Land Board Endorses Proposals For Biofuels, Biomass Facilities

“We’re getting out of land resource policy into energy policy,” Hawai`i Island Land Board member Rob Pacheco said at the board’s October 10 meeting.

Ever since the state Legislature passed Act 145 earlier this year to allow the Department of Land and Natural Resources to directly negotiate leases for proposed agricultural-energy facilities, renewable energy companies have been lining up to apply for state land leases. To ensure that the Board of Land and Natural Resources supports the best, most viable projects and doesn’t just approve them on a first-come-first-served basis, DLNR director and board chair Laura Thielen announced at the meeting that her department will consult with the state Department of Business, Economic Development, and Tourism’s energy experts on such projects before they are brought to the board.

With the increasing number of requests for land leases from renewable energy companies, Thielen said she worried that her board and her department “don’t have the expertise to pick and choose.”

Two large renewable energy projects being proposed for state land on the Big Island have already put the Land Board in the position of making some very tough land use and energy policy decisions. Not only must the board decide whether the plan of Hamakua Biomass Energy, LLC, to turn Hamakua’s eucalyptus trees into electricity and the proposal of SunFuels Hawai`i, LLC, to turn trees into biofuel are viable and worth locking up thousands of acres of public land, it must also make sure those projects won’t harm the island’s tenuous ranching, dairy, and forest products industries, which uses or plans to use much of the same land.

At its November 14 meeting, the Land Board voted to support both projects by approving in principle leases to both companies. Hamakua Biomass, which had received Land Board approval-in-principle for a 64-acre processing facility site in early October, was granted a similar approval for 10,500 acres of vacant agricultural and, possibly, Conservation District land, which will be used to grow feedstock. The board also approved in principle a lease to Sunfuels Hawai`i for 10,000 acres, which is the minimum acreage company representative John Ray said would be needed to run a successful operation.

The decisions do not guarantee that the Land Board will issue leases for these projects, but they do give the companies the assurance they need to continue discussions with the utilities and various other entities.

Hamakua Biomass

Energy projects have many moving parts and the stalling of any one of them could spell disaster. In the case of Hamakua Biomass, the company is negotiating the purchase of thousands of acres of eucalyptus along the Hamakua Coast from Kamehameha Schools, is working to obtain a power purchase agreement with the Hawaiian Electric Light Company for 25 megawatts of electricity, and is seeking approvals from the Public Utilities Commission, among other things.

If all goes as planned, says company CEO Guy Gilliland, Hamakua Biomass will be a “viable operation” within 18 months, setting up a plant and operating using trees from land owned by Kamehameha Schools. Plantings on state land should begin by 2010 and those trees will power its plant from 2020 on, he said. According to DBEDT energy project facilitator Joshua Strickler, Hamakua Biomass needs a lease of state land to ease HELCO’s concerns about a secure, long-term energy supply. “They’re worried about what happens after the Kamehameha Schools lease ends [around 2020],” he told the Land Board in November.

Whether the state can deliver the 10,500 acres of vacant land that Hamakua seeks is unclear. Of the 23,380 acres first identified by Hamakua for possible inclusion in a lease, 18,385 acres were identified by the DLNR’s Division of Forestry and Wildlife as being predominantly native forest in the Conservation District – including Natural Area Reserve lands – that are inappropriate for energy production. While the division identified about 1,000 acres of commercially usable trees within the state’s forest reserve, a DLNR report states that both the department and DBEDT felt those trees would be better used in the forest products industry rather than for energy. As of the November meeting, the DLNR had identified only a few thousand acres of vacant land that could be used.

Still, on November 12, DLNR land agent Gary Martin recommended that the board approve in principle a lease of up to 10,500 acres, with the terms and conditions to be brought to the board at a later date. Martin also stated that should the lands on Hamakua’s list not be suitable for commercial forestry, Hamakua should work with the DLNR to identify other lands.

