At a recent meeting of the Coordinating Group on Alien Pest Species, veteran observers of the state Legislature summed up their take on the session that came to an end last month.
“My optimism was shaken this session,” said Mark Fox, the new interim head of The Nature Conservancy of Hawai`i (now that Suzanne Case has been appointed to chair the Board of Land and Natural Resources). While the state Division of Forestry and Wildlife emerged with its forest programs intact, he continued, “the Hawai`i Invasive Species Council [HISC] is going to take a hit.”
There were some good bills regarding the inter-island shipment of pests, but they did not make it through to passage.
“It was a challenging session, particularly in regard to some of the processes that occurred at the Legislature. Clinically, some of it was ingenious policy-making, but it was sometimes frustrating to watch.”
Josh Atwood, director of HISC, said that his organization “avoided some potentially damaging bills, but it didn’t get any changes that would allow the [state] Department of Agriculture to work on biosecurity.” After the dust settles, he said, “it’s looking like we’ll have $4.75 million in our pool for competitive HISC proposals.”
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Taking Back from NARS
Perhaps the biggest hit to Hawai`i’s natural resources came with passage of Senate Bill 1299. As introduced (by Sen. Jill Tokuda, chair of the Senate Committee on Ways and Means), it would have established a cap on special funds supported by the conveyance tax. The Land Conservation Fund, which receives 10 percent of the conveyance tax, would have been funded only until it reached a maximum of $7.6 million. The rental housing trust fund would have been capped at $38 million. And the Natural Area Reserve Fund (NARF) would have stopped receiving its portion of the conveyance tax once it reached $19 million.
The committee report, signed by Tokuda, states that capping the funds would “promote budgetary planning and transparency” by, among other things, “increasing competition for limited public funds among agencies and programs…”
Carty Chang, at the time the interim chairman of the Board of Land and Natural Resources, testified at the bill’s first hearing in February that the NARF had already undergone a cutback from 2009 to 2012, when “the allocation to the NARF was reduced to 20 percent to support the General Fund during the economic downturn. Coupled with the greatly reduced revenues due to lethargic real estate market, the department tightened its belt and made do with less. … [T]he department feels now is the time to push forward with conservation activities to protect the state from the pending impacts of climate change.”
When the bill moved to the House of Representatives on April 8, the cap on the Land Conservation Fund was lowered to $6.8 million, while the NARF was completely eliminated. Instead of receiving a portion of the conveyance tax revenues, NARF would be subject to annual appropriations – set in the House draft at $2.1 million for fiscal years 2016 and 2017 – and the ability to use any of that to manage state-owned Natural Area Reserves was eliminated.
(The use of conveyance tax funds to support the state’s own reserves wasn’t authorized until 2005. Before then, the fund could be used only to support the Forest Stewardship, Natural Area Partnership, and watershed partnership programs, which provide matching funds to private landowners, and the Department of Land and Natural Resources’ Youth Conservation Corps.)
To offset the loss of conveyance tax revenue, the House draft proposed instead appropriating a total of $9,656,128 from the general fund to support the programs and projects that would have been paid for out of the special fund. It also called for $5 million in general funds to support invasive species programs.
The conservation community mobilized in opposition to the House proposal. Dozens of people submitted testimony – some as individuals, others representing all the major environmental organizations in Hawai`i.
Christy Martin, director of the Coordinating Group on Alien Pest Species, reminded lawmakers that this represented a change from their previous positions. “Historically, legislators were supportive of finding dedicated funding mechanisms for programs and services where there is a nexus between the source and the program it supports,” she stated in her testimony. Referring to the idea expressed in the Senate committee report that programs should have to compete for funds, Martin continued:
“Funding to protect `ohi`a (for example) cannot possibly compete against programs protecting public health, or educating kids. Agencies can only do so much to compete for funds, but legislators have a responsibility to ensure that government agencies have enough funds to take care of public trust resources. Special funds like those funded through a portion of the conveyance tax were a way to ensure that `ohi`a did not have to compete with kids for funds.”
