“40 C.F.R. § 144.81(2) defines large capacity cesspools (LCCs) to include multiple dwelling, community or regional cesspools, or other devices that receive sanitary wastes, containing human excreta, which have an open bottom and sometimes perforated sides.”

💡 This defines the exact type of illegal wastewater system the bank operated for nearly two decades.

“40 C.F.R. §§ 144.84(b)(2) and 144.88 required owners or operators of existing LCCs to have closed them by April 5, 2005. New LCCs were prohibited as of April 5, 2000.”

💡 The bank had nearly two decades to comply with this clear federal mandate but allegedly did not.

“EPA alleges that the cesspools that serviced the Property containing the Kukuiolono Golf Course Comfort Station and Kukuiolono Park Pavilion (TMK 4-2-3-005-002) meet the regulatory criteria of LCCs, as that term is described at 40 C.F.R. § 144.81(2), in that the two cesspools have the capacity to serve twenty (20) or more persons per day.”

💡 Facilities serving the public were connected to illegal wastewater systems threatening drinking water.

“EPA alleges that each day that Respondent failed to close the alleged LCCs at the Kukuiolono Golf Course Comfort Station, Kukuiolono Park Pavilion, and the Kukuiolono Camp residential dwellings after April 5, 2005, constitutes a violation of 40 C.F.R. §§ 144.84(b)(2) and 144.88.”

💡 This language establishes that the bank committed thousands of separate violations over nearly 19 years.

“Under Section 1423(c)(1) of the SDWA, 42 U.S.C. § 300h-2(c)(1), and 40 C.F.R. Part 19, EPA may assess a civil penalty of not more than $27,018 for each day of violation, up to a maximum administrative penalty of $337,725, for violations occurring after November 2, 2015 where penalties are assessed on or after January 6, 2023.”

💡 EPA could have imposed nearly six times the actual penalty but settled for just $58,000.

“Section 1423(c)(4)(B) of the SDWA, 42 U.S.C. 300h-2(c)(4)(B), requires the Administrator to take into account the seriousness of the violation, the economic benefit (if any) resulting from the violation, any history of such violations, any good faith efforts to comply with the applicable requirements, the economic impact of the penalty on the violator, and such other matters as justice may require.”

💡 Despite this mandate to consider economic benefit from violations, the penalty appears minimal compared to compliance costs deferred.

“Consistent with 40 C.F.R. § 22.18(b), for purposes of the proceeding, Respondent: admits the jurisdictional allegations of the CA/FO; neither admits nor denies specific factual allegations contained in the CA/FO; consents to the assessment of any stated civil penalty, and to any conditions specified in the Consent Agreement.”

💡 The bank settled without admitting the underlying facts despite nearly two decades of alleged violations.

“By December 31, 2024, close the three (3) LCCs at the Properties in accordance with 40 C.F.R. §§ 144.84(b)(2), 144.88(a), and 144.89(a), and all other applicable requirements, including all Hawaii Department of Health (HDOH) closure, conversion, and/or replacement requirements.”

💡 Rather than requiring immediate closure, EPA gave the bank nearly a full year after settlement to finally comply.

“If Respondent fails to make the payment specified in Section V.A. or fails to comply with the requirements regarding the closure of the alleged LCCs at the properties specified in Section V.B., Respondent agrees to pay in addition to the assessed penalty, a stipulated penalty of $300 per day per violation for each day the Respondent is late meeting the applicable requirements.”

💡 A $300 daily penalty for continued operation of illegal cesspools is trivial for a major financial institution.

“Full payment of the penalty as described in Section V.A., above, and full compliance with this CA/FO as described in Section V.B. shall only resolve Respondent’s liability for federal civil penalties for the violations and facts alleged in Section IV of this CA/FO.”

💡 The settlement narrowly resolves only federal civil penalties, not broader liability or compensation to affected communities.

“This civil penalty represents an administrative civil penalty and shall not be deductible for purposes of federal taxes. 26 U.S.C. § 162(f).”

💡 The penalty is officially characterized as punishment, not a business expense, yet its small size undermines deterrent effect.

“For purposes of the identification requirement of Section 162(f)(2)(A)(ii) of the Internal Revenue Code, 26 U.S.C. § 162(f)(2)(A)(ii), performance of Section V.B. is restitution or required to come into compliance with law.”

💡 The agreement frames cesspool closure as restitution, implicitly acknowledging harm caused by the violations.

“Section 1421 of the SDWA, 42 U.S.C. § 300h, requires that the Administrator of EPA promulgate regulations, which shall include permitting requirements as well as inspection, monitoring, recordkeeping, and reporting requirements, for state underground injection control (UIC) programs to prevent underground injection from endangering drinking water sources.”

💡 The entire regulatory framework exists to prevent exactly what the bank allegedly did for nearly two decades.

“Respondent is the Bank of Hawaii solely in its capacity as Trustee of the Kukuiolono Park Trust Estate, and not in its individual or corporate capacity. The Kukuiolono Park Trust Estate is a trust treated as a 501(c)(3) organization whose headquarters is located at 111 South King Street, Honolulu, Hawaii.”

💡 Even in its charitable trustee role, the bank allegedly prioritized cost savings over environmental compliance and public health.

“Respondent has operated one parcel of real property located at 854 Puu Road (TMK 4-2-3-005-002) in Kalaheo on the Island of Kauai, comprised of the Kukuiolono Golf Course, Golf Course Comfort Station, Kukuiolono Park Pavilion, and Kukuiolono Japanese Garden, and another parcel of real property located at 4255 Papalina Road (TMK (4) 2-3-005: 024) in Kalaheo on the Island of Kauai, comprised of the Kukuiolono Camp residential dwellings, since at least August 20, 1918 and approximately 1943, respectively.”

💡 The bank’s century-long oversight of these properties underscores institutional knowledge and responsibility.