Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committees on Water, Land, Energy and Environment and Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2802 entitled:

beg leave to report as follows:

The purpose of this measure is to allow the Board of Land and Natural Resources to lease public lands to renewable energy producers through direct negotiations.

Testimony in support of this measure was received from the Department of Business, Economic Development, and Tourism, Department of Land and Natural Resources (DLNR), Hawaiian Electric Company, Inc., and Life of the Land. The Hawaii Renewable Energy Alliance submitted comments.

Your Committees find that Chapter 171, Hawaii Revised Statutes, allows for leasing of public lands by direct negotiation to public utilities, including electric utility companies, but does not allow for direct negotiation to renewable energy producers who provide power to the electric utility companies. As a result, public lands can only be leased via public auction to these entities.

Your Committees have heard that in recent years, DLNR has received requests to lease public lands for wind farms, which are considered renewable energy producers. There is substantial preliminary work in planning and developing these projects, including preparation of Environmental Assessments and Conservation District Use Applications. With such a significant investment in time and money, applicants are apprehensive about the process when they are not assured a lease through the auction disposition method. This uncertainty discourages the development of renewable energy projects on public lands.

Your Committees understand that research indicates the federal government, and many mainland states and municipalities currently allow for direct negotiation to renewable energy producers.

Your Committees have also heard the concern raised regarding the requirement that the disposition be subject to legislative disapproval, but note that this provision is required for the disposition of public utilities under current law.

Your Committees have amended this measure to limit to twenty-five per cent, the power produced by a renewable energy producer from fossil fuels, and to make technical amendments to conform to the preferred drafting style.

As affirmed by the records of votes of the members of your Committees on Water, Land, Energy and Environment and Commerce, Consumer Protection and Housing that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2802, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2802, S.D. 1, and be referred to the Committee on Ways and Means.