WAILUKU, Maui — Facing restrictions on use of the 'Iao aquifer and a growing demand for water, Mayor Alan Arakawa yesterday announced he will push to obtain control of surface water from the four streams that flow above the underground resource.

The Na Wai 'Eha — the "four great waters" of the 'Iao, Waihe'e, Waikapu and Waiehu streams — have been controlled by Wailuku Agribusiness for at least a century. The company phased out its farming activities in recent years but continues to divert water from the streams to sell to other agricultural interests, including Hawaiian Commercial & Sugar Co. and Maui Pineapple Co.

Arakawa yesterday estimated the cost of acquiring the surface water system — either through a negotiated sale or eminent domain proceedings — at roughly $7 million. It is not known where the money would come from, although Arakawa said a water rate increase is a possible revenue source. Initial funding for an appraisal will be included in the mayor's budget proposal for the 2006-07 fiscal year, he said.

In exchange for Arakawa's promise to pursue restoration of the 'Iao, Waihe'e and Waiehu stream flows, the Earthjustice environmental law firm agreed to drop a contested case against the county that is pending before the state Commission on Water Resource Management. The case involves a dispute over the county's water permit applications for use of the 'Iao aquifer, which serves Maui's most populated areas.

Earthjustice attorney Kapua Sproat said she will appear at the water commission meeting today to ask that the petition filed on behalf of Hui o Na Wai 'Eha and the Maui Meadows Homeowners Association, and a related petition by the Office of Hawaiian Affairs, be withdrawn.

The dispute began in 2003 when the commission took control of the 'Iao aquifer in response to a petition by the homeowners group that argued the county was mismanaging the resource. The action required all water users, including the county, to apply for water permits. Earthjustice and OHA objected to the county's permit applications and requested a contested case hearing.

In a separate petition pending before the water commission, Earthjustice is seeking to set instream flow standards for Na Wai 'Eha that would provide enough water to sustain native stream life, taro farming and other public uses. The petitioners in that case are Maui Tomorrow and Hui o Na Wai 'Eha.

Earthjustice has accused Wailuku Agribusiness of illegally "wasting" water from its stream diversions. Sproat said a system of grates and other intakes prevent a continuous flow to the sea, creating "lethal" conditions for native stream life.

Sproat said Wailuku Agribusiness claims 37 million gallons of the estimated 60 million gallons per day generated by the four streams. Company reports indicate that up to 30 million gallons per day are going unused, she said.

Arakawa yesterday supported the claim, saying little farming is taking place on former plantation lands and that most of the stream water is not being used.

In a Nov. 1 letter to Wailuku Agribusiness President Avery Chumbley, the mayor asked the company to voluntarily return sufficient water to the 'Iao and Waihe'e streams, which provide the bulk of the 60 million gallons per day, to ensure year-round mauka-to-makai flow, "out of concern for traditional and cultural Native Hawaiian rights, the public interest, and the environment."

Chumbley did not respond to the letter, but yesterday said the mayor is making "misleading statements" about the extent of agricultural activities fed by the stream diversions.

"Does he want agriculture on the island of Maui to cease? All the water being diverted is being used by Hawaiian Commercial & Sugar Co., Maui Pineapple Co., diversified farming and golf courses," he said.

Chumbley said Wailuku Agribusiness is leasing 1,200 acres to Hawaiian Commercial & Sugar and an additional 200 acres to Maui Pineapple, and that the Maui Cattle Co. is preparing 260 acres for irrigated pastures.

Wailuku Agribusiness previously approached the county to buy 13,167 acres of watershed lands and its distribution system of ditches, intakes and reservoirs. Chumbley said even though the company has sold much of the underlying land, it has retained perpetual easement and use rights to the water and can assign those rights to the county for a price.

But a sticking point for government officials has been the company's insistence that the county assume the contracts between Wailuku Agribusiness and the plantations and other water users. Arakawa said he doesn't feel the county should be bound by those agreements since water is a public resource.

"The buyer is going to need to honor those contracts," Chumbley said. "What are they going to say to the Waikapu golf course, 'Sorry but we're taking your water?' "

Among those joining Arakawa at yesterday's news conference announcing the agreement to withdraw the contested case petitions were Sproat, OHA Chairwoman Haunani Apoliona and Burt Sakata of Hui o Na Wai 'Eha.

Reach Christie Wilson at cwilson@honoluluadvertiser.com.