‘Long and tortuous path’ continues in Hawaii bioenergy dispute
A federal judge signaled he is likely to dismiss some claims in a dispute between Hu Honua and Hawaiian Electric.
by Jeremy Yurow, Court House News, March 31, 2025
HONOLULU (CN) — A federal judge in Hawaii indicated Monday he would likely dismiss some antitrust claims in a dispute between Hu Honua Bioenergy and Hawaiian Electric that's spanned nearly a decade.
During a motion hearing, Senior U.S. District Judge J. Michael Seabright signaled he was inclined to grant Hawaiian Electric's motion to partially dismiss Hu Honua's third amended and supplemental complaint, while declining to exercise jurisdiction over the remaining state law claims.
The lawsuit, first filed in 2016, stems from Hawaiian Electric's termination of a power purchase agreement (PPA) with Hu Honua, which would have allowed the bioenergy company to sell electricity generated from its facility to the power grid on Hawaii's Big Island.
"I've obviously issued three separate orders now that are pretty substantive," Seabright said during Monday's hearing, referring to previous rulings on similar issues. "I understand plaintiffs disagree with them, and that's fine, and that's what my circuit is for."
The judge noted that the case has followed a long and "tortuous" path through the Public Utilities Commission and the state Supreme Court, but he added that he wasn't suggesting that any particularly party was causing the delays.
Hu Honua's attorney Margery Bronster, a partner at Bronster, Fujichaku and Robbins, argued that the "foreclosure of competition in a highly concentrated market is a textbook example of antitrust injury, especially when the foreclosure is by the actual monopolist," citing recent cases including Pulse Network v. Visa and others from the Ninth Circuit.
She further claimed that since the foreclosure of Hu Honua there has been lower capacity in the market, restricted output, blackouts, issues with reliability, and higher costs.
Hawaiian Electric's attorney Joseph Stewart, with Kobayashi Sugita & Goda, LLP, said that the dispute should be handled as either a breach of contract claim or a regulatory issue relating to the Public Utilities Commission.
"Since Your Honor has ruled three times and it's the start of baseball season, I feel like three strikes and you're out," Stewart said.
A key point of contention involves the Public Utility Regulatory Policies Act (PURPA), which guarantees qualifying facilities like Hu Honua the ability to sell power. The bioenergy company argued that the act doesn't prohibit it from pleading antitrust injury. It also suggested that Hawaiian Electric might take inconsistent positions before the court and the Public Utilities Commission.
"If this case is dismissed in whole or in part based on PURPA, then HECO can't, certainly shouldn't take the position before the PUC that it can reject a PURPA PPA," said plaintiff attorney Daniel Swanson, who is a partner in Gibson, Dunn & Crutcher LLP.
Much of the hearing Monday focused on procedural questions about how to handle remaining state law claims and a pending motion to compel arbitration. Seabright expressed his inclination to dismiss the federal antitrust claims with prejudice and the state claims without prejudice, allowing them to be refiled in state court rather than ruling on the arbitration motion.
"My gut is sort of, if I'm going to decline jurisdiction, then a state court judge can pick up all the issues to deal with what's left," Seabright said. "A judge, wherever it is in state court, will get the case, but I'm not going to rule on something first before ... it just doesn't sit square with me."
Defense counsel agreed, with Stewart noting that it was "cleaner to have a final judgment resolving all the claims, dismissing on the merits, presumably the antitrust claims, and then dismissing, for want of jurisdiction, without prejudice, the remaining state law claims."
The case highlights ongoing tensions in Hawaii's heavily regulated energy market, where the state has set ambitious renewable energy goals. Hu Honua had planned to produce electricity by burning eucalyptus trees and other plant matter at its facility on the Big Island.
Judge Seabright concluded the hearing by offering to help facilitate settlement discussions if all parties were interested, noting that a mutual respect in the case has developed over its long history, and he could potentially help use that in a way to leverage such discussions.
The judge indicated he would issue a brief order describing it as "more like a synopsis of where we are and the conclusion, as opposed to an analysis of all the analysis I've done in the past."