The landowner, facing fines worth $453,000 for failing to provide information to the state water commision, made the decision yesterday before the state Commission on Water Resource Management, said Marjorie Ziegler, an analyst with the Earthjustice Legal Defense Fund.

"This is a major victory," she said. "If they do this, the streams will be restored and water will be flowing over the waterfalls. I'm really excited."

The commission had been asking Kamehameha Schools since December 2000 for reports on how it planned to use the Lalakea Ditch irrigation system, which was built in the early 1900s by the now-defunct Hamakua Sugar Co.

A Hilo lessee had planned to use the ditch for an aquaculture project, but specifics were not provided about the plan and the system, which is in disrepair.

The irrigation system diversion now takes about 2.5 million gallons a day from three sources: Lalakea Stream and one of its tributaries and Hakaloa Stream.

Before the diversion can be stopped, repairs must be completed to the lower Hamakua Ditch irrigation system, a separate system. The commision set a deadline of June.

In lieu of the fine, the commission will allow Kamehameha Schools to pay for other water studies of similar worth, said Ziegler, who has been working on behalf of the Waipio Valley Community Association to settle the issue for the past five years.

"Kamehameha Schools should be commended for looking at the cultural and the environmental benefits of restoring these streams," Ziegler said. "They are not looking at the dollar as the bottom line."