Efforts of the Board of Land and Natural Resources to carry out the wishes of the state Legislature have earned the displeasure of \u2013 well, legislators. At a hearing last month in Hilo, three members of the Senate Committee on Water, Land, Agriculture, and Hawaiian Affairs grilled Laura Thielen, chairperson of the Land Board, over last November\u2019s approval in principle of leases of tens of thousands of acres of land along the Big Island\u2019s Hamakua Coast to two biofuel companies, Hamakua Biomass Energy, LLC, and SunFuels Hawai`i, LLC. Hamakua Biomass is planning to burn eucalyptus to generate electricity, while SunFuels is proposing to convert biomass to biodiesel.<\/p>\n
\tClayton Hee, committee chairman, expressed concern that the expedited lease approval process employed by the Department of Land and Natural Resources was excluding other legitimate players in the bioenergy field, amounting to a \u201cfirst come, first served\u201d policy. Thielen strongly disagreed with that characterization: \u201cIt\u2019s not first come, first served,\u201d she replied. \u201cNothing prevents other companies from joining in the negotiations\u201d that were made possible by the Land Board action on November 14, she said at the hearing held December 17 at the University of Hawai`i-Hilo.<\/p>\n
\tWhen asked by Sen. Dwight Takamine, who represents the Hamakua area, why the Land Board members did not delay the vote until they could have a meeting in the area or at least until the Big Island board member was present, Thielen answered: \u201cThe Board of Land and Natural Resources \u2013 or my reason for my vote, I felt it was important to begin hard discussions about a more productive use of land through mixed use.\u201d The Land Board, she added, indicated it would hold a meeting on the Big Island before any final decision.<\/p>\n
\tThielen clarified that the board\u2019s action in no way meant that holders of existing leases would be forced off the land. \u201cLeases are a contractual agreement,\u201d she said. \u201cNobody is forcing anybody\u201d to do anything, she added. Time and again, Thielen referred to a situation that developed in Kalepa, Kaua`i, where a biofuel company sought to use state lands encumbered to ranchers and farmers. The board sponsored negotiations between the company and the existing users, resulting in a \u201cwin-win\u201d situation whereby existing users received improved infrastructure as compensation for ceding parts of their land to the biofuel company, which, she added, was now supplying about 10 percent of the electricity used on the island.<\/p>\n
\tIn any event, she said, the board was only doing what it was instructed to do by the Legislature itself when, in 2002, it passed amendments to Chapter 171-95, Hawai`i Revised Statutes.<\/i> The main thrust of the amendments was to make it easier to put biofuel crops on state land by allowing the Land Board to lease those lands by direct negotiation with interested biofuel companies instead of putting them up for auction.<\/p>\n
\tJoshua Strickler, an energy project facilitator with the Department of Business, Economic Development, and Tourism, was asked by Thielen to help the DLNR qualify the various proposals it was receiving from companies interested in using state lands for biomass production. At the Hilo hearing, Strickler did not hesitate to agree with Hee\u2019s suggestion that the policy for awarding leases was \u201cfirst in, first out.\u201d \u201cThose who waited are too late,\u201d Strickler told Senators Hee, Takamine, and Russell Kokubun, the three committee members present. \u201cWe\u2019re not here to award third or fourth place.\u201d While other companies, including Hu Honua (which plans to revive an old coal-fired power plant in Pepe`ekeo to burn biofuels) and Tradewinds (which holds already a license to harvest eucalyptus from state forest reserve land, for use as lumber and veneer products) have since expressed their interest in obtaining the use of state lands for biomass projects, at the time that Strickler was asked to help the DLNR evaluate proposals, only SunFuels and Hamakua Biomass had come forward, he said.<\/p>\n
\t\u201cIt came down to who was better prepared,\u201d Strickler said. \u201cHamakua Biomass has a power purchase agreement and had started work obtaining clean air permits. What tilted it toward Hamakua Biomass was their preparation.\u201d<\/p>\n
\tTakamine asked Strickler what had been done to alert other companies to this opportunity.<\/p>\n
\t\u201cWe contacted some companies,\u201d Strickler replied. Hu Honua was firm that it \u201cwas not interested in being a land manager,\u201d he said, and did not want leases. Tradewinds was \u201cjust a forestry company,\u201d he said; \u201cif old growth is available, we want them to get it,\u201d adding that Tradewinds had indicated it was not interested in leasing large tracts of land for planting.<\/p>\n
A Turnaround<\/b><\/i><\/p>\n
Despite Thielen\u2019s insistence that any and all interested in hopping on the biomass bandwagon were welcome to join in the negotiations, John Ray, general manager of SunFuels, said he would like to see the Land Board\u2019s decision of November 14 rescinded. SunFuels\u2019 proposal to grow biofuel crops on lands already under lease to ranchers and others was the lightning rod for much of the opposition to the Land Board action that ultimately led to the Senate committee hearing and the draft legislation proposed by Hee to amend Chapter 171-95, Hawai`i Revised Statutes. <\/i><\/p>\n
\t\u201cWe never intended to take over existing leases,\u201d Ray said. \u201cWe just wanted to talk with the lessees about more productive tree crops.\u201d<\/p>\n
\tRay also disputed the notion that there was acreage enough to accommodate all potential biofuel producers in addition to farmers and ranchers. \u201cIt\u2019s fair to say that this is a competitive situation,\u201d he said, adding that no representative of any state agency had approached him about engaging in talks aimed at finding the best mix of uses for state lands.<\/p>\n
