RELATING TO CARBON SEQUESTRATION INCENTIVES.

HB975

HOUSE OF REPRESENTATIVES

H.B. NO.

975

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to carbon sequestration incentives
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.
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The legislature finds that the Hawaii carbon smart
land management assistance pilot program established by Act 185, Session Laws
of Hawaii 2022, was met with a high degree of interest and engagement from
local Hawaiian farmers, farmer networks, ranchers, foresters, agroecologists,
grassroots and local non-profit organizations, community groups, schools,
private land managers, ecologists, and businesses.

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The legislature further finds that
the Hawaii carbon smart land management assistance pilot program should
continue past the upcoming sunset date of June 30, 2025, as it will lead to
more sustainable land management practices, an overall increase in carbon
sