Biomass-Fueled Power Plant Near Hilo Continues to Face Legal Challenges

When it was originally proposed, the Hu Honua Bioenergy power plant, just north of Hilo in the village of Pepe`ekeo, seemed like an answer to several challenges facing the Big Island and the state as a whole. Using wood (biomass) as a fuel would help Hawai`i move away from reliance on imported fossil fuels. The plant would be a market for mill ends and sawdust from a planned commercial sawmill that would process eucalyptus and other logs from state and private plantations along the Hamakua coast. By employing workers to build and operate the facility, the power plant would also be a source of well-paying jobs in a region still recovering from the shutdown of sugar plantations decades ago.

The original plant on the site had burned bagasse, augmented by fuel and (from 1985 on) coal until the mid-1990s, when the sugar plantation, owned by C. Brewer, ceased operations. Much of the company’s land holdings, including the plant site, was sold to Continental Pacific, LLC, a Florida-based land broker that has purchased several large properties throughout Hawai`i. The plant continued to operate, burning coal, until December 31, 2004.

After the plant shut down, it was purchased by Pacific Rim Energy Partners, which proposed to restart it using eucalyptus from lands in Hamakua owned by Kamehameha Schools, as well as the state’s Waiakea Timber Management Area. By 2008, ownership of the plant had transferred to Hu Honua Bioenergy, LLC, whose members included Ethanol Research Hawai`i, LLC (owned by Daniel KenKnight) and MMARV Bioenergy (a subsidiary of Baltimore-based Municipal Mortgage & Equity, LLC). Heading up Hu Honua was Richard McQuain, a former executive with Hawaiian Electric Industries.

On April Fool’s Day in 2010, MMARV Bioenergy’s interest was purchased by a group of investors who had formed a Delaware limited liability company called C Change Pacific. The company continued to press forward with its plan to refurbish the Pepe`ekeo plant, obtaining a Special Management Area permit from the Hawai`i County Planning Commission and receiving from the Hawai`i Department of Health, in 2011, a permit to operate under the federal Clean Air Act.

In 2012, Hu Honua and the Big Island utility, HELCO, signed a power purchase agreement (PPA), which was then put before the state Public Utilities Commission for its approval. As of press time, the PUC was in the final stages of considering the agreement, under which Hu Honua would supply 21.5 megawatts of power to the Hawai`i island grid.

But the plant still must overcome several hurdles before the way is cleared for its operation:

The Clean-Air Permit

A group of nearby residents, organized as Preserve Pepe`ekeo Health and Environment (PPHE), is fighting in federal district court to vacate the covered-source permit Hu Honua received from the DOH. PPHE sued the Environmental Protection Agency in September 2012 after the agency failed to respond to the group’s petition asking the agency to object to the permit.
As of press time, the EPA had until December 4 to respond to the petition, but had requested, because of the government shutdown, that it be given until February 7. Attorney Marc Chytilo, representing PPHE, says the judge must agree to the extension.
If the EPA decides to object to the state permit, the permit would be vacated and Hu Honua, the state, or both, would then be allowed to respond and re-initiate the permit process. If the EPA does not object, Chytilo says, “that decision is reviewable in federal court.”

The SMA Permit

The fate of Hu Honua’s Special Management Area permit is also in limbo. Several neighbors objecting to the permit’s validity filed a complaint in 3rd Circuit Court in July 2011. In August 2012, Judge Greg K. Nakamura found the permit deficient inasmuch as the application did not include a thorough-going archaeological inventory study (AIS) and remanded it back to the Planning Commission for further review.
The commission accepted a revised AIS earlier this year.
Judge Nakamura had not issued a decision by press time.

Lease Violations?
On September 23, Maukaloa Farms, LLC, which owns the land leased by Hu Honua, filed a complaint in 3rd Circuit Court seeking to halt all further work on the site. According to the complaint, Hu Honua was required to get Maukaloa Farms’ approval for all improvements costing $500,000 or more, as well as a bond covering the anticipated costs. Construction to date, the complaint states, “far exceeds” this amount.
No trial date had been set as of press time.