During public testimony, Hamakua resident Elizabeth Cole said that she supported renewable energy, but was concerned that the lands were being treated as though they were a commodity, while the public sees its land as an asset. On behalf of Big Island council member Dominic Yagong for North Hilo, she asked that the matter be deferred until the Land Board next meets on the Big Island, since, “minimally, from all the discussions I’ve been hearing, I think about 50 square miles [are at stake].”

Also concerned with project’s impact on the island was Greg Smitman, associate director of The Kohala Center, a nonprofit organization that is under contract to prepare an agriculture management plan and land map for the county to help with long-range planning. He asked whether there would be an opportunity for individual farmers to grow biomass to fill the proposed processing plants or would the plant operators supply their own fuel. He also asked how appraisal rates would be set, whether Hamakua was taking into account costs of property improvement, and what soil, slope and climate characteristics, if any, made the lands suitable for biomass use.

In a similar vein, board member Sam Gon said, “Whenever we’re talking tens of thousands of acres that might be put into a particular land use, you have to think about the consequences and the balances of the uses that are to occur potentially on that landscape.” He asked DBEDT’s Strickler whether his discussions with DLNR staff included the full range of possible uses for the lands being sought, including pasture, restoration, and conventional food agriculture.

Strickler said that he has met several times with staff from the DLNR’s forestry and land divisions and made sure that land set aside for conservation was not considered. However, he added, “speaking on behalf of DBEDT, that’s not really our job in that the land issue, we feel, is a DLNR issue…We looked at it more in terms of viability of technology and sustainability.”

Whether the DLNR chooses to help Hamakua look for lands beyond the few thousand acres that have been identified “is going to be one of the tough decisions this board is going to have to wrestle with,” Thielen said, adding that the recent flood of renewable energy projects is the first time in many years that people are seeking large tracts of land.

In the end, the board voted unanimously to approve the lease in principle and required that a public hearing on the project be held in Hamakua. Land Board members Tim Johns, a Hawaiian Electric Company board member, and Taryn Schuman had recused themselves from the matter.

Board member Gon said the board’s decision will merely trigger a series of actions and does not lock the state into any commitments. “The major discussions lie ahead,” he said. In addition, Gon added that Hamakua would likely be required to complete an environmental assessment for its project. (Had the board not acknowledged this fact, Henry Curtis of Life of the Land said he would request a contested case hearing.)

Before the board’s vote, Strickler asked the Land Board whether it would be possible to expedite the lease by delegating final approval to Thielen. She and board members Gon and Jerry Edlao all responded that they would rather the lease come back to the full board.

Thielen said that while delegation may be possible “down the line,” she felt, “because this [direct negotiation of energy leases] is new…it’s better to be working through the board and have public testimony. It’s more helpful.”

SunFuels Hawai`i

At the start, both the general manager of SunFuels Hawai`i, LLC, the Land Board’s chair, and the DLNR’s land division administrator apologized for the way the company’s project was introduced to the public. An article in the Honolulu Advertiser on November 12 announced that the board would be considering issuing a lease in principle to the company for lands that are currently leased or under permit to Big Island ranchers and dairymen, causing somewhat of a panic, since none of the lessees or permittees had been contacted by the DLNR or SunFuels about the company’s proposal to plant trees on their lands to make biodiesel.

The potential acreage cited in the article and in the DLNR’s Land Division November 14 report to the board was around 37,000 acres. But as SunFuels’ John Ray explained to the board, that number was a gross total of all the tax map key parcels the company had identified for possible tree planting and not the net acreage that will actually be planted with eucalyptus or other species of trees.

At the Land Board’s November meeting, Land Division administrator Morris Atta said he opposed “right off the bat” the inclusion of any dairy lands, since the industry is so fragile. He apologized for not notifying all of the interested parties before the matter was brought to the board and for giving anyone the impression that the board would actually be awarding a lease for occupied lands.

While Ray said his company has been assessing the available feed stock on the island for the past year and a half, he said he had not yet spoken to the tenants on any of the state properties about a co-existence plan. He also said he did not expect his proposal to be on the Land Board’s agenda so soon.