Martin attached a table to her testimony, showing the amount of general funds received by the Department of Land and Natural Resources since 1996. In that year, that department received $26.67 million. Two decades later, the general fund appropriation for the department was barely $3 million more — $29.95 million. Although clearly, legislators have not been able to fund increases over time, she said, “the DLNR has added programs by utilizing special funds. … These programs include the Watershed Partnerships and support for the Invasive Species Committees on each island, support for the Hawaii Ant Lab, and more. The repeal of S[pecial] funds for conservation will have repercussions statewide this year, and for generations to come.”
Marjorie Ziegler, testifying on behalf of the Conservation Council for Hawai`i, called the proposed draft “a huge loss and a significant step backwards in protecting our resources for future generations.” In addition to opposing the bill, Ziegler also voiced her objections to the way the legislation was handled. “The content of the proposed [House Draft 1] should have been heard by subject committees in both houses” before eliminating the dedicated funding for these important programs, she told the committee.
Chris Yuen, a member of the Board of Land and Natural Resources, also weighed in on the process as well as the substance of the bill. “This move to take dedicated funding away from the Natural Area Reserve System, coming after it passed [the state budget bill], … raises some serious questions about the leadership of the House Finance Committee and its commitment to environmental protection.”
Despite the testimony, the Finance Committee passed the bill out with few changes. This was, for all intents and purposes, the same bill that was adopted by House and Senate conferees, with co-chairs Sylvia Luke, chair of the House Ways and Means Committee, and Tokuda, her Senate counterpart.
On May 5, the conference bill was approved in the Senate, with “no” votes cast only by Sam Slom and Laura Thielen. Russell Ruderman and Gil Riviere voted aye with reservations. The same day, the House voted to approve the bill as well, with dissenting votes cast by Calvin Say, Cynthia Thielen, and James Tokioka.
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Invasive Species Study
To Get an Update
In 2002, the Legislative Reference Bureau released a study, “Filling the Gaps in the Fight Against Invasive Species,” that estimated the annual cost of addressing invasive species issues in the state at $50 million. Of course, since then, funding for programs addressing invasive species has fallen far short of that mark. The initial budget of the Hawai`i Invasive Species Council, in fiscal 2005, was just $2 million. From 2010 to 2013, HISC had no general funds, and in 2014, just $750,000. In the current fiscal year, a record $5.75 million was appropriated.
Now, with more than a decade of new invasive pests and ramped-up associated risks – little fire ants and the coconut rhinocerous beetle on O`ahu, albizia in hurricane-ravaged Puna, the awful prospect of `ohi`a disappearing from Hawai`i forests as a result of a new-to-Hawai`i fungus – the Legislature has decided to update the 2002 study by appropriating $100,000 to the LRB. The study, authorized in House Bill 1471, is to be delivered to the Legislature before the start of next-year’s session.
But at the same time, and in the same bill, the Legislature rescinded funding for two invasive species projects approved in 2013: an appropriation of $162,540 for a detector-dog program, and $165,055 for a program to protect queen bees.
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Resource Protection Struck
From Environmental Response Fund
One of the first measures signed by Gov. David Ige – Act 25 of the 2015 session – was Senate Bill 1118. That bill makes an appropriation of $800,000 for the current fiscal year to cover expenses incurred by the Department of Health’s Hazard Evaluation and Emergency Response (HEER) branch. Whether it is enough is anyone’s guess: the DOH had asked for $1.05 million.
As the bill notes, HEER is funded mostly by the Environmental Response, Energy, and Food Security tax, better known as the barrel tax. Of the $1.05 tax on each barrel of petroleum product, five cents is deposited into the Environmental Response Revolving Fund (ERRF).
“However,” the bill notes, “the environmental response revolving fund balance is dangerously low due to reduced consumption of crude oil in the state, while demand for public health and environmental hazard evaluation and emergency response has increased.”
It’s more than dangerously low: it is in debt.
