Island Watch

posted in: March 1997 | 0

Japanese Paper Firm Gets Nod For Pulp Plantation on State Land

The state Board of Land and Natural Resources has given its tentative approval to a plan that calls for leasing about 5,100 acres of former cane land in the Hamakua area of the Big Island to Oji Paper Company and Marubeni Corp., another Japanese firm to which Oji is closely allied. The land will be used to plant fast-growing trees to supply Oji’s paper mills.

The state has been negotiating with Oji /Marubeni for the last year. Originally, the state had wanted to go with another firm, Fletcher Challenge of New Zealand, to develop a forestry plan for the Hamakua land. However, when Fletcher Challenge failed to obtain a lease on more than 20,000 acres in the Hamakua region owned by Bishop Estate (which ultimately selected Prudential Timber), Fletcher Challenge dropped out of the picture. Oji, which had signaled its interest in an initial response to state inquiries, then began negotiating seriously with the state.

The matter came before the BLNR at its meeting of February 14. Executives from Oji and Marubeni had scheduled a visit to Hawai’i to sign a non-binding letter of intent. To accommodate their schedule, the BLNR was asked to give its approval to a request from staff that the BLNR chairman, Mike Wilson, be authorized to sign such a letter.

Creatures of a Schedule

The staff report on the Oji/Marubeni negotiations was not made available to the public in advance of the February 14 meeting nor had the board itself been provided with specifics. For this reason, Big Island board member Chris Yuen indicated he thought the BLNR should defer a vote on the matter.

“We are the responsible party in this decision and it’s a big decision…. We don’t even have a list of the TMK’s [tax map keys] involved.”

“As far as the scheduling of people coming over, hoping to sign the letter of intent,” Yuen continued, “well, I am a board member and I have to make a responsible decision. Somebody else … may hope that the board is going to make the decision that they want, but the fact that they have scheduled themselves to come over on the hope and assumption that the board is going to make a certain decision.

“I just can’t see that. Then we become the creatures of somebody else’s schedule. We’re backed into the fact that somebody else has a schedule and then we make a decision…. So, I really don’t want to vote on this today just because I’m sure some very important people who have much more important projects and things to do are planning to come to Hawai’i.”

John Michael White, a representative of Oji, downplayed the significance of what the BLNR was being asked to approve. “What we’re simply asking now is the board to give the chairman the authority to finalize a nonbinding letter of intent, which would then be used for both sides to negotiate further.”

Other members of the board disagreed with Yuen, going against the customary board practice of deferring to the board member representing the island where the project is to occur. O’ahu board member Michael Nekoba stressed that the letter of intent was nonbinding and that if the board did not approve the staffs request, Hawai’i’s reputation as anti-business would be confirmed. “I agree with Chris this is a big matter,” Nekoba said, “but because this is a non-binding letter of intent, because we’re dealing with a company that’s coming to Hawai’i to create jobs… I do not want to delay the process.”

A Done Deal?

At large board member Colbert Matsumoto and board chairman Wilson also pressed Yuen to agree to the staff request.

Yuen expressed his concerns yet again: “I see the letter of intent as the board’s decision to enter into this agreement… We approve this today, and the next time it comes to the board it’s the lease. In the meantime, if I had second thoughts about it, I would not feel comfortable about saying, ‘Gee, in between signing this thing and then coming up with the lease, I had second thoughts and I don’t want to support it anymore.’… Once you’ve made the basic decision, that’s it.” While it may technically be non-binding, Yuen noted, that was so only in a strictly legal sense. “It’s non-binding in the sense that … both sides can back out from a strictly legal point of view, but I would not myself feel comfortable, having voted in favor of signing a letter of intent, to back out on the basic content.”

After further pressure from his colleagues on the board, Yuen finally made a motion to approve the staff recommendation, but with the caution that the approval was in no way that amount to a final action of the board.

“What I would propose,” Yuen said, “is that we authorize the chair to execute a nonbinding letter of intent along the general terms outlined in the staff submittal with the understanding that it’s not a final commitment on the project by the board, that it is an expression of the deep interest of the state in proceeding with it, but that there hasn’t been the full opportunity for the public to comment on the specifics of the letter of intent…. I want to be able to say, when people ask about this, that it’s not a done deal…. We have to let them know that it is not something we’re cramming down their throats without giving them a chance to say something about it. And that’s the thing that’s very important to me.”

The Proposal

Oji Paper Company (formerly known as New Oji Paper) advertises itself as the largest paper company in Japan and the third-largest in the world. Its plans for the Hamakua region call for planting a total of about 24,000 acres in eucalyptus or other fast-growing trees. (The state’s 5,100 acres and, in all likelihood, an additional 4,000 owned by the County of Hawai’i will make up a sizable chunk of the plantation. The rest of the acreage will be leased from private landowners.)

The trees will be allowed to grow between six and nine years. When the plantation is fully operational, about 3,000 acres a year will be harvested and then replanted, for the cycle to begin anew. The harvested trees will be trucked to Kawaihae harbor, where Oji will chip them at a chipping plant (to be built either by Oji or Prudential Timber). The wood chips will be loaded onto a fleet of vessels owned by Oji for transport to its paper plants in Japan.

There is no public information about Oji’s negotiations with the County of Hawai’i and private landowners. The specifics of the final plan for use of state land will await ultimately the Land Board’s approval of a lease.

