the

Board] and all its agents, servants, and employees, and all

others acting in concert with them, including but not limited to

the administrator of the State Procurement Office, and all of his

agents, servants[,] and employees, and all chief procurement

officers and their agents, servants and employees in the state

and county governments from utilizing HAR § 3-122-66 in the

procurement of professional services under HRS § 103D-304.”

On January 10, 2012, Asato filed a motion for summary

judgment. Asato again contended that “HAR § 3-122-66 conflicts

with HRS § 103D-304(g) and should be struck down[.]” Again,

Asato asked the court to “declare that HAR § 3-122-66 has never

been valid and has always been ultra vires and is void ab initio,

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enjoin its current and future use and declare that every

government contract issued under the invalid authority of HAR §

3-122-66 is void ab initio.”

On March 30, 2012, the Board filed a cross-motion for

summary judgment. The Board argued that HAR § 3-122-66 was

authorized by HRS § 103D-102(b)(4)(L),5 and therefore “HAR § 3-

5
HRS § 103D-102 (Supp. 2010) provides in relevant part as follows

§ 103D-102 Application of this chapter

(b) Notwithstanding subsection (a), this chapter shall not
apply to contracts by governmental bodies:

. . .

(4) To procure the following goods or services which are
available from multiple sources but for which procurement by
competitive means is either not practicable or not
advantageous to the State:
(A) Services of expert witnesses for potential and actual
litigation of legal matters involving the State, its
agencies, and its officers and employees, including
administrative quasi-judicial proceedings;
(B) Works of art for museum or public display;
(C) Research and reference materials including books, maps,
periodicals, and pamphlets, which are published in print,
video, audio, magnetic, or electronic form;
(D) Meats and foodstuffs for the Kalaupapa settlement;
(E) Opponents for athletic contests;
(F) Utility services whose rates or prices are fixed by
regulatory processes or agencies;
(G) Performances, including entertainment, speeches, and
cultural and artistic presentations;
(H) Goods and services for commercial resale by the State;
(I) Services of printers, rating agencies, support
facilities, fiscal and paying agents, and registrars for the
issuance and sale of the State's or counties’ bonds;
(J) Services of attorneys employed or retained to advise,
represent, or provide any other legal service to the State
or any of its agencies, on matters arising under laws of
another state or foreign country, or in an action brought in
another state, federal, or foreign jurisdiction, when
substantially all legal services are expected to be
performed outside this State;
(K) Financing agreements under chapter 37D; and
(L) Any other goods or services which the policy board
(continued...)

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122-66 is a valid rule.” According to the Board, Asato did not

have standing as a taxpayer because he did not demonstrate that

he had suffered a pecuniary loss from the enactment of HAR § 3-

122-66, and Asato did not have standing under HRS § 91-7 because

“HRS § 91-7 limits relief to claims from ‘interested persons’ who

can show an actual or threatened injury.” (Citing Richard v.

Metcalf, 82 Haw. 249, 253, 921 P.2d 169, 173 (1996).) Finally,

the Board maintained that Asato could not challenge specific

contracts awarded under HAR § 3-122-66 because “[c]hallenges to

the award of procurement contracts are governed exclusively by

the Procurement Code.” (Citing HRS § 103D-704.)

B.

On June 8, 2012, the circuit court of the first circuit

(the court)6 issued an order granting Asato’s motion for summary

judgment. As to Asato’s standing, the court concluded that Asato

was an “interested person” under HRS § 91-7 because he “seeks to

obtain a judicial declaration,” and “has brought an action

against the agency in circuit court and is asking us to determine

whether or not this rule is valid or invalid as it violates

5
(...continued)
determines by rules or the chief procurement officer
determines in writing is available from multiple sources but
for which procurement by competitive means is either not
practicable or not advantageous to the State[.]

(Emphases added.)

6
The Honorable Karl K. Sakamoto presided.

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statutory provisions or exceeds statutory authority.” The court

also held that the “three-part test of injury in fact” set forth

in Bush v. Watson, 81 Hawai#i 474, 918 P.3d 1130 (1996) “would

have been met here.”

The court explained that the first prong of the test

was met because Asato demonstrated that the Board used HAR § 3-

122-66 to “exempt certain procurements from requirements of HRS §

103D-304, where [Asato] assert[ed] that the administrative rule

is inconsistent with the statute.” The second prong was met

“because the actual or threatened injury to [Asato], as a

taxpayer, is directly traceable to [the Board’s] actions,

especially in concerning integrity of contracts using taxpayer

funds.” Finally, the third prong was met because “a favorable

decision would require [the board] to follow the statutory

mandates of HRS § 103D-304, and would result or render [sic] HAR

§ 3-122-66 invalid, which is the direct object of [Asato’s]

lawsuit.”

As to the validity of HAR § 3-122-66, the court

explained that “[HRS §] 103D-102(b)(4) lists 11 very specific

goods and services exempted from the ambit of 103D,” and

therefore “subsection (L) . . . must be read by its plain and

obvious meaning -- which is that the policy board must determine

by rule, or [the] chief procurement officer must determine in

writing, specific classes of goods or services which are

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available from multiple services, but for which procurement by

competitive means is either not practicable nor advantageous to

the State[;]” but “HAR § 3-122-66 does not do any such thing.”

Moreover, the court concluded that HAR § 3-122-66 could not be

justified by the need to “fill a gap left in HRS § 103D-304,”

because “[t]he plain language of section 304 does not leave any

such gaps[.]” Therefore, the court held that “that HAR §

3-122-66 is invalid[.]”

However, the court “declin[ed] to declare any contracts

exempted under HAR § 3-122-66 void prior to the date that its

order is filed,” because “the plain reading of standing in HRS §

91-7 is that the court shall declare the rule invalid and that is

all the court does.”

Finally, the court ruled on Asato’s request for

attorney’s fees pursuant to the private attorney general

doctrine. It held that all three factors of the private attorney

general doctrine, set forth infra, were met, and awarded Asato

reasonable attorney’s fees and costs.

C.

On August 15, 2012, the court entered a judgment in

favor of Asato and against the Board. Then, on September 4,

2012, the court issued its order awarding attorney’s fees and

costs.

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D.

Both Asato and the Board appealed the court’s August 15,

2012 judgment. The Board also appealed the court’s September 4,

2012 order awarding attorney’s fees and costs. On June 27, 2013,

Asato filed an application for transfer of the appeal from the

Intermediate Court of Appeals (ICA) to this court. This court

granted a discretionary transfer on August 1, 2013, pursuant to

HRS § 602-58(b) (Supp. 2012)7. The parties had already filed

briefs with the ICA.

II.

A.

In its Opening Brief, the Board argued, inter alia,

that (1) Asato did not have standing as a taxpayer because he

failed to meet any of the three requirements for taxpayer

standing set forth in Iuli, (2) the court erred in concluding

that Asato had standing under HRS § 91-7 because Asato did not

suffer injury in fact, and (3) that the court erred in concluding

that HAR § 3-122-66 was invalid, because the Board was authorized

7
HRS § 602-58(b) provides as follows:

(b) the supreme court, in a manner and within the time
provided by the rules of the court, may grant an application
to transfer any case within the jurisdiction fo the
intermediate appellate court to the supreme court upon the
grounds that the case involves:
(1) A question of first impression or a novel legal
question; or
(2) Issues upon which there is an inconsistency in the
decisions of the intermediate appellate court or of
the supreme court.

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to adopt HAR § 3-122-66 under HRS § 103D-102(b)(4)(L).

B.

1.

Asato filed a cross-appeal, arguing inter alia that the

court erred in refusing to grant his requested relief of (1)

“declar[ing] as a matter of law that HAR § 3-122-66 has never

been valid and has always been void ab initio[,]”8 (2)

“declar[ing] that every government contract issued under the

invalid authority of HAR § 3-122-66 is void ab initio,” and (3)

“preliminarily and permanently enjoin[ing] and restrain[ing] the

[Board] . . . from using HAR § 3-122-66.”

2.

In its Answering Brief on cross-appeal, the Board asserted

that “[a] declaration of invalidity is all that is required by HRS §

91-7,” and therefore the court did not err in “refusing to also

declare the Rule void ab initio or ‘always . . . ultra vires.’”

(Emphasis in original.) In the alternative, the Board contended

that “even if Asato’s position were correct,” he was not entitled to

the “voiding of all government contracts entered into pursuant to

the Rule.”

8
To reiterate, the court’s order concluded that “HAR § 3-122-66 is
invalid, pursuant to the statutory authority under HRS § 91-7.” Asato
construes the court’s order as ruling that “HAR § 3-122-66 was invalid as of
the date of entry of its order.” Asato does not explain why it was relevant
that the court declined to rule that HAR § 3-122-66 “has never been valid;”
however, this argument is apparently linked to his contention that the court
should have invalidated each contract issued under HAR § 3-122-66.

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The Board explained that, first, “while HRS § 91-7

allows a circuit court to hear attacks on a rule’s validity, it

‘does not give the circuit court jurisdiction to hear a challenge

to the application of a rule.’” (Quoting Puana v. Sunn, 69 Haw.

187, 189, 737 P.3d 867, 869 (1987).) (Emphasis in original.)

Second, according to the Board, “voiding the contracts would

clearly be improper because the parties to the contracts are not

parties to this case,” and “the ‘absence of interested parties

can be raised at any time even by a reviewing court on its own

motion.’” (Quoting Marvin v. Pfleuger, 127 Hawai#i 490, 503, 280

P.3d 88, 101 (2012).) (Emphasis in original.)

As to Asato’s argument that he was entitled to an

injunction, the Board asserted that Asato waived any argument

that he was entitled to an injunction because Asato’s Opening

Brief did not “mention [] the standards required to obtain an

injunction or [] attempt to argue that Asato met such standards.”

Additionally, the Board noted that Asato “did not even file a

motion for a preliminary or permanent injunction.” The Board

explained that “‘[a]n injunction is an extraordinary remedy’

which is used when a problem cannot ‘be adequately redressed by

an action at law.’” (Quoting Morgan v. Planning Dep’t, County of

Kaua#i, 104 Hawai#i 173, 188, 86 P.3d 982, 997 (2004).) (Emphasis

added.) Here, “[b]ecause the [court] declared that [HAR § 3-122-

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66] was invalid, an injunction would have been superfluous even

if Asato had properly requested one.”

3.

In his Reply Brief, Asato argued that “injunctive

relief is an appropriate and necessary remedy to stop a

government agency’s statutory violation,” and that “[n]o Hawai#i

court has said an injunction is unnecessary to restrain a

violation of a statute.” Additionally, according to Asato, he

had standing as a taxpayer to challenge the individual contracts

issued under HAR § 3-122-66, in addition to his challenge based

on HRS § 91-7. Also, Asato contended that the Board failed to

raise the issue of absent indispensable parties before the court

and that “the identification and disposition of affected

government contracts could take place on remand or in a separate

proceeding[.]” (Citing Haiku Plantations Ass’n v. Lono, 56 Haw.

96, 103, 529 P.2d 1, 6 (1974).) Finally, Asato maintained that

the Board’s indispensable parties argument also fails because

“illegal, and hence, void, contracts are not enforceable against

the government agency where the agency violated the procurement

law or a public policy.”

III.

A.

Asato is entitled to standing in this case pursuant to

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HRS § 91-7.9 See Life of the Land, 63 Haw. at 176, 623 P.2d at

441. As related, Asato’s action was brought pursuant to HRS §

91-7, which allows “[a]ny interested person” to obtain “a

judicial declaration as to the validity of an agency rule.” The

court determined that Asato had standing under HRS § 91-7.10 The

9
Inasmuch as we find standing based on HRS § 91-7, we need not
reach the claims raised on taxpayer standing or HRS § 632-1. It is said,
“[m]any states have liberalized taxpayer standing . . . and allow taxpayer
suits against any improper expenditure without need to show special injury to
the plaintiff.” Akau v. Olohana Corp., 65 Haw. 383, 387, 652 P.2d 1130, 1133
(1989). The ability to challenge illegal public expenditures is “based upon .
. . the taxpayer’s equitable ownership of such funds and his liability to
replenish the public treasury for deficiencies caused by the
misappropriation.” Hawai#i’s Thousand Friends v. Anderson, 70 Haw. 276, 282,
768 P.3d 1293, 1298 (1989) (internal quotation marks omitted). This court has
recognized that in “special situations,” such as where the State awards
government contracts involving “patently improper and defective bidding
procedures,” a plaintiff does not need to demonstrate actual pecuniary harm
because the harm to taxpayers “could be presumed.” Iuli, 62 Haw. at 185-86,
613 P.3d at 657; see also Federal Electric, 56 Haw. at 62, 527 P.2d at 1290;
Mottl v. Miyahira, 95 Hawai#i 381, 391 n.13, 23 P.3d 716, 727 n.13 (2001).

10
Although the court did not decide the taxpayer standing issue, it
may be noted that the dissent contends that the “special situation” discussed
in Iuli and Federal Electric is not presented here because (1) “HAR § 3-122-66
[] is not an ‘innovative procedure without the benefit of definitive
guidelines,’” dissenting opinion at 28 (quoting Federal Electric, 56 Haw. at
66, 527 P.2d at 1291), (2) unlike in the instant case, in Federal Electric,
the City awarded a contract to a bidder whose bid exceeded the plaintiff by
more the $90,000, dissenting opinion at 28, and (3) Federal Electric and Iuli
were “decided at a time when there was no express provision allowing for a
judicial action by disappointed bidders.” Dissenting opinion at 26-28.
Respectfully, the foregoing is incorrect. First, to reiterate,
Iuli recognized that harm may be presumed in all cases involving “patently
improper or defective bidding procedures,” irrespective of whether those
procedures were “innovative.” Iuli, 62. Haw. at 185-86, 613 P.3d at 657.
Second, Federal Electric did not rely on the fact that the plaintiff was the
lowest bidder. The issue in Federal Electric was not that the plaintiff’s bid
was the lowest bid, but rather that due to indefinite specifications, it could
not be determined whether the plaintiff was in fact the lowest bidder.
Federal Electric, 56 Haw. at 62, 527 P.3d at 1289. Third, the lack of any
express provision allowing for suit by a disappointed bidder was irrelevant
inasmuch as the law granted disappointed bidders standing to sue irrespective
of their standing as taxpayers. Id.; see also, e.g., In re Air Terminal
Servs., 47 Haw. 499, 510-12, 393 P.2d 60, 68 (1964) (holding that a
disappointed bidder who was not a taxpayer had standing to argue that it had a
“clear legal right to be awarded the contract”). Thus, the requirements
imposed by the dissent on taxpayer standing in this area are inconsistent with
(continued...)

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analysis as to HRS § 91-7 in this opinion differs from that of

the court, in that Asato is not required to satisfy the three-

part injury in fact test in order to obtain standing as an

“interested person”.

B.

This court has considered what is required to become

“[a]ny interested person” under HRS § 91-7 in two prior cases.

In Life of the Land, the plaintiffs challenged the legality of

procedures followed by the Land Use Commission in boundary

review. Id. at 177, 623 P.2d at 441. The Land Use Commission

asserted that the plaintiffs had not demonstrated standing to

seek judicial relief. Id. at 171, 623 P.2d at 437-38.

In rejecting the Land Use Commission’s argument, this

court articulated the general principle that “we have not been

inclined to foreclose challenges to administrative determinations

through restrictive applications of standing requirements, and

see no sound reason for doing so here.” Id. at 171, 623 P.2d at

438. Life of the Land further took note of the “expansive trend

in defining injury for standing purposes,” as articulated in In

re Hawaiian Elec. Co., 56 Haw. 260, 535 P.2d 1102 (1975):
“We note that the trend in American jurisprudence as
evidenced by recent decisions of this court and courts

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(...continued)
our precedent.

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across the land, has been to broaden the class of persons that
have standing to challenge agency action. The United States
Supreme Court has clearly indicated that standing cannot be
confined only to those who allege economic harm, nor can it be
denied to others simply because many persons share the same
purported injury . . . .”

Life of the Land, 63 Haw. at 175, 623 P.2d at 440 (emphasis

added) (quoting In re Hawaiian Elec. Co., 56 Haw. at 256 n.1, 535

P.2d at 1105 n.1). This court further observed that

“‘[c]omplexities about standing are barriers to justice; in

removing the barriers the emphasis should be on the needs of

justice.’” Id. at 174 n.8, 623 P.2d at 439 n.8 (quoting E.

Diamond Head Ass’n v. Zoning Bd. of Appeals, 52 Haw. 518, 523

n.5, 470 P.2d 796, 799 n.5 (1971)). “Our touchstone[,]” Life of

the Land concluded, therefore “remains ‘the needs of justice.’”

Id. at 176, 623 P.2d at 441.

Having articulated the standing doctrine thus, Life of

the Land surmised that the plaintiff organization and its members

had a “‘stake’ in the outcome of the alleged controversy adequate

to invoke judicial intervention, even though they [were] neither

owners nor adjoining owners of land reclassified by the Land Use

Commission . . . .” Id. at 177, 623 P.2d at 441. In applying

HRS § 91-7, this court determined that because the plaintiffs had

interests that “may have been adversely affected, they

undoubtedly [were] ‘interested persons[,]’” for purposes of HRS §

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91-7.11 Id. at 177-78, 623 P.2d at 441. It also noted that

plaintiffs had been deemed “aggrieved persons” in a prior case

and thus were undoubtedly “interested persons.” Id. at 178, 623

P.2d at 441.

In Richard, this court seemingly adopted a more

stringent standing requirement for “[a]ny interested person” than

was necessarily required in Life of the Land. Instead of

concluding simply that the plaintiffs had interests that “may

have been adversely affected,” Life of the Land, 63 Haw. at 177-

78, 623 P.2d at 441, Richard required that the plaintiffs

demonstrate an “injury in fact.” Richard, 82 Hawai#i at 253-54,

921 P.2d at 173-74. However, it is not clear how Richard reached

this conclusion. Richard states that it was relying on Bush,

which, according to Richard, “applied the ‘injury in fact’ test

to determine the standing of a party who had filed a declaratory

judgment action under HRS § 91-7.” Richard, 82 Hawai#i at 253,

11
The dissent notes that this statement is “not at odds with the
application of the injury in fact test.” Dissenting opinion at 17. Although
not “at odds” with the injury in fact test, Life of the Land did not
explicitly require that all three prongs of the injury in fact test be
satisfied in its discussion of standing under HRS § 91-7. See 63 Haw. at 177-
78, 623 P.2d at 441. The dissent further states that “nothing in Life of the
Land suggests that a plaintiff need not demonstrate injury in fact in order to
have standing under HRS § 91-7[,]” dissenting opinion at 18-19, yet, nothing
in Life of the Land requires that a plaintiff demonstrate injury in fact
either. Indeed, were the criteria for “[a]ny interested person” the same as
the injury in fact test for an “aggrieved” person, this court would have
simply said so in Life of the Land, since the plaintiffs had already been
designated as “aggrieved” persons, having met the injury in fact test. That
the standing threshold for “interested person[s]” was not the same is
manifested by that fact, and the extended discussion concerning “interested
person[s]” in Life of the Land.

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921 P.2d at 173. However, Bush does not mention either HRS § 91-

7 or “[a]ny interested person”, or provide any analysis on why

the injury in fact test should apply to “[a]ny interested

person[s].” See Bush, 81 Hawai#i at 479, 918 P.2d at 1135.

Thus, it was not evident why “[a]ny interested person”

must meet the injury in fact test under Richard, when, in Life of

the Land, this court stated that a plaintiff who has interests

that “may have been adversely affected,” is “[a]ny interested

person.” Life of the Land, 63 Haw. at 177-78, 623 P.2d at 441

(emphasis added). Accordingly, in the absence of supportive

reasoning, it is difficult to accord governing impact to this

aspect of Richard,12 particularly where the plain language of HRS

§ 91-7 and the legislative history of that statute require a

different result that is in accord with Life of the Land.

C.

In the context of HRS § 91-7, “[a]ny” means “one

selected without restriction.” Merriam Webster’s Collegiate

Dictionary 53 (10th ed. 1993). “Interested” is defined as “being

affected or involved[.]” Id. at 610. “Persons” is defined in

HRS § 91-1 (1993) broadly as “individuals, partnerships,

corporations, associations, or public or private organizations of

any character other than agencies.” Therefore, “[b]ased on the

12
Richard is overruled to the extent that it may conflict with the
decision herein.

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plain language of [HRS § 91-7], then, [any] interested person[ is

one who is, without restriction] ‘affected’ by or ‘involved’”

with the validity of an agency rule. AlohaCare v. Ito, 126

Hawai#i 326, 360, 271 P.3d 621, 655 (2012) (Acoba, J., concurring

and dissenting). This is consistent with the holding in Life of

the Land that a plaintiff who has interests that “may have been

adversely affected,” is an “interested person.”13 63 Haw. at

177-78, 623 P.2d at 441. Under the circumstances of this case,

Asato qualifies as an “interested person” because, as a taxpayer

challenging a specific public bidding procedure, he may be

affected by the validity of a regulation that allegedly allowed

an illegal expenditure of public funds.14 See e.g., Hawai#i’s

Thousand Friends, 70 Haw. at 282, 768 P.3d at 1298.

13
The dissent argues that where the legislature has intended “any
person” to be able to bring suit, it has used the term “any person”.
Dissenting opinion at 22-23. See, e.g., HRS § 91-12. However, Asato is not
simply “[a]ny person”, but a taxpayer who may be affected by the illegality of
a bidding procedure. Also, by the same token, the term “[a]ny interested
person” does not by its plain language require that an individual have met the
injury in fact test.

14
The dissent states that “Asato made no showing that he was either
personally ‘affected’ by or ‘involved’ with HAR § 3-122-66.” Dissenting
opinion at 21. However, Asato is affected as a taxpayer, in challenging the
validity of a specific bidding procedure in the procurement context. In that
specific situation, our taxpayer cases indicate harm may be presumed. See nn.
9 and 10, supra. By stating that the majority “fails to point to any
allegation made by Asato that he was personally affected by or involved with
HAR § 3-122-66[,]” dissenting opinion at 21-22 (emphasis added), the dissent
appears to be arguing that Asato could not meet the injury in fact test;
however, we hold that that test does not apply for the reasons set forth supra
and infra. For the same reasons, Asato’s complaint was sufficient to
withstand summary judgment. See dissenting opinion at 11 n.2.

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D.

Furthermore, in adopting HRS § 91-7, the legislature

deviated from the MSAPA with respect to who may be “[a]ny

interested person.” See Model State Administrative Procedure

Act, 1961 Act (U.L.A.) § 7. The MSAPA section setting out a

procedure for declaratory judgments as to the validity or

applicability of rules provides, as its first sentence, that:

“The validity or applicability of a rule may be determined in an

action for declaratory judgment in the [court], if it is alleged

that the rule, or its threatened application, interferes with or

impairs, or threatens to interfere with or impair, the legal

rights or privileges of the plaintiff.” Id. (emphasis added).

In contrast, the first sentence of HRS § 91-7(a) provides, to

reiterate, that “[a]ny interested person may obtain a judicial

declaration as to the validity of an agency rule . . . .”

In explaining this departure from the MSAPA, the House

Judiciary Committee stated that “[y]our Committee is of the

opinion that this section will allow an interested person to seek

judicial review on the validity of a rule for the reasons

enumerated therein regardless of whether there is an actual case

or controversy.” H. Stand. Comm. Rep. No. 8, in 1961 House

Journal, at 658 (emphasis added). The three-part injury test

serves as Hawai#i’s counterpart to the Article III “cases and

controversies” requirement. See Bush, 81 Hawai#i at 479, 918

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P.2d at 1135; Life of the Land, 63 Haw. at 172, 623 P.2d at 438.

See also Mottl, 95 Hawai#i at 396, 23 P.3d at 731 (Acoba, J.,

concurring, joined by Ramil, J.) (“Our analogue of ‘article III’

jurisdictional requirements is the three-part injury test.”).

However, courts of this state are not bound by the U.S.

Constitution’s Article III, § 2 “cases or controversies”

requirement. See Life of the Land, 63 Haw. at 171-72, 623 P.2d

at 438.

Accordingly, where the legislative history of HRS § 91-

7 indicates that no “actual case or controversy” is required, see

1961 House Journal, at 658, the legislature obviously intended to

liberalize standing requirements.15 As a result, this court

should not mandate that the three-part injury test is necessary

to bring an action pursuant to HRS § 91-7.

E.

Moreover, it is well-established that the requirements

to be “[a]ny interested person” are less than those to be an

“aggrieved person” in HRS chapter 91.16 See AlohaCare, 126

Hawai#i at 344, 271 P.3d at 640; Richard, 82 Hawai#i at 253, 921

15
This is also evidenced by the language of HRS § 91-7(a), which
states that “[t]he action may be maintained whether or not petitioner has
first requested the agency to pass upon the validity of the rule in question.”

16
HRS 91-14 (Supp. 2004) uses the term “person aggrieved”. That
section provides for judicial review for “[a]ny person aggrieved by a final
decision and order in a contested case or by a preliminary ruling of the
nature that deferral of review pending entry of a subsequent final decision
would deprive appellant of adequate relief . . . .” HRS § 91-14(a).

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P.2d at 173; Life of the Land, 63 Haw. at 177-78, 623 P.2d at

441. Indeed, by using the term “[a]ny interested person” rather

than “aggrieved [person]”, the legislature established a “broader

platform” for “persons” bringing actions under HRS § 91-7. Cf.

AlohaCare, 126 Hawai#i at 362, 271 P.3d at 657 (Acoba, J.,

concurring and dissenting) (noting that in the context of HRS §

91-8 (1993), “[a]ny interested person” should be construed

differently from an HRS § 91-14 “aggrieved person”).

Under our case law, an “aggrieved person” is one who

has suffered an injury in fact, see E & J Lounge Operating Co. v.

Liquor Comm’n of City & Cnty. of Honolulu, 118 Hawai#i 320, 346

n.35, 189 P.3d 432, 458 n.35 (2008), and therefore, the term

“[a]ny interested person” is one who is subject to less stringent

standing requirements. Based on the plain language of HRS § 91-

7, the legislative history, and the differences between an

“interested person” and a “person aggrieved” in Chapter 91, an

“interested person” need not show injury in fact in order to

bring an action pursuant to HRS § 91-7.

Also, our courts have “broadened standing in actions

challenging administrative decisions[,]” Mottl, 95 Hawai#i at

391, 23 P.3d at 726, and “in cases of public interest under our

jurisdiction[,]” Bush, 81 Hawai#i at 479, 918 P.2d at 1130. As

was held in Pele Defense Fund v. Paty, 73 Haw. 578, 837 P.2d 1247

(1992), “[t]his court has adopted a broad view of what

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constitutes a ‘personal stake’ in cases in which the rights of

the public might otherwise be denied hearing in a judicial form.”

73 Haw. at 593, 837 P.2d at 1257 (citation and internal quotation

marks omitted). Life of the Land, explained that “standing

requirements should not be barriers to justice.” 63 Hawai#i at

174, 623 P.2d 431. In this case, to deny Asato standing as an

“interested person” would be to effectively erect a barrier to

justice by preventing judicial review of the validity of HAR § 3-

122-66. 17

One of the reasons stated for imposing the injury in

fact requirement is to deny standing in cases where the litigant

“‘seek[s] to do no more than vindicate [his or her] own value

preferences through the judicial process[.]’” Richard, 82

Hawai#i at 253, 921 P.2d at 174 (quoting Sierra Club v. Morton,

405 U.S. 727, 740 (1972)). Instead, the litigant here sought a

declaratory judgment as to the validity of a regulation. This

type of action cannot be said to be one that vindicates Asato’s

own value preferences through the judicial process, because if

17
The dissent states that we “impl[y] that standing under Life of
the Land is so expansive that the injury in fact requirement no longer applies
under HRS § 91-7.” Dissenting opinion at 17. To the contrary, we simply
articulate the principles in Life of the Land indicating what “[a]ny
interested person” means under HRS § 91-7. Although the dissent would mandate
the same injury in fact requirement, applicable to “aggrieved person[s],” in
contested cases under HRS § 91-14 for “[a]ny interested person[s]” in claims
brought under HRS § 91-7, it sets forth no reasons why the injury in fact test
applied to aggrieved persons should be mandated for “[a]ny interested person”
in the context of dissimilar actions and remedies under HRS § 91-7. See State
v. Fields, 67 Haw. 268, 274, 686 P.2d 1379, 1385 (1984) (internal quotation
marks and citation omitted).

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the regulation is indeed invalid, then the action brought by

Asato will actually serve to uphold the legislature’s intent in

the government procurement area.

F.

