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HomeMy WebLinkAboutCOM 0155.000 2008-2010 LAURA H. THIELEN p C CIWRPf:RSON LINDA I,INGLE pS fi.... ....,Mq~ I1pARD OF IAND ANDNAIllMI. RI'SOVRCEti • GOVERNOR OF HAWAII AA' 19TT59a Vq CO SSION ON WATER RESOURCE MANAGEIOENN h q atiHi .ti ' r fRUSSELL Y. TSUJI F t t' ` 1 .l ,,d DF.WtY `dnd dNd i - 1 I r 1 f~ g j KE~C WAHARA C J/ n'\ r FE 5E1NY111INEIDR-WARE F e 1009 B 2 MP C' norv ••e T a gg.Q^q...,...... ~aq`p. c ac cun ®.F}q.p BV . ANCIS COMFO S.SION ON WA Ilk ILR RI'SOVRCL MANAGLMI:NT J^/~ CO CRVAiION ANO COASTALLANOS 4 `rl~I.~ CONSF. ]lO}IgNppESOl1RCiS ENFORCFMF.N! STATE OF HAWAII (rQU r T-.[R H Ml FE NZ'. r } Srate Ut MawE" DEPARTMENT OF LAND AND NATURAL RESOURCES RAHOOLAWEE I'A+~` Fa~ An COMMISSION LAND POST OFFICE BOX 621 STATE PARKS HONOLULU, HAWAII 96809 January 21, 2009 MEMORANDUM TO: The Honorable Clayton Hee, Senator Chairman of the Senate Water, Land, Agriculture and Hawaiian Affairs Committee The Honorable Clift Tsuji, Representative Chairman of the House Committee on Agriculture The Honorable Mark M. Nakashima, Representative The Honorable William P. Kenoi, Mayor, County of Hawaii The Honorable J. Yoshimoto, Chairman of the Hawaii County Council The Honorable Dominic Yagong, Councilmember of the Hawaii County Council FROM: Laura H. Thielen, Chairperson Board of Land and Natural Resources SUBJECT: Summary of Board Action on Hamakua Biomass Energy, LLC and Sunfuels Hawaii LLC Applications in 2008 Due to the public interest in the above referenced subject matter, the Department of Land and Natural Resources has prepared the attached summary of the action taken by the Board of Land and Natural Resources on the applications submitted for the use of State lands on the Island of Hawaii by Hamakua Biomass Energy, LLC and Sunfuels Hawaii LLC. If there are any questions, please feel free to contact Mr. Morris Atta, Administrator for Land Division at 587- 0422. Thank you. cc: Hamakua Biomass Energy, LLC Sunfuels Hawaii LLC Comm: No. ~SS Ref. To: Ref. Date FEB 17 MT SUMMARY OF BOARD ACTION ON HAMAKUA BIOMASS ENERGY, LLC AND SUNFUELS HAWAII LLC APPLICATIONS IN 2008 The Department of Land and Natural Resources, through its Board of Land and Natural Resources (Board), has agreed to enter into negotiations with two renewable energy companies, Hamakua Biomass Energy, LLC/Hamakua Biomass Holdings, LLC (together referred to as Hamakua Biomass) and Sunfuels Hawaii LLC (Sunfuels), to discuss the possibility of leasing State lands on the Hamakua Coast for the purpose of developing biofuel to support renewable energy sources on the Big Island. Hamakua Biomass applied to the Board for a lease of a 63-acre parcel in Ookala for its energy generation facility, and up to 10,500 acres of land to support commercial forestry operations to supply biofuel for the steam turbine at the facility. On October 10, 2008, the Board agreed to enter into negotiations for the lease of the 63-acre parcel to Hamakua Biomass subject to Hamakua Biomass complying with the environmental assessment law, but deferred action on its request for commercial forestry lands until the Board's November 14, 2008 meeting. The Board directed the staffs of the Land Division and the Division of Forestry and Wildlife to consult with the Department of Business, Economic Development and Tourism, to: 1. Identify lands appropriate for biomass energy production on the Hamakua Coast; 2. Identify whether there were competing, viable biofuel companies also interested in leasing the same State lands; 3. Determine an appropriate manner to select among competing applicants; and 4. Formulate a recommendation on lease conditions, in the event leases were issued, to ensure the producer met specific benchmarks and timetable to deliver the renewable energy or face a revocation of a lease. Sunfuels initially sought a lease of up to 37,263 acres of State lands to grow trees for its biomass-to-liquid-diesel plant. The parcels identified by Sunfuels included lands under eight existing State leases and one revocable permit presently used as pasture. Land Division staff included these leased lands in the submittal to the Board for the November 14 meeting on the understanding that Sunfuels' proposed operations might be compatible to coexist with livestock grazing, or that ranchers might be willing to negotiate with Sunfuels for subleases or assignments of leased ranch lands. (Later, in January 2009, Sunfuels publicly stated that it will not be pursuing subleases or assignments of the leases on these lands.) At its meeting of November 14, 2008, the Board had before it both Hamakua Biomass' and Sunfuels' applications to lease State lands. The Board voted to allow the State to enter into negotiations with Hamakua Biomass for up to 10,500 acres, and with Sunfuels for up to 10,000 acres. No leases were issued. The Board merely voted to open discussion with the two applicants, subject to the following specific conditions: With respect to Hamakua Biomass' application, the Board required Hamakua Biomass to: 1. Hold a public presentation in Hamakua about its proposed operations; 2. Identify unencumbered State lands for the forestry operation; 3. Conduct due diligence and obtain necessary entitlements; 4. Comply with environmental assessment law; 5. Negotiate and enter into a Power Purchase Agreement with Hawaii Electric Light Company; 6. Secure project financing; and 7. Where necessary, process and obtain subdivision approval from the County of Hawaii at Hamakua Biomass' own cost. With respect to Sunfuels' application, the Board reduced the potential acreage subject to negotiation after Sunfuels testified that the company could operate with approximately 8,000 acres in planted trees. The Board required Sunfuels to: 1. Meet with all concerned tenants and stakeholders, including relevant State and County of Hawaii offices, to discuss its project and determine the viability of securing agreements for the use leased ranch lands; 2. Determine the minimum acreage required and establish a timetable for proceeding; 3. Conduct due diligence and obtain necessary entitlements; 4. Perform environmental assessments for land use changes relevant to its project; and 5. Secure project financing commitments. Both Hamakua Biomass and Sunfuels are required to return to the Board at a later date with a recommendation for proceeding, at a meeting to be held on the Big Island. The Board will consider any proposed leases at that time. In summary, at the Board's meeting of November 14, 2008, no leases were awarded to either Hamakua Biomass or Sunfuels. Rather, in furtherance of the renewable energy goals and policies adopted by the Governor and law enacted by the legislature, the Board opened the door to direct lease negotiations with Hamakua Biomass and Sunfuels for State lands for their proposed renewable energy projects. If Hamakua Biomass and Sunfuels comply with the conditions imposed on them, their requests for leases will be presented to the Board. At that time, the Board will examine the projects in more detail and will consider agency and public comments in determining whether the projects propose an appropriate and environmentally sound use of limited public resources. If other renewable energy producers are interested in the same lands, they may submit applications to the Board and their proposals will be considered in the Board's decision-making process.