\tDan KenKnight of Hu Honua contradicted statements made by Strickler that his company was not interested in state lands or that Hamakua Biomass was further along with its permits than other entities. Saying he was certain it was an \u201chonest mistake,\u201d KenKnight informed the senators that he had never been told that \u201call state lands in Hamakua would be taken up in the non-bid process. We\u2019re in competition for that, as well as seeking private lands.\u201d<\/p>\n
\tWhen Strickler approached him in September, KenKnight said, \u201cwe told him we were working with the Hawai`i Agriculture Research Corporation on a sustainable biomass plan.\u201d<\/p>\n
\t\u201cWe assumed, maybe naively, that you\u2019d need a specific plan,\u201d he said, something more than just, \u201cgrow eucalyptus.\u201d<\/p>\n
\t\u201cWe didn\u2019t think all the land would be gone\u201d by the time his company was ready to go, he said.<\/p>\n
Alarmed Ranchers<\/b><\/i><\/p>\n
Earlier in the day of December 17, the three senators met separately with ranchers and other holders of state leases in the Hamakua area. The ranchers were also well represented at the evening hearing.<\/p>\n
\tMost of them had been alarmed by the Land Board action, which they had understood to be more of a commitment than Thielen had described. Several denounced the Land Board for past actions that diminished the size of their leases in order to provide habitat for palila as part of the mitigation required to build the Saddle Road.<\/p>\n
\tBut if the ranchers were operating under a misconception, so, too, apparently was Senator Hee \u2013 himself a rancher. In a press release to announce the Hilo hearing, Hee stated, \u201cI firmly believe that the staff recommendation of DLNR was improper because it recommended leasing lands to a business entity that are already under State lease to farmers and ranchers. This is just one reason why state lands productively used for agriculture are diminishing.\u201d<\/p>\n
\tThe Hamakua community as a whole also seemed to think the board action had in some way usurped the rights of lessees. At the community meeting of December 18 in Honoka`a, sponsored by County Councilmember Dominic Yagong, Thielen\u2019s announcement that the board \u201cdid not issue any leases\u201d drew enthusiastic applause from the crowd that filled the Honoka`a People\u2019s Theater. Referring again to the Kalepa, Kaua`i, example, Thielen noted that the bioenergy company that had sought to use state lands entered into separate sublease agreements with some of the leaseholders, resulting in more revenue to ranchers as well as the improved infrastructure, allowing them to increase their productivity on lands not used to grow biofuel crops.<\/p>\n
\tTim Mann, president of the Hamakua-North Hilo Farmers Cooperative, wanted to see the list of parties involved in negotiations expanded to include not just the holders of leased lands and the biofuel companies, but \u201call groups,\u201d including farmers. The goal would be to \u201cidentify the best use of available lands,\u201d he suggested, and work out a lease policy on that basis.<\/p>\n
\tOne of the few disinterested parties to testify at the Senate committee hearing was Jeff Choi, a former deputy attorney general and retired district judge. \u201cI saw the way the ethanol decision was made,\u201d Choi said, referring to the state\u2019s decision a decade ago to promote the use and manufacture of ethanol. \u201cIt was bad.\u201d Now, he added, all the talk about biomass and bioenergy reminded him of that decision. \u201cRenewable energy are magic words,\u201d he said. And as for the Land Board\u2019s efforts to negotiate direct leases with biofuel companies, he concluded, \u201call I see as a lawyer is a potential lawsuit. This screams lawsuit.\u201d<\/p>\n
The board of directors of the Natural Energy Laboratory of Hawai`i Authority gave its approval \u201cin concept\u201d to the plan of BioEnergy Hawai`i to build a waste-to-energy facility on state land managed by NELHA. Carbon dioxide from the stack would be captured and used to feed algae, which would then be converted into biodiesel to run the trucks of Pacific Waste, Inc., a large commercial waste hauler in West Hawai`i that is owned by many of the same parties proposing the incinerator.<\/p>\n
\tLast spring, the NELHA board gave the project \u201capproval in concept\u201d the first time (see the July 2008 issue of Environment Hawai`i<\/i>). In October, it approved a non-binding letter of intent \u2013 described as nothing more than \u201can agreement to negotiate\u201d a lease \u2013 but without a draft sublease attached. Last month\u2019s \u201capproval in concept\u201d differed in that it was attached to a draft sublease. BioEnergy Hawai`i attorney Francis Jung insisted that the draft sublease and the letter of intent his client was seeking were \u201ctotally non-binding.\u201d<\/p>\n
\t\u201cThe problem is, in today\u2019s credit market, if you\u2019re going before any committee to raise money, they have to know there\u2019s some substance to what you\u2019re proposing\u2026 [This] gives us a starting point to raise funds and financing,\u201d Jung said.<\/p>\n
\tInitially, the algae component was presented as an optional add-on, but in the documents approved by the board, it is included as an essential element of the BEH proposal. Early estimates of the cost to build the plant were on the order of $70 million. At the NELHA meeting in December, NELHA executive director Ron Baird said the company would need \u201cup to $100 million.\u201d<\/p>\n
\tMuch of the discussion centered on whether the board\u2019s action was tantamount to a commitment or could be construed as a reservation or option on some 25 acres of NELHA land for the proposal. Board members gave their approval only after receiving assurances that their action was neither.<\/p>\n
\tShould BioEnergy Hawai`i get its financing in place, the next step is preparing an environmental impact statement. This, company representatives said, could take up to two years.<\/p>\n
— Patricia Tummons<\/p>\n
Volume 19, Number 7 January 2009<\/p>\n","protected":false},"excerpt":{"rendered":"
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