As noted, HAR § 3-122-66 allowed for the Board to,

under certain circumstances, procure professional services where

less than three potential qualified persons had been identified,

HAR § 3-122-66(a), in contrast with HRS § 103D-304(g) which

required that “[t]he selection committee shall rank a minimum of

three persons based on the selection criteria and send the

ranking to the head of the purchasing agency.” In bringing an

action to determine whether the promulgation of HAR § 3-122-66

exceeded the scope of the Board’s authority outlined in the

procurement code, Asato therefore sought to effectuate the

purposes behind the procurement code, and accordingly, the public

interest. See CARL Corp. v. State, Dep’t of Educ., 85 Hawai#i

431, 455, 946 P.2d 1, 25 (1997) (noting that “[i]t is certainly

in the public interest that the [State] abide by the procurement

rules it has set for itself”).

When the legislature enacted the current procurement

code, HRS chapter 103D in 1993, it set out a number of intended

purposes in the preamble to the act, among which were:
(4) Ensuring the fair and equitable treatment of all persons
who deal with the procurement system of the State and
counties;
(5) Providing increased economy in procurement activities

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and maximizing to the fullest extent practicable the
purchasing value of public funds;
(6) Fostering effective broad-based competition within the
free enterprise system;
(7) Providing safeguards for the maintenance of a
procurement system of quality and integrity; and
(8) Increasing public confidence in the procedures followed
in public procurement.

1993 Haw. 1st Special Sess. Laws Act 8, § 1 at 38-39. A

challenge to the validity of a particular regulation as outside

the scope of the procurement code protects the principles under

which the HRS chapter 103D was enacted. Specifically, Asato’s

complaint contended that “[c]ontracts issued in circumvention of

the ‘minimum of three persons’ requirement [in] HRS § 103D-304(g)

violate . . . the long established public policies . . .

including ‘[p]roviding increased economy in procurement

activities and maximizing to the fullest extent practicable the

purchasing value of public funds.’” (Quoting HRS § 103-304(g).)

Inasmuch as Asato sought to sustain the objectives of the

procurement code, his action was “a case of public interest,”

Bush, 81 Hawai#i at 479, 918 P.2d at 1130, and therefore relaxed

standing requirements would apply.18 Therefore, Asato has

18
Additionally, a determination that Asato has standing to challenge
the regulation herein is consistent with the principle of separation of
powers. It has been explained that “[w]ithout judicial review, there would be
no ‘check’ on the propriety of the agency’s actions under the law and the
agency could be left to decide the legality of its own actions.” Alakai Na
Keiki, Inc. v. Matayoshi, 127 Hawai#i 263, 277, 277 P.3d 988, 1002 (2012)
(citing McHugh v. Santa Monica Rent Control Bd., 777 P.2d 91, 107 (Cal. 1989).
Consequently, “if the legislature delegates judicial power to an
administrative agency and precludes judicial review of the legality of the
agency’s own actions, a separation of powers issue would arise.” Id. HRS §
91-7 allows for judicial review of the validity of agency rules. However, if
judicially-imposed standing limitations preclude review of administrative
(continued...)

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standing to challenge the validity of HAR § 3-122-66, under HRS §

91-7, as mandated by “the needs of justice.” Life of the Land,

63 Haw. at 176, 623 P.2d at 441.

G.

The dissent asserts that “until today, it has been well

settled that a plaintiff must satisfy the three-part injury in

order to have standing under HRS § 91-7[,]” dissenting opinion at

16, and that we abandon long standing precedent in reaching a

different conclusion. Id. Respectfully, based on the previous

cases, the standing issue is squarely presented in this case and

previously was not “well settled.” In the discussion of standing

in the context of HRS § 91-7, this court never actually applied

the three-part injury in fact test in Life of the Land or

indicated that it must be applied in order for a plaintiff to be

an “interested person.” 63 Haw. at 177-78, 623 P.2d at 441.

While the plaintiffs in that case clearly would have satisfied

the test, because they had already been deemed “aggrieved

persons,” this court did not require in Life of the Land that

plaintiffs allege an injury in fact in order to achieve HRS § 91-

7 standing. Id. In Richard, as noted, no reasoning was

proffered as to why an “interested person” must meet the injury

18
(...continued)
rules, then the judiciary will be prevented from considering the legality of
agency actions, in contravention of the doctrine of separation of powers.

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in fact test, despite the fact that it was the first case to

articulate that requirement. 82 Hawai#i at 253-54, 921 P.2d at

173-74. Instead, Richard may have erroneously assumed that the

issue had already been resolved in Bush. Id. at 253, 921 P.2d at

173. Thus, the issue of HRS § 91-7 standing was far from “well

settled.”

Of course, the doctrine of stare decisis must not be

treated lightly. See State v. Garcia, 96 Hawai#i 200, 206, 29

P.3d 919, 925 (2001). However, under these circumstances, we

seek to address an issue that was not well-supported or well-

settled, and in doing so, review an ancillary holding of Richard,

which in any event, was not necessarily intended to set precedent

in this area. No reasoned or comprehensive discussion of the

meaning of the phrase “[a]ny interested person,” or the

legislative history of HRS § 91-7, including its source in the

MSAPA, has been had in any of our cases. Standing is a

prudential doctrine, see Citizens for Protection of North Kohala

Coastline v. County of Hawai#i, 91 Hawai#i 94, 100, 979 P.2d 1120,

1126 (1999), and where no prudential reasons have ever been set

forth in support of a particular standing requirement, review of

that requirement is warranted, as we do so here.

IV.

We conclude that HAR § 3-122-66 manifestly exceeds the

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scope of the authority granted to the Board by the legislature.

To reiterate, HRS § 91-7(b) provides that “[t]he court shall

declare the rule invalid if it finds that it . . . exceeds the

statutory authority of the agency[.]” The court in this case

correctly determined that “HAR § 3-122-66, as a rule allowing

waiver of HRS § 103D-304(g), contradicts or conflicts with the

statute it attempts to implement.”

In connection with the rule-making authority of

administrative agencies,
“a public administrative agency possesses only such rule-
making authority as is delegated to it by a state
legislature and may only exercise this power within the
framework of the statute under which it is conferred.
Administrative rules and regulations which exceed the scope
of the statutory enactment they were devised to implement
are invalid and must be struck down.”

Haole v. State, 111 Hawai#i 144, 152, 140 P.3d 377, 385 (2006)

(quoting Stop H-3 Ass’n v. State Dep’t of Transp., 68 Haw. 154,

161, 706 P.2d 446, 451 (1985)) (other citations omitted).

Moreover, “an administrative agency can only wield powers

expressly or implicitly granted to it by statute.” Id. (quoting

Morgan, 104 Hawai#i at 179-80, 86 P.3d at 988-89). Thus, the

authority of the Board is delineated by the statutory authority

given to it by the legislature. See Puana, 69 Haw. at 189, 737

P.2d at 870 (holding that an agency’s authority “is limited to

enacting rules which carry out and further the purposes of the

legislation”).

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Of course, an administrative agency may also exercise

its authority through implied powers not expressly granted,

inasmuch as “the legislature cannot foresee all the problems

incidental to carrying out the duties and responsibilities of the

agency.” Haole, 111 Haw. at 152, 140 P.3d at 385 (citation

omitted). However, such implied powers are limited to those

“reasonably necessary to carry out the powers expressly granted.”

Id. (citation omitted).

Moreover, “[i]t is axiomatic that an administrative rule

cannot contradict or conflict with the statute it attempts to

implement.” Agsalud v. Blalack, 67 Haw. 588, 591, 699 P.2d 17, 19

(1985) (citations omitted); see Hyatt Corp. v. Honolulu Liquor

Comm’n, 69 Haw. 238, 241, 738 P.2d 1205, 1206-07 (1987). A rule

that conflicts with an enabling statute must be declared invalid

as outside the scope of the agency’s authority. See Tamashiro v.

Dep’t of Human Servs., 112 Hawai#i 388, 427, 146 P.3d 103, 142

(2006) (holding that where the agency’s rule conflicted with HRS

chapter 91, it exceeded the agency’s authority).

The question in this case, then, is whether, in

promulgating HAR § 3-122-66 the Board was either (1) exercising

the statutory authority granted to it by the legislature, or (2)

exercising its implied power “reasonably necessary to carry out

the powers expressly granted.” Haole, 111 Haw. at 152, 140 P.3d

at 385. If not, then the regulation must be struck down.

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A.

1.

First to be addressed is whether there is a conflict

between the regulation and the procurement code. As explained,

the court found that there was a conflict between HAR § 3-122-66

and HRS § 103D-304, inasmuch as HAR § 3-122-66 allows a waiver of

HRS § 103D-304(g).

The plain language of the relevant statute, HRS § 103D-

304(g) provides that: “The selection committee shall rank a

minimum of three persons based on the selection criteria and send

the ranking to the head of the purchasing agency.” (Emphasis

added.) Where the word “shall” is used in statutes, it is

“‘generally imperative or mandatory.’” Leslie v. Bd. of Appeals

of Cnty. of Hawai#i, 109 Hawai#i 384, 393, 126 P.3d 1071, 1081

(2006) (quoting Black’s Law Dictionary 1375 (6th ed. 1990)).

Thus, HRS § 103D-304(g) unambiguously requires that in every

situation, the selection committee rank “a minimum of three

persons.”

The challenged regulation, HAR § 3-122-66(a)(1), on the

other hand, provides that:
(a) If the names of less than three qualified persons are
submitted pursuant to section 103D-304(g), HRS, the head of
the purchasing agency may determine that:

(1) Negotiations under section 103D-304(h), HRS,
may be conducted provided that:

(A) The prices submitted are fair and
reasonable; and

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(B) Other prospective offerors had
reasonable opportunity to respond; or
there is not adequate time to resolicit
through public notice statements of
qualifications and expressions of
interest.

(Emphasis added.) By its language, then, this regulation

provides for procurement procedures that may take place with

“less than three qualified persons” under certain circumstances.

HRS § 103D-202 (Supp. 1997)19 gives the Board the “authority and

responsibility to adopt rules, consistent with this chapter,

governing the procurement, management, control, and disposal of

any and all goods, services, and construction.” (Emphasis

added.) HAR § 3-122-66 “exceed[s] the scope” of the Board’s

authority to promulgate rules pursuant to HRS § 103D-202, because

the rule provides for procurement to take place in a situation

19
HRS § 103D-202 provides in full as follows:

Except as otherwise provided in this chapter, the [Board]
shall have the authority and responsibility to adopt rules,
consistent with this chapter, governing the procurement,
management, control, and disposal of any and all goods,
services, and construction. All rules shall be adopted in
accordance with chapter 91; provided that the [Board] shall
have the power to issue interim rules by procurement
directives, which shall be except from the public notice,
public hearing, and gubernatorial approval requirements of
chapter 91. The interim rules shall be effective for not
more than eighteen months. The [Board] shall consider and
decide matters of policy within the scope of this chapter
including those referred to by a chief procurement officer.
The [Board] shall have the power to audit and monitor the
implementation of its rules and the requirements of this
chapter, but shall not exercise authority over the award or
administration of any particular contract, or over any
dispute, claim, or litigation pertaining thereto.

(Emphases added.)

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that the statute, by its plain language, would not allow, and

thus is not consistent with HRS § 103D-304(g).

Specifically, where there are less than three qualified

persons that can be considered for a professional services

contract, the statute, by use of the word “shall” would disallow

the procedures set forth in HAR § 3-122-66 to continue. HRS §

103D-304(g). The regulation, however, would permit procurement

procedures to continue and allow for negotiations and award,

despite that fact that less than three qualified persons were

submitted for consideration by the head of the purchasing agency.

HAR § 3-122-66. Manifestly, this regulation is in excess of the

limitations in HRS § 103D-304(g), and thus the Board did not have

the authority to promulgate such a rule under its general rule-

making authority set forth in HRS § 103D-202. The Board, then,

exceeded the bounds of the “rule-making authority as [was]

delegated to it by the state legislature,” Haole, 111 Hawai#i at

152, 140 P.3d at 385, because the rule conflicts with HRS § 103D-

304(g).

This case is similar in some respects to Capua v.

Weyerhaeuser Co., 117 Hawai#i 439, 184 P.3d 191 (2008). In

Capua, this court considered whether a regulation promulgated by

the director of the Labor and Industrial Relations (director) was

inconsistent with a statute. 117 Hawai#i at 441, 184 P.3d at

193. The regulation deemed that an employee waived the right to

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certain vocational rehabilitation benefits when that employee had

been awarded permanent partial disability (PPD) benefits. Id. at

447, 184 P.3d at 199. The relevant statute stated that “‘[t]he

director shall refer employees who may have or have suffered

permanent disability as a result of work injuries . . . for such

physical and vocational rehabilitation services as are

feasible[,]’” and that “‘[t]he eligibility of any injured

employee to receive other benefits under this chapter shall in no

way be affected by the employee’s entrance upon a course of

physical or vocational rehabilitation as herein provided.’” Id.

at 446, 184 P.3d at 198 (some emphasis omitted) (quoting HRS §

386-25 (1993)).

Capua concluded that, by its use of the mandatory term

“shall”, the statute mandated the director to refer an employee

for vocational rehabilitation, including employees who had been

awarded PPD benefits, contrary to the regulation. Id. Thus,

Capua determined that the regulation was inconsistent with the

statute, and therefore beyond the authority of the director to

promulgate. Id. at 448, 184 P.3d at 200.

The same situation is presented by the instant case,

where the statute requires that there “shall” be a minimum of

three qualified persons considered, and the regulation, in

contradiction, allows for a procedure whereby less than three

qualified persons may be considered. As such, the regulation in

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the instant case is plainly outside the express rule-making

powers granted to the Board.

2.

HAR § 3-122-66 is also outside the scope of the implied

powers of the Board, because it directly conflicts with the

procurement code. Where a regulation conflicts with a statute,

the regulation cannot be said to be “reasonably necessary to

carry out the powers” expressly granted to the administrative

agency. Puana, 68 Haw. at 189, 737 P.2d at 870.

Moreover, although “the legislature cannot foresee all

the problems incidental to carrying out the duties and

responsibilities of the agency[,]” id. (citation omitted), as

will be explained infra, the legislature in this instance

apparently did foresee the possibility that there would be less

than three qualified persons for consideration.

B.

In addition to the conflict between the plain language

of the statute and regulation at issue, the legislative history

of HRS § 103D-304 further supports the conclusion that HAR § 3-

122-66 is invalid because it “exceed[s] the scope of the

statutory enactment [it was] devised to implement . . . .”

Haole, 111 Hawai#i at 152, 140 P.3d at 385. The requirement set

forth by the legislature that there be a minimum of three persons

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identified by the selection committee was enacted to establish a

base number for the procurement process when “professional

services” contracts are at issue.
“Professional services” means those services within the
scope of the practice of architecture, landscape
architecture, professional engineering, land surveying, real
property appraisal, law, medicine, accounting, dentistry,
public finance bond underwriting, public finance bond
investment banking, or any other practice defined as
professional by the laws of this State or the professional
and scientific occupation series contained in the United
States Office of Personnel Management’s Qualifications
Standards Handbook.

HRS § 103D-104 (Supp. 2011).

As noted, the current version of the Procurement Code

was enacted in 1993. See 1993 Haw. 1st Special Sess. Laws Act 8,

§ 1 at 37-38. Prior to 1993, the Procurement Code, at HRS

Chapter 103, did not differentiate between the procurement of

“professional services” and the procurement of other types of

goods and services. See HRS Chapter 89 (1985 Repl.) The

legislature’s 1993 revisions to the HRS included a section

specifically on the procurement of “professional services.” See

1993 Haw. 1st Special Sess. Laws Act 8, § 2 at 49. This section,

HRS § 103D-304, as set forth by the legislature in 1993, stated

as follows:
(e) . . . . Unless fewer than three submissions have
been received, the screening committee shall conduct
discussions with at least three persons regarding the
services which are required and the services they are able
to provide. . . . . The committee shall provide the head of
the purchasing agency with the names of the three persons
who the committee concludes is the most qualified to provide
the services required for the project, with a summary of
each of their qualifications.

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(f) The head of the purchasing agency shall evaluate
the summary of qualifications for each of the three persons
provided by the screening committee and may conduct
additional discussions with any of them.

See id. at 50 (emphasis added).

In 1995, the legislature amended HRS § 103D-304 to

delete the phrase, emphasized above, stating that “[u]nless fewer

than three submissions have been received, the screening

committee shall conduct discussions with at least three persons

. . . .” 1995 Haw. Sess. Laws Act 178, § 10 at 301-02. In 1997,

the language “a minimum of three persons” was added to HRS §

103D-304, in reference to the number of qualified persons that

needed to be evaluated, 1997 Haw. Sess. Laws Act 21, § 1 at 26,

and in 2003, the phrase “minimum of three persons” was moved to

its current location, in subsection (g) of the statute. 2003

Haw. Sess. Laws Act 52 § 5, at 78-79. Finally, in 2004, HRS §

103D-304(g) was amended again, leaving the “minimum of three

persons” language intact. 2004 Haw. Sess. Laws Act 216, § 1 at

984.

Accordingly, in 1993, the legislature contemplated a

situation in which there could be less than three initial

submissions to the preliminary screening committee (later termed

the “selection committee”). However, this language was deleted

in 1995, and thereafter there was no longer a provision allowing

for less than three persons to be considered in connection with

professional services procurements. The relevant Conference

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Committee Report from 1995 states that the legislature amended

the Procurement Code by “[c]larifying that agencies may publish

more than one notice inviting persons engaged in providing

professional services to submit current statements of

qualifications and expressions of interest, and may publish

additional notices if previously unanticipated needs for

professional services arise.” Conf. Comm. Rep. No. 38, in 1995

House Journal, at 969. Therefore, in connection with requiring

no less than three persons to be considered, the legislature

expanded the notice provisions inviting professional services

persons to submit qualifications. See id. This legislative

history indicates that the legislature did consider the situation

where there may be less then three qualified persons who could be

identified for these types of procurements, and decided that the

solution was to expand the invitation process to obtain more

qualified professionals.

Relatedly, the 1995 revisions were aimed at the

evaluation process via confidential discussions as well as the

allowance for less than three submissions to the screening

committee for consideration. See 1995 Haw. Sess. Laws Act 178, §

10 at 302. As constituted prior to 1995, then-subsection (e) of

HRS § 103D-304 was in conflict with itself. It provided that the

screening committee had to conduct confidential communications

with at least three persons regarding their services, “[u]nless

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fewer than three submissions [had] been received.” Id. But, two

sentences later, it required that the screening committee

“provide the head of the purchasing agency with the names of the

three persons who the committee concludes is [sic] the most

qualified to provide the services required for the project[.]”

Id. The conflict arises because it is not clear how, where less

than three submissions had been received, the screening committee

could provide the head of the purchasing agency with “the names

of the three persons” who were most qualified.

Pursuant to the 1995 revisions, the legislature altered

the procedure so that the screening committee could conduct

confidential discussions with any person submitted to it, and

also resolved the conflict in the pre-1995 statute by deleting

the provision contemplating a situation where “fewer than three”

submissions had been received by the screening committee. See

id. The alternative way the legislature could have resolved the

conflict would have been by allowing the screening committee to

submit the names of less than three persons to the head of the

purchasing agency where the screening committee itself had

received less than three submissions. Instead, the legislature

deleted any reference to a situation where the screening

committee might be presented with “fewer than three” submissions.

Id.

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Inasmuch as the legislature specifically required that

there be a “minimum of three persons” considered, the Board was

unquestionably acting outside the scope of its authority when it

promulgated HAR § 3-122-66, because it acted in conflict with the

legislature’s purpose to ensure that there were three persons

considered. Here, by overriding the solution to a problem that

the legislature had already considered, the Board, in effect,

implemented a legislative solution. It is not the role of

administrative agencies to legislate outside the ken of their

statutorily prescribed role. HAR § 3-122-66 thus exceeds the

Board’s express powers and any implied powers that the Board may

excercise. As discussed, because HAR § 3-122-66 directly

conflicts with HRS § 103D-304(g), it cannot be justified under

the general rule-making authority of the Board, set forth in HRS

§ 103D-202. HRS § 103D-202 provides only that the Board shall

adopt rules “consistent with [HRS Chapter 103D.]” HAR § 3-122-66

is not consistent with HRS Chapter 103D.

Also, it is not for this court to second-guess the

legislature’s intention when it set forth the specifics of the

procurement process over a number of years and through numerous

legislative amendments to the Procurement Code. It appears that

that issue raised by HAR § 13-122-66 was in fact contemplated by

the legislature, which in turn declined to provide for the

remedial solution proffered by the Board. “‘[N]either the courts

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nor the administrative agencies are empowered to rewrite statutes

to suit their notions of sound public policy where the

legislature has clearly and unambiguously spoken.’” State v.

Harada, 98 Hawai#i 18, 50, 41 P.3d 174, 206 (2002) (Acoba, J.,

concurring and dissenting) (quoting 1 N. Singer, Sutherland

Statutory Construction § 3.06, at 55 (5th ed. 1992-94)). As

such, the statutory scheme must be upheld, requiring that the

regulation be invalidated. See Haole, 111 Hawai#i at 152, 140

P.3d at 385.

V.

For the reasons described above, the statute and the

legislative history demonstrates, the issue here was specifically

contemplated and addressed by the legislature. There is no “gap”

to be filled by the administrative agency.

A.

First, the statutory mandate at issue in this case,

that there be a “minimum of three persons” ranked by the

selection committee, HRS § 103D-304(g), is in connection with the

procurement of “professional services” only. “Professional

services” includes recognized specialities where there are likely

to be three qualified persons available and willing to provide

“services within the scope of the practice of architecture,

landscape architecture, professional engineering, land surveying,

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real property appraisal, law, medicine, accounting, dentistry,”

etc.

Second, even if there are less than three qualified

persons available for a particular service, there are other

options available, including resolicitation, for example. Thus,

as explained, when the legislature amended HRS § 103D-304 as part

of Act 178 in 1995, expressly deleting the language “[u]nless

fewer than three submissions have been received,” it noted that

Act 178 also “[c]larifi[ed] that agencies may publish more than

one notice inviting persons engaged in professional services to

submit current statements of qualifications and expressions of

interest, and may publish additional notices if previously

unanticipated needs for professional services arise.” Conf.

Comm. Rep. No. 38, in 1995 House Journal, at 969. HRS § 103D-

304(b) provides that additional notices shall be given if, inter

alia, “[t]he response to the initial notice is inadequate[,]” or

“[n]ew needs for professional services arise.” Further, in the

event that subsequent solicitation proves futile, or time does

not allow for subsequent solicitation, the procuring entity may

need to redefine the scope of the services sought.

Third, there are provisions in the Procurement Code

that allow for the procurement of services in an emergency, HRS §

103D-307 (1993), or where the amount of the contract would be

considered a “small purchase” pursuant to HRS § 103D-305 (Supp.

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2009). See HRS § 103D-304(j) (allowing contracts under a certain

monetary amount to be negotiated “with at least two persons on

the list of qualified persons”). Thus, in either of these

situations, the procuring entity has options for procurement

processes that do not run afoul of HRS § 103D-304(g).

Taking all of these factors into consideration, the

statute would not lead to legally absurd results. State and

county governments would not be precluded from procuring

professional services such as architects and engineers where they

can resolicit services, where they are able to redefine the scope

of the work to obtain three qualified persons, where the

procurement meets the statutory limits for a “small purchase”

procurement, HRS § 103D-305, and where the procurement is an

emergency procurement as described in HRS § 103D-307.

Consequently, the legislature obviously accounted for those

instances where three qualified persons might not be available.

By doing so, the legislature manifested its adherence

to the proposition that in the absence of these exceptions, that

no award be made unless three qualified bidders are considered.

The wisdom of that determination is committed to the legislature.

See County of Kauai v. Baptiste, 115 Hawai#i 15, 60, 165 P.3d

916, 961 (2007) (Acoba, J., dissenting, joined by Duffy, J.)

(“[N]ot all wisdom resides in the judiciary. In our democracy,

governance is a tripartite function.”). The legislature has

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clearly spoken, by virtue of the express language and legislative

history of HRS § 103D-304. Accordingly, the qualifications on

the state’s and local government’s ability to procure

professional services do not produce an erroneous result.

B.

Where the regulation provides for procedures outside

those authorized by the legislature, it necessarily follows that

there is harm to the public. Where a contract award may be based

on a consideration of less than the minimum number of “qualified

persons” required by the statute, there may be an unwarranted

basis for a review committee to determine that less than three

persons is permissible.

As currently constituted, the text requiring three

qualified persons effectuates the legislative purposes behind the

Procurement Code, including “[p]roviding increased economy in

procurement activities and maximizing to the fullest extent

practicable the purchasing value of public funds,” and

“[f]ostering effective broad-based competition within the free

enterprise system[.]” 1993 Haw. 1st Special Sess. Laws Act 8, §

1 at 38-39. By mandating that there be “a minimum of three

persons” ranked in all professional services procurement not

otherwise exempted from HRS § 103D-304, the Procurement Code

ensures that the procuring entity is incentivized to obtain the

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widest possible range of qualified persons for a particular

project.

C.

Lastly, the Board alleges that HAR § 3-122-66 was

adopted in accordance with its authority under HRS § 103D-

102(b)(4)(L). As noted previously, HRS § 103D-102(b)(4) provides

that
(b) “[Chapter 103D] shall not apply to contracts by
government bodies:
. . . .
(4) To procure the following goods or services which are
available from multiple sources but for which procurement by
competitive means is either not practicable or not
advantageous to the State:
(A) Services of expert witnesses . . .
(B) Works of art for museum or public display;
(C) Research and reference materials including books,
maps, periodicals, and pamphlets . . .
(D) Meats and foodstuffs for the Kalaupapa settlement;
(E) Opponents for athletic contests;
(F) Utility services whose rates or prices are
fixed by regulatory processes or agencies;
(G) Performances, including entertainment, speeches,
and cultural and artistic presentations;
(H) Goods and services for commercial resale by
the State;
(I) Services of printers, rating agencies, support
facilities, fiscal and paying agents, and registrars
for the issuance and sale of the State’s or counties’
bonds;
(J) Services of attorneys employed or retained to
advise, represent or provide any other legal services
to the State or any of its agencies, on matters
arising under laws of another state or foreign
country, or in an action brought in another state,
federal, or foreign jurisdiction, when substantially
all legal services are expected to be performed
outside this State;
(K) Financing agreements under chapter 37D; and
(L) Any other goods or services which the policy board
determines by rules or the chief procurement officer
determines in writing is available from multiple
source but for which procurement by competitive means
is either not practicable or not advantageous to the
State[.]

(Emphases added.)

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However, it is plain that applying the canon of

statutory construction known as ejusdem generis, HAR § 3-122-66

cannot be reconciled under HRS § 103D-102(b)(4)(L). “The

doctrine of ejusdem generis states that ‘where general words

follow specific words in a statute, those general words are

construed to embrace only objects similar in nature to those

objects enumerated by the preceding specific words.’” Singleton

v. Liquor Comm’n of Hawai#i, 111 Hawai#i 234, 242 n.14, 140 P.3d

1014, 1022 n.14 (2006) (quoting Peterson v. Hawaii Elec. Light

Co., 85 Hawai#i 322, 328, 944 P.2d 1265, 1271 (1997) (other

citation omitted)).

Subsection (L) is meant to identify particular goods or

services exempt from the requirements of the Procurement Code.

The general words “[a]ny other goods or services” in subsection

(L) must, under the doctrine of ejusdem generis, be construed in

connection with the list of items (A) through (K) preceding it.

Items (A) through (K) enumerate specific types of goods or

services, for example, works of art, research and reference

materials, out-of-state attorney services, printers, and

performances. See HRS § 103D-102(b)(4)(A) - (K). The Board

would construe (L) not to exempt types of goods or services, but

instead to provide an exemption when a particular factual

situation is posited -- specifically, where less than three

qualified persons are identified under HRS § 103D-304. This

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would give the general words “[a]ny other goods or services” in

HRS § 103D-102 (b)(4)(L) a meaning dissimilar to the specific

exemptions enumerated at HRS § 103D-102(b)(4)(A) - (K), and

therefore would be inconsistent with established principles of

statutory construction. Accordingly, the factual situation of

less than three qualified persons under the Board’s rule HAR § 3-

122-66, cannot be rationalized as an unenumerated exception

within the scope of HRS § 103D-102(b)(4).

Also, HRS § 103D-102(b)(4)(L) provides an exemption

only for “[a]ny other goods or services which the policy board

determines by rules or the chief procurement officer determines

in writing is available from multiple sources but for which

procurement by competitive means is either not practicable or not

advantageous to the State[.]” Id. (emphasis added). The

“rule[]” providing an exemption for these other goods and

services is HAR § 3-120-4 (2011),20 which specifically includes

20
HAR § 3-120-4 provides, in relevant part:

§ 3-120-4. Procurements exempt from chapter 103D, HRS.

(a) Notwithstanding the intent of chapter 103D, HRS, to
require governmental bodies to procure their goods and
services through competitive bidding, it is acknowledged
that there may be situations where procurement by
competitive means is either not practicable or not
advantageous to the State.

(b) Exhibit A titled “Procurements Exempt From Chapter 103D,
HRS” dated 03/17/2011, is located at the end of this
chapter. This exhibit provides a list of goods and services
which the procurement policy board has determined to be
exempt from chapter 103D, HRS, because although such goods
(continued...)

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an Exhibit listing the specific goods and services that the Board

has deemed exempt from HRS chapter 103D, “because although such

goods and services may be ‘available from multiple sources,’

their ‘procurement by competitive means would be either not

practicable or not advantageous to the State.’” HAR § 3-120-4

(quoting HRS § 103D-102(b)(4)). The Exhibit referenced in HAR §

3-120-4 includes services such as “[b]urial services” and

“[c]ourt reporter services”, but does not include “professional

services” as defined in HRS § 103D-104. HAR § 3-122-66, in

contrast, does not reference any language from HRS § 103D-

102(b)(4), and focuses, again, on the number of qualified persons

available rather than the type of good or service being procured.

Thus, it is plain that HAR § 3-120-4, and not HAR § 3-122-66, is

the Board’s rule by which it exempts goods or services not

already enumerated in HRS § 103D-102(b)(4).

HAR § 3-122-66 is also inconsistent with HRS § 103D-

102(b)(4)(L), because HAR § 3-122-66 does not require that the

“chief procurement officer determines in writing”, HRS § 103D-

102(b)(4)(L), that the specific good or service is exempt from

HRS Chapter 103D.

20
(...continued)
and services may be available from multiple sources, their
procurement by competitive means would be either not
practicable or not advantageous to the State.

(Emphasis added.)

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Rather, HAR § 3-122-66 allows the “head of the purchasing agency”

to determine that negotiations may be conducted “[i]f the names

of less then three qualified persons are submitted . . . .”

Therefore, for numerous reasons, HRS § 103D-102(b)(4)(L) cannot

serve as a basis on which to justify the Board’s promulgation of

HAR § 3-122-66, which is outside the scope of the Board’s

authority.

VI.

Finally, the court did not err with respect to the

points of error raised by Asato on cross-appeal. First, the

court did not err in refusing to declare that HAR § 3-122-66 “has

never been valid and has always been ultra vires and void ab

initio.” Instead, the court correctly complied with the language

of HRS § 91-7 and declared the statute invalid. Second, the

court did not err in “refusing to declare that every government

contract issued under the invalid authority of HAR § 3-122-66 is

void ab initio,” inasmuch as the validity of those contracts was

not before the court.21 Third, the court did not err in refusing

to grant a preliminary and permanent injunction prohibiting use

of HAR § 3-122-66 because the legal remedy of declaring HAR § 3-

21
The principles, as addressed herein, pertain to the universal
procurement of all professional services contracts and not to any particular
contract or “project.”

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122-66 invalid constituted an adequate legal remedy rendering an

injunction unnecessary.22

A.

As to Asato’s first point of error on cross-appeal,

Asato’s argument regarding the validity of HAR § 3-122-66 was

apparently linked to his contention that the court should have

declared every award issued under HAR § 3-122-66 invalid,

inasmuch as Asato maintained that the contracts were “void ab

initio” because HAR § 3-122-66 “has never been valid.” However,

as explained infra, the court correctly declined to declare every

contract issued under HAR § 3-122-66 invalid.

The court’s ruling was consistent with HRS § 91-7. HRS

§ 91-7 states that “the court shall declare the rule invalid if

it finds that it violates . . . statutory provisions, or exceeds

the statutory authority of the agency.” (Emphasis added.) In

consonance with the plain meaning of HRS § 91-7, the court

declared that “HAR § 3-122-66 is invalid, pursuant to the

22
Asato’s Opening Brief also raised, as additional points of error
(4) that “the attorney general and [the Board] improperly contended and
participated in the enactment and perpetuation of HAR § 3-122-66[,]” (5) that
“the attorney general and [the Board] have disregarded and violated their
public trust responsibilities,” and (6) that “the attorney general and [the
Board] [should] be judicially barred or estopped from asserting the issues in
its appeal[.]” However, these are not truly “points of error” inasmuch as
they do not state an “alleged error committed by the court[.]” Hawai#i Rules
of Appellate Procedure Rule 28(b)(4)(i). Moreover, Asato apparently concedes
that these issues were “not argued before the [court].” See State v. Moses,
102 Hawai#i 449, 456, 77 P.3d 940, 947 (2003) (“As a general rule, if a party
does not raise an argument at trial, that argument will be deemed to have been
waived on appeal[.]”). Thus, these contentions of error are not discussed
further.

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statutory authority under HRS § 91-7.” (Emphasis added.) Asato

points to nothing in the language or legislative history of HRS §

91-7 requiring the court to declare that a rule “has never been

valid,” instead of ruling that the rule “is invalid.” Hence, the

court satisfied the statutory mandate of HRS § 91-7.

B.

1.

As to Asato’s second point of error on cross-appeal,

the court did not err in refusing to rule that every government

contract issued under HAR § 3-122-66 was void ab initio. In his

Complaint, Asato requested a declaratory judgment that HAR § 3-

122-66 was invalid pursuant to HRS § 91-7 and HRS § 632-1 and

also requested that “all existing contracts in which HAR § 3-122-

66 was used . . . be rescinded as being void ab initio.”

However, Asato did not cite any authority allowing the court to

rescind all contracts authorized under HAR § 3-122-66.

Similarly, Asato brought his motion for summary

judgment under, inter alia, HRS § 91-7 and HRS § 632-1, and

maintained that “[t]here are no genuine disputes of material fact

as to the meaning of the ‘minimum of three persons’ requirement

in HRS § 103D-304(g) and the . . . inconsistency of HAR § 3-122-

66 which nullifies the ‘minimum of three persons requirement.”

In his memorandum in support of his motion, Asato again requested

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that the court “declare that every government contract issued

under the invalid authority of HAR § 3-122-66 is void ab initio.”

However, Asato did not cite any authority allowing the court to

declare every government contract invalid.23

2.

As an initial matter, it is unclear whether Asato’s

request that the court rule that every contract awarded under HAR

§ 3-122-66 is invalid is brought under his declaratory action or

his injunctive action. In any event, first, Asato’s request for

declaratory judgment did not permit the court to invalidate each

contract awarded under HAR § 3-122-66. HRS § 91-7 only allows

parties to “obtain a judicial declaration as to the validity of

an agency rule.” (Emphasis added.) Thus, this court has

explained that “HRS § 91–7 does not give the circuit court

jurisdiction to hear a challenge to the application of a rule”

but instead allows for “attacks on a rule’s validity.” Puana, 69

Haw. at 189, 737 P.2d at 869 (emphasis added). In awarding

contracts pursuant to HAR § 3-122-66, agencies “applied” that

23
In Asato’s memorandum, he stated that “all contracts issued under
the invalid authority of HAR § 3-122-66 are [] void ab initio,” and cited to
Exhibits 1 and 4. Exhibit 1 was a copy of Asato’s complaint, which identified
26 contracts that Asato believed were issued under HAR § 3-122-66. Exhibit 4
was a copy of a “Department of Transportation procurement award for
Architecture and Engineering professional services,” showing that the
“selection list for th[e] contract did not have the ‘minimum of three persons
required by HRS § 103D-304(g).” Asato also attached as Exhibit 19 the Board’s
Answers to Interrogatories, which admitted that at least 11 of the 26
contracts identified in Asato’s complaint “were procurements awarded pursuant
to HAR § 3-122-66.”

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rule. Hence, Asato’s challenge to every contract awarded under

HAR § 3-122-66 could not be brought under HRS § 91-7.

Additionally, in an action brought under HRS § 632-1,

it must be demonstrated that “antagonistic claims are present

between the parties involved which indicate imminent and

inevitable litigation,” or “a party asserts a legal relation,

status, right, or privilege in which the party has a concrete

interest and that there is a challenge or denial of the asserted

relation, status, right, or privilege by an adversary party who

also has or asserts a concrete interest therein.” HRS § 632-1.

In other words, “‘the question is whether the facts alleged,

under all the circumstances, show that there is a substantial

controversy, between parties having adverse legal interests, of

sufficient immediacy and reality to warrant a declaratory

judgment.’” Kaho#ohanohano v. State, 114 Hawai#i 302, 332, 162

P.3d 696, 726 (2007) (Acoba, J., concurring) (quoting United

Public Workers, AFSCME, Local 646 v. Yogi, 101 Hawai#i 46, 57, 62

P.3d 189, 200 (2002)) (emphasis added). Absent any rendition of

the circumstances surrounding each contract, it cannot be

determined from the allegations whether there is a “substantial

controversy” as to a particular contract that is “of sufficient

immediacy and reality to warrant a declaratory judgment.” Id.

Hence, a declaratory judgment generally declaring that all the

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contracts issued under HAR § 3-122-66 are invalidated cannot be

issued pursuant to HRS § 632-1.

Finally, the court could not have invalidated every

contract awarded under HAR § 3-122-66 as “ancillary relief” under

either HRS § 91-7 or HRS § 632-3.24 HRS § 632-3 provides that

“[f]urther relief based on a declaratory judgment may be granted

whenever necessary or proper, after reasonable notice and

hearing, against any adverse party whose rights have been

adjudicated by the judgment.” (Emphasis added.) Here, however,

the recipients of contracts awarded under HAR § 3-122-66 were not

made parties to the case, and therefore their rights have not

been “adjudicated by the judgment.” Consequently, the court

24
In his Reply Brief, Asato cited Costa v. Sunn, 5 Haw. App. 419,
697 P.2d 43 (1985) for the proposition that “the court's authority to grant
ancillary relief under § 91–7 is coextensive with its authority under HRS
Chapter 632.” However, Asato made no further argument as to why “ancillary
relief” in appropriate in this case.
In Costa, the plaintiff challenged new rules for public assistance
programs promulgated by the Department of Social Services and Housing (DSSH).
5 Haw. App. at 420, 697 P.2d at 45. The plaintiff brought a class action on
behalf of “all residents of the State of Hawai#i and members of their public
assistance households who were, or will be, adversely affected by [new
rules].” Id. at 422, 697 P.2d at 46. In addition to invalidating the new
rules, the court ordered DSSH to reinstate the old rules and “reinstate all
recipients or applicants who may have had their benefits reduced, terminated,
or denied” pursuant to the new rules. The court held that these action were
valid under the court’s authority to grant “ancillary relief.” Id. at 425,
697 P.2d at 48.
However, Costa cited HRS § 632-3 as authority for granting
“ancillary relief.” Id. at 425, 697 P.2d at 48. As explained infra, under
HRS § 632-3 ancillary relief is only available against parties whose rights
have been adjudicated. Inasmuch as Costa was a class action, all of the
parties were before the court and thus their rights were adjudicated. Here,
in contrast, Asato has requested relief against parties who are not before the
court. Hence, Costa is inapposite.

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could not have invalidated those contracts on the basis of

“ancillary relief.”

In his Reply Brief, Asato argued for the first time

that, in addition to supporting his standing to sue as a

taxpayer, Lucas and Federal Electric served as a basis to

invalidate the contracts awarded under HAR § 3-122-66. According

to Asato, those cases demonstrate that, following a suit by a

taxpayer, courts have a “continuing obligation to invalidate

unlawful . . . government contracts.” However, as the Board

points out, generally the parties to the contract must be made

parties to a suit in which the contract is challenged. See Haiku

Plantations Ass’n v. Lono, 56 Haw. 96, 102, 529 P.2d 1, 5 (1974)

(“This court cannot undertake to hear and determine questions

affecting the interests of these absent persons unless they are

made parties and have had an opportunity to come into court.”

(internal quotation marks omitted)).25 Moreover, any contract

remedies must be tailored to the facts of each case. See Air

Terminal Servs., 47 Haw. at 509, 393 P.2d at 67 (explaining the

25
Asato apparently argues that, based on Haiku Plantations, if all
of the government contracts were invalidated, “the identification and
disposition of affected government contracts could take place on remand or in
a separate proceeding.” However, in Haiku Plantations, the court “reverse[d]
and vacate[d]” the portions of a declaratory judgment that were adverse to the
parties not before the court, and stated that further adjudication could be
had “in a future proceeding in which all of those having an interest are made
parties before the court.” 56 Haw. at 102, 529 P.2d at 6. Plainly, then,
under Haiku Plantations it would be inappropriate to make any determination
regarding the validity of government contracts when the parties to those
contracts are not before the court.

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“unavailability of mandamus to attack a public contract when the

contract has not only been executed but possession has been taken

and the concessionaire is operating under it”).26 Thus, neither

case cited by Asato would permit the court to simply declare all

the contracts invalid under the circumstances here.27

C.

As to Asato’s third point of error on cross-appeal, it

has been explained that “courts generally will refuse to grant

injunctive relief unless plaintiff demonstrates that there is no

adequate legal remedy[.]” Wright and Miller, Federal Practice

and Procedure § 2944; see also Punohu v. Sunn, 66 Haw. 485, 487,

666 P.2d 1133, 1135 (1983) (holding that injunctive relief was

inappropriate because “the same relief can be obtained through an

application for a stay in the administrative appeal under Chapter

91,” and therefore “there is no lack of an adequate remedy at law

26
In Air Terminal Servs., this court indicated that the disappointed
bidder should have sought injunctive relief because the contract had already
been issued. See Air Terminal Servs., 47 Haw. at 509, 393 P.2d at 67
(rejecting the disappointed bidder’s argument that “the case should be treated
the same as an injunctive suit”). However, this court explained that because
the recipient of the contract had been dismissed from the suit with prejudice,
and the disappointed bidder had failed to amend the complaint to state a claim
for injunctive relief against the recipient of the contract, the action must
be treated as a mandamus action, and that mandamus was not available “where
the performance of the contract has proceeded as far as it has here.” Id. at
506, 510, 393 P.2d at 66, 68. Thus, under Air Terminal Servs., it is apparent
that the recipient of the contract is a necessary party in a challenge to void
a contract that has already been awarded and partially performed.

27
Inasmuch as the parties to the contracts awarded are not before
the court, see discussion supra, we do not discuss Asato’s contention that the
parties who have already performed work on the contracts issued under HAR § 3-
122-66 are not entitled to any compensation on such contracts because the
contracts are void and against public policy.

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available to the appellees”). Here, Asato requested injunctions

restraining the Board from “using HAR § 3-122-66 in the

procurement of professional services under HRS § 103D-304[.]”

However, by declaring HAR § 3-122-66 invalid, the court

effectively ruled that HAR § 3-122-66 “is void and cannot be

enforced.” Hyatt Corp., 69 Haw. at 240, 738 P.2d at 1206.

Hence, the court’s ruling effectively prohibits the Board from

using HAR § 3-122-66 in the procurement of professional services.

In other words, the remedy provided by the court accomplished the

same purpose as Asato’s requested injunctions. Consequently,

there was “an adequate remedy at law,” and injunctive relief was

not appropriate.

VII.

Inasmuch as we hold that Asato prevailed on his HRS §

91-7 challenge to the validity of HAR § 3-122-66, we must decide

whether the court properly granted attorney’s fees and costs

pursuant to the private attorney general doctrine.

The private attorney general doctrine is an equitable

doctrine and an exception to the traditional “American Rule” that

each party must pay its own litigation expenses. See Honolulu

Const. & Draying Co. v. State, Dep’t of Land & Nat. Res., 130

Hawai#i 306, 308, 310 P.3d 301, 303 (2013).
Courts applying the doctrine consider three basic factors:
(1) the strength or societal importance of the public policy
vindicated by the litigation, (2) the necessity for private
enforcement and the magnitude of the resultant burden on the

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plaintiff, and (3) the number of people standing to benefit
from the decision.

Id. (emphasis in original) (quoting Sierra Club v. Dep’t of

Transp. of State of Hawai#i, 120 Hawai#i 181, 218, 202 P.3d 1226,

1263 (2009) (Sierra Club II)) (other citation omitted).

The court’s determination as to the private attorney

general doctrine is reviewed “under the abuse of discretion

standard,” however, “we review de novo whether the trial court

disregarded rules or principles of law that arise in deciding

whether or not a party satisfies the three factors of the private

attorney general doctrine.” Id. at 313, 310 P.3d at 308. In

determining whether Asato was in fact entitled to fees, we need

not address all three factors, inasmuch as we conclude that Asato

is unable to satisfy the third prong of the doctrine.

As to the third criterion, “the number of people

standing to benefit from the decision,” Sierra Club, 120 Hawai#i

at 218, 202 P.3d at 1263 (citations omitted), the court

determined that “proper enforcement of the procurement code via

enforcement through HRS § 103D-304 is of benefit to all citizens

of the state.” The Board contends, on the other hand, that “even

if invalidation of the [r]ule could benefit someone in some

theoretical case, there is no showing that even a handful of

people, let alone many people, would benefit.”

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This court has found that the third prong of the

private attorney general doctrine has been satisfied where

plaintiffs have vindicated causes that included procedural rights

related to environmental review, see Sierra Club v. Dept. of

Transp., 115 Hawai#i 299, 304, 167 P.3d 292, 297 (2007) (Sierra

Club I), Native Hawaiian cultural rights, Maui Tomorrow, 110

Hawai#i at 245, 131 P.3d at 528, and historic preservation,

Honolulu Const. & Draying Co., 130 Hawai#i at 319, 310 P.3d at

314. We have recognized that the third prong of the doctrine had

been met where “all of the citizens of the state, present and

future, stood to benefit from the decision.” In re Water Use

Permit Applications, 96 Hawai#i 27, 31, 25 P.3d 802, 806 (2001)

(Waiahole II) (citing In re Water Use Permit Applications, 94

Hawai#i 97, 98, 9 P.3d 409, 510 (2000) (Waiahole I) (recognizing

the “ultimate importance of these matters to the present and

future generations of our state”)). In connection with equitable

rationales underlying the doctrine, we have also explained that

the types of causes to which the private attorney general

doctrine is applicable, “do not involve the fortunes of a single

individual to the extent necessary to encourage their private

vindication in the courts.” Honolulu Const. & Draying Co., 130

Hawai#i at 319, 310 P.3d at 914 (emphasis in original) (quoting

Waiahole II, 96 Hawai#i at 30, 25 P.3d at 802 (quoting Serrano v.

Priest, 569 P.2d 1303, 1313-14 (Cal. 1977))).

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In the instant case, the specific holding would apply

in future cases where there are fewer than three qualified

bidders for professional services contracts pursuant to HRS §

103D-304(g). Asato argued, however, that all taxpayers will

benefit from this action because they are entitled to expect

“that all public funds will be spent lawfully and prudently[.]”

But, there may be, for example, providers of

professional services who would be individually affected or

involved sufficiently to encourage them to bring a suit

challenging the validity of a regulation promulgated pursuant to

the Procurement Code. See Waiahole II, 96 Hawai#i at 30, 25 P.3d

at 802. Thus, under the circumstances, this case does not meet

the third criterion of the private attorney general doctrine, and

accordingly Asato is not entitled to attorney’s fees and costs.

VIII.

Subject to the reasons set forth above, the court’s

August 15, 2012 judgment is affirmed in part and vacated in part,

and the court’s September 4, 2012 order awarding attorney’s fees

and costs is reversed.

Arthur Y. Park and /s/ Simeon R. Acoba, Jr.
John C. McLaren,
for petitioner /s/ Sabrina S. McKenna

Marissa H.I. Luning, /s/ Richard W. Pollack
for respondent

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