According to testimony from the Department of Health on Senate Bill 359, HEER had asked to borrow $1 million from the state treasury to help it meet its obligations and cover payroll through June (the governor and the Department of Budget and Finance pared that back to $900,000). The department “anticipates that it would repay this loan in” fiscal year 2016, the DOH told the House Committee on Energy and Environmental Protection last March, when the panel was hearing SB 359.
In its original draft, that measure would have increased the share of the barrel tax that goes to fund the ERRF to 15 cents, from 5 cents; increased the share that goes to the Energy Security Special Fund to 40 cents, from 15; and increased that going to the Agricultural Development and Food Security Special Fund to 40 cents, from 15.
According to the Department of Health, the five-cent diversion into the ERRF “is insufficient to sustain the 41 positions (31 filled positions) that depend on the ERRF for funding. These include positions that respond to oil spills and hazardous material releases, as well as positions that work on environmental issues, like state water quality monitoring, contaminated site remediation, and management of solid and hazardous waste.”
The bill passed the Senate and the House Energy and Environment Committee without substantial change. When it arrived before the House Ways and Means Committee, chaired by Sylvia Luke, it became clear that Luke had a different vision for the barrel tax. What her committee heard was a drastically modified version of the bill– a proposed House Draft 1 – that, yet again, removed a permanent funding source for much-needed resource protection programs, replacing it instead with general fund appropriations amounting to roughly $6.5 million total over the next two fiscal years.
The Department of Health did not object. Testimony from others, including the Honolulu Board of Water Supply, seemed to be directed to the earlier version of the bill, the one that would have increased HEER’s share of the barrel tax.
When the bill came out of the House and Senate conference committee, it had been changed once again. The definition of fossil fuel was expanded to include fuels other than oil, with taxes on them based on their BTU content.
In its final form, it retains the ERRF, but holds its share of the barrel tax to five cents. At the same time, it narrows considerably the range of activities that the DOH can support with the ERRF. Actions authorized in previous legislation had included “response actions and preparedness, including removal actions” and “environmental protection and natural resource protection programs … and to address concerns related to air quality, global warming, clean water, polluted runoff, solid and hazardous waste, drinking water” and more. All that language has been struck now, with the department limited now to “removal, remediation, and detection of oil and pollutant or contaminant releases.”
Furthermore, any funds in the ERRF in excess of $1.25 million at the end of each fiscal year are to be transferred to the state general fund.
Last, but by no means least, the House and Senate conferees slipped in language, unheard in any previous incarnations of the bill, that allows AES, the owner of the coal-fired power plant on O`ahu, to avoid paying the BTU-based tax, set at 19 cents per million BTU, on the coal it imports. AES is not called out by name, but is the only facility that fits the definition in the bill. “The tax imposed … shall not apply to coal used to fulfill a signed power purchase agreement between an independent power producer and an electric utility that is in effect as of June 30, 2015.”
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Energy Security,
With an Asterisk
One bill that has received high praise from a number of quarters is House Bill 623, relating to renewable standards. In its final form, the measure resets the state’s goals for advancing renewable energy. Before, the goal was to achieve 25 percent of net electricity sales by December 31, 2020, from renewable energy; that is now 30 percent. The fraction for the end of 2040 is 70 percent, and that for 2045 is 100 percent.
Life of the Land’s Henry Curtis has had the bad grace to point out the fly in the renewable portfolio standards. In a commentary published in the online news source Civil Beat, he reminded readers that electricity accounts for less than a third of all energy consumed in Hawai`i. “Twenty-two percent renewable electricity” – the state’s current level – “means Hawai`i gets 7 percent of its total energy from renewable resources. Most energy is used for ground and air transportation.”
Furthermore, he noted, state law defines renewable in a way “that does not make sense.” All biofuel qualifies as renewable, he wrote, “no matter how it is made or where it is grown” – including, for example, palm oil from plantations in Southeast Asia. Finally, he pointed out that the way that percentage is calculated is skewed, so that renewable goals can be deemed to have been met even if non-renewable fuels continue to account for a large measure of electricity used.