The Department of Land and Natural Resources staff submitted to the Land Board on February 14 does provide some indication of the way negotiations are headed, however. About 10 percent of the total plantable area is to be planted in long-term growth. This 10 percent is to be located “primarily along visual buffer zones along public highways, riparian/gulch areas and other areas on the perimeter of the tree plantation,” the staff report states. “These trees will be planted and managed by New Oji/Marubeni for two years, upon which [time] the state will take over management and ownership of the trees.”

Within eight years, Oji also is to have a right to harvest stands of blue gum on additional state pasture land, “assuming the state has not sold the stands previously.” Also, Oji can utilize the land “for further tree plantations on similar terms to the sugar lands.”

Term of the lease is to be for 55 years, at an annual lease rent of $40 per year per planted acre after the fourth year. Up to that time, the rent is to be $10 per acre. Rent will not be charged for the areas set aside for long-term growth. The rental rate will be reopened at the end of the 15th, 25th, 35th, and 45th years, with a rate to be set by appraisal. In addition to the rent, Oji is to pay a royalty of 50 cents per cubic meter of wood harvested.

Finally, Oji agrees to post a $3.5 million performance bond or letter of credit “to secure the construction of a woodchip production facility and a ship loading facility for woodchips.” Also, it has agreed to contribute $30,000 for state forestry training and education programs for local residents.

The plantation will be managed in accordance with the state’s “best management practices for establishment of a plantation forest.” What this entails was not spelled out in the staff submittal.

Anti-Trust Actions

While Oji Paper may be a new face in Hawai’i, it is well known in some circles of the mainland – particularly to the U.S. Department of Justice, which has been investigating New Oji since 1991 for conspiring to fix wholesale prices of thermal flex paper.

In 1994, the Mitsubishi Corp., New Oji, and its subsidiary, Kanzaki Specialty Papers, were fined $6 million for anti-trust activity, according to an article in The Financial Times of July 17, 1994.

A year later, New Oji was indicted in U.S. District Court in Boston on charges of illegally fixing the price of thermal fax paper. And in July 1996, the government of Canada announced that it had reached an agreement with New Oji, under terms of which the company pleaded guilty to one charge of conspiracy to set prices in the thermal fax paper industry, paid a fine of $600,000, and was prohibited from engaging in further anti-competitive activity.

DLNR Proposes Again A Fence at Pu’u O Umi

In 1992, the state Department of Land and Natural Resources’ Division of Forestry and Wildlife built a one-and-a-half-mile long fence at Pu’u O Umi Natural Area Reserve, north of Waimea in the Kohala mountains of the Big Island. The fence was intended to protect rare species of native plants in a montane bog from the depredations of feral pigs.

In early 1993, outrage from pig hunters led the DLNR to remove portions of the fence assisted by hunters and their allies.

Opponents of the fence had claimed that the state had not notified them or included them in the decision to build the fence (although fencing was listed as a management action in the Pu’u O Umi management plan released in 1989). In response to the controversy, the DLNR convened a task force to address a wide range of concerns relating to the state’s management of Natural Area Reserves. Members of the task force, calling itself the Natural Areas Working Group (NAWG), were drawn from DLNR staff, hunter groups, Hawaiian cultural organizations, the U.S. Fish and Wildlife Service, and the private environmental sector.

One of the outcomes of their meetings was the decision to establish area advisory groups with whom the DLNR would consult in deciding on management options for the various elements of the state’s Natural Area Reserve System. In the Kohala area, the Kohala Forest Management Group was established.

In January, the DLNR released an environmental assessment for a proposed fence at Pu’u O Umi. The draft EA, prepared this time after extensive consultation with hunter and environmental organizations, was approved by the Kohala Forest Management Group at its meeting of October 21, 1996.

The proposal, as described in the draft EA, calls for installation of a 39-inch-high fence around 120 acres of montane bogs and other forest communities. According to the draft EA, “feral pigs are present in high numbers in and around the project area. Their activity has contributed to the destruction of native vegetation and subsequent invasion by non-native weeds in much of the area surrounding the bog…. The bog areas are relatively free of weeds at present, primarily because the soft ground dissuades pigs from entering the bog. However, several animal trails have been established in portions of the bog, and weeds are colonizing these areas.”

Pigs would be removed from the fenced area by driving them out of it by helicopter or by hunting them, the draft EA states.

Deadline for comments on the draft EA is March 10.

Irradiation Advocate Gets Busted By INS

Mike Strong, a farmer who has been working closely with the state Department of Agriculture to develop a fruit irradiation facility in Hawai’i, has been accused by the U.S. Immigration and Naturalization Services of bringing undocumented foreign workers to the United States illegally to work on his Kaua’i farm. According to INS district director Don Radcliffe, Strong has been charged with six counts of criminal violations of immigration law. Radcliffe told Environment Hawai`i that this case marks the first time a farmer in Hawai’i has been charged with criminal violations of the immigration law.

Strong is a member of the state-financed Exotic Pest Insect Committee, whose principal purpose is to advance irradiation. In that capacity, he has traveled several times to the mainland United States, accompanying shipments of fruit from his farm to an irradiation plant in Illinois. He has also traveled, at state expense, to Washington, D.C., to lobby for irradiation.

Volume 7, Number 9 March 1997

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