He said that the company is focusing mainly on “marginal,” private lands that are not being used to grow food crops, and added that he would consider a lease of 6,000 to 8,000 acres of state land “a huge success.” The actual acreage SunFuels will need depends on the feedstock species, other land uses, and native habitats involved.

With regard to why the Land Board should support his proposal, Ray said that hybrid electric cars simply can’t meet all of Hawai`i’s transportation demands, so there will continue to be a need for biodiesel.

“We’re a very large, rural island and that’s never going to change [and]…I don’t think there’s room for two power plants and what we want to do. I think there’s room for one power plant [and us],” he said.

In his testimony before the board, state Department of Agriculture deputy director Duane Okamoto expressed his concern about the potential for conflict with other agricultural uses. In addition to including two dairies in its proposed list of properties, Okamoto said, SunFuels’ proposal included other lands that are slated to be transferred from the DLNR to the DOA.

Alan Gottlieb, president of the Hawai`i Cattlemen’s Council, also saw a conflict and asked that the Land Board ensure that there is no net loss of state grazing lands as a result of renewable energy projects.

“We need a core of large producers to make the industry viable,” he said, adding that in addition to the dairy industry, “our industry is fragile, too.” He did, however, seem open to co-existing with an energy company if it results in improvements to the land.

Dean Okimoto of the Hawai`i Farm Bureau Federation worried about the effects renewable energy projects will have on farmers statewide. “There are too many farmers at risk now,” he told the board. “They’re scared to spend this money [to improve their operations] and their lands are going to be taken away” in an effort to put lands to their “highest and best use.”

Opposing the project for entirely different reasons was Life of the Land’s Henry Curtis, who suggested that in the eight to ten years that it will take SunFuels to start producing biodiesel, electric vehicle technology may improve to meet all transportation needs. He added that ocean thermal energy conversion and wave energy alone could meet the islands energy needs. “Why do we need to convert lands?” he asked.

He also said that the state should require an environmental assessment of the project, since the technology that will be used to make the biodiesel is still being tested. “We’re guinea pigs,” he said.

Cole, of Hamakua, was also concerned that the Land Board was not looking at the islands’ energy picture as a whole. “You folks are being asked to make very deep energy policy decisions… [promoting the use of] eucalyptus for electricity may preclude wind or pump storage hydro,” she said.

In discussing how to proceed, it was clear the board held many of the same concerns as those who had testified. Maui Land Board member Jerry Edlao said that the lessees currently on the land have been good stewards. “If we move forward, it’s like saying, ‘We don’t care about you guys.’…I cannot support this unless there is more dialogue,” he said. Even so, Kaua`i board member Ron Agor felt the need to move things forward, with certain conditions.

Based on a motion by Gon, which incorporated amendments reflecting the wishes of various board members, the board voted to approve in principle a lease to SunFuels of 10,000 acres and ordered the company to work with all concerned tenants and stakeholders on securing land use agreements, among other things. Board members Tim Johns and Taryn Schuman recused themselves from voting on the matter.

After the controversial energy items had been voted on and nearly everyone had filed out of the meeting room, the Land Board heard a request from the Division of Forestry and Wildlife to approve a Hawai`i Conservation Reserve Enhancement Program (CREP) agreement between the state and the U.S. Department of Agriculture.

“This is actually a big deal,” DOFAW administrator Paul Conry said. According to his report to the board, the Hawai`i CREP has the potential to provide up to $42 million in federal funds to local farmers, ranchers, and agricultural producers over the 20-year period of the program.

Under the program, enrolled landowners and lessees must conserve their watersheds by planting hardwoods, creating a riparian forest buffer, or restoring wetlands, among other things, depending on the lands involved and the state’s goals for those lands. In exchange, the landowners or lessees receive rental payments, reimbursements, and other incentive payments from the government.

The board unanimously approved the agreement, which must still be signed by the governor.

— Teresa Dawson

Volume 19, Number 6 December 2008