On April 16, 2024, Hu Honua Bioenergy, LLC (“Hu Honua”) filed objections to U.S. Magistrate Judge Kenneth J. Mansfield’s recent order denying in part its request to update its antitrust charges against Hawaiian Electric Industries et al. The U.S. District Court in Honolulu had previously granted Hu Honua’s request to file an amended complaint by April 23.

These legal proceedings take place against the backdrop of a serious energy crisis on Hawaii Island. Hu Honua continues to believe this crisis is the result of HECO’s near-total monopoly status over the wholesale firm power generation market, which causes direct harm to Hawaii residents in the form of higher rates and grid reliability issues.

Accompanying the objection was the following statement from Daniel Swanson of Gibson, Dunn & Crutcher LLP, attorney for Hu Honua:

“Hu Honua today asked the district court to override an initial ruling by a magistrate judge that gives Hawaiian Electric carte blanche to engage in monopolistic conduct—conduct that has already inflicted serious harm on Hawaii Island by reducing power generation to the point of repeated blackouts. Hawaii Island’s residents should no longer be forced to endure an ongoing electricity crisis caused by Hawaiian Electric’s anticompetitive behavior. As Hu Honua recently pointed out in a letter to the Hawaii Public Utilities Commission, Hu Honua’s renewable biomass plant is the solution to resolving this crisis. We look forward to the district court’s review of the erroneous initial ruling.”

Key arguments in Hu Honua’s objection include:

  • The proposed amended complaint contains extensive allegations of harm to the relevant wholesale firm power generation market on Hawaii Island stemming from the acquisition of the Hamakua plant, Hawaiian Electric’s biggest independent rival for generation of firm electric power on the Island.
  • The Order’s holding that state regulation bars Hu Honua from proving antitrust injury stemming from the Hamakua acquisition is contrary to the Ninth Circuit precedent, which makes clear that regulation in an antitrust case raises factual issues that cannot be resolved at the pleadings stage. This holding also contravenes a recent Hawaii Supreme Court case clarifying that the relevant wholesale market is designed to be competitive, and that the courts remain open to hear antitrust claims predicated on injuries suffered in that market.
  • The Order’s holding that Hu Honua’s claims relating to the Hamakua acquisition are untimely is contrary to Ninth Circuit law. The Order finds that these claims accrued as soon as the Hamakua plant was acquired without regard for whether Hu Honua had suffered any resulting harm at that time. In fact, Hu Honua did not suffer any resulting harm (and the claims therefore did not accrue) until 2023, when Hu Honua lost the protection of the parties’ conditional settlement and amended Power Purchase Agreement. The Order’s untimeliness holding is also internally contradictory—the Order finds both that Hu Honua’s prior complaints asserted the facts underlying these claims and that these claims concern new injuries and new facts.

Please click here for further coverage of the objection by the Hawaii Tribune-Herald.

Please find Hu Honua’s full objection below: