Hawaiʻi AG applauds state supreme court decision upholding prohibition of short-term vacation rentals on agricultural lands

Attorney General Anne Lopez is applauding the Hawaiʻi Supreme Court’s unanimous decision of Rosehill v. State of Hawaiʻi, Land Use Commission, where the court held that farm dwellings in the agricultural district cannot be used as short-term vacation rentals under Hawaiʻi law.

In making its decision, the Hawaiʻi Supreme Court further held that courts must generally defer to agencies when interpreting ambiguous laws, expressly disagreeing with a 2024 US Supreme Court case that overruled the 40-year-old case of Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.

The County of Hawaiʻi has an ordinance that generally prohibits short-term vacation rentals in the agricultural district. In 2020, both the County of Hawaiʻi and certain owners of land in the agricultural district of the County of Hawaiʻi petitioned the state Land Use Commission (LUC) for declaratory orders regarding the legality of this prohibition under state law. The LUC held that a short-term vacation rental is not a permitted use of a farm dwelling in the agricultural district.

On appeal, the Hawaiʻi Supreme Court agreed with the LUC, holding that a farm dwelling may not be used as short-term vacation rentals because “short-term vacation rentals undermine” agricultural purposes.

In making this decision, the Hawaiʻi Supreme Court expressly deferred to the LUC’s interpretation of Hawaiʻi law, stating: “In Hawaiʻi, we defer to those agencies with the naʻauao (knowledge/wisdom) on particular subject matters to get complex issues right.” In making this decision, the court expressly disagreed with the reasoning of the US Supreme Court’s 2024 decision of Loper Bright Enterprises v. Raimondo, which overruled longstanding principles of federal judicial deference to agency interpretation of statutes.

Gov. Josh Green, M.D. was among the state leaders that praised the Hawaiʻi Supreme Court’s decision saying, “Using agricultural lands for genuine agricultural purposes and ensuring that housing is allocated for our residents are two of the most crucial issues facing our state today. I commend that Hawaiʻi Supreme Court for making the right decision for the people of Hawaiʻi.”

“Today’s decision makes clear that deference to administrative agencies is a principle with continued vitality in Hawaiʻi,” said Lopez. “This decision reaffirms the importance of agency expertise under Hawaiʻi law.”

“This was a win for preserving agricultural lands in Hawaiʻi. Short-term vacation rentals are transient accommodations effectively for vacation or tourist use and do not belong in the agricultural district. That was the LUC’s finding when a dozen Hawaiʻi island landowners applied to rent out their farm dwellings as short-term vacation rentals,” said Special Deputy Attorney General Doug Chin, a former Attorney General of Hawaiʻi and current partner at Starn O’Toole Marcus & Fisher who argued the case before the Hawaiʻi Supreme Court. “The Hawaiʻi Supreme Court unanimously upheld the LUC’s thoughtful and well-reasoned decision.”