The measure contains another big loophole. If utilities are unable “to acquire sufficient renewable electrical energy to meet the renewable portfolio standard goals beyond 2030 in a manner that is beneficial to Hawai`i’s economy in relation to comparable fossil fuel resources,” they are given a pass.
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Community-Based
Renewable Energy
Rooftop solar installations can benefit homeowners, but it is difficult for those living in apartments and other multi-family dwellings to enjoy the same advantages, given the difficulties associated with siting photovoltaic panels and other challenges.
Senate Bill 1050 attempts to address that by requiring utilities to file with the Public Utilities Commission a rate schedule to accommodate people who participate in community-based renewable energy projects. The deadline for that filing is October 1 of this year.
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Liquefied Natural Gas
Gets a Green Light
Liquefied natural gas is not renewable, nor is it locally sourced, but Hawaiian Electric Industries has been pushing to allow it to be included as part of a bridge to a more renewable future. And this year, the Legislature went along.
House Bill 1286, already signed by Gov. Ige into law as Act 38 of the 2015 Legislature, calls for LNG to be used, albeit “only as a cost-effective transitional, limited-term replacement of petroleum for electricity generation” and when its use “does not impede the development and use of other cost-effective renewable energy sources.”
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Special Purpose Bond
For Maui Waste Processor
House Bill 139 sailed through to passage with few amendments, although there were many vocal opponents. The measure authorizes the issuance of $90 million in special purpose revenue bonds to help Anaergia, Inc., build a waste-to-energy plant on Maui.
Two years ago, Maui County selected Maui Resource Recovery Facility, LLC (a subsidiary of Anaergia Services, LLC, which is itself a subsidiary of Anaergia, Inc.) to develop the facility, intended to produce renewable fuels from municipal waste as well as fuel-producing crops the company plans to grow on Department of Hawaiian Home Lands in west Maui.
Last year, when the county announced it was discontinuing a pilot curbside recycling program launched in Kihei in 2013, many residents placed the blame on the agreement with Anaergia, signed by Mayor Alan Arakawa in January 2014. In testimony before the House Finance Committee on February 26, dozens of them made their objections clear. It was in vain. The measure passed and sped through the Senate as well.
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Tax Credits
For Cesspool Upgrades
Hawai`i leads the nation in one dubious category: cesspools. As stated in the preface to House Bill 1140, “Cesspools constitute a nonpoint contamination source of grave concern… [They] release approximately 55,000,000 gallons of untreated sewage into the ground each day.”
Although few would disagree on the need to upgrade cesspools to septic tanks or connect the homes and businesses using them to sewer lines, a proposal by the Department of Health last year requiring the phase out of cesspools was met with strong objection, led primarily by real-estate brokers. Then-Gov. Neil Abercrombie left office in December without having signed the proposed rules.
HB 1140 attempts to move the state in the direction that the proposed rules could not by offering some financial assistance to owners of buildings that are served by cesspools. An individual homeowner can qualify for up to $10,000 in tax credits. As soon as the amount of credits totals $5 million, however, tax credits cease for that year, with eligible taxpayers instructed to claim the credit the next year.
The bill restricts eligibility for the tax credits to only those cesspools that are within 200 feet of a shoreline, stream, wetland, or source of drinking water are qualified for the credit.
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Water Scalping
Stating that “new and innovative options for water conservation must be explored,” House Bill 1394 calls for a study of water scalping, a process that “involves the extraction of valuable, usable water from a sewerage network.”
Initially, the bill called for the Department of Accounting and General Services to develop criteria for implementing water scalping technology and to install and operate it in selected state facilities by 2019. With DAGS protesting that it had neither experience nor funds to carry out the assignment, the focus was shifted to the Department of Transportation and the scale of work was trimmed back.
In final form, DOT’s Airports Division is called on to study the feasibility of water scalping technology in state airport facilities. The bill, which authorizes $8.6 million for the work, gives the DOT until the end of the year to report back on its findings.
— Patricia Tummons
For Further Reading
The Hawai`i State Capitol website has a complete list of bills, including all drafts, committee reports, and testimony. Go to http://www.capitol.hawaii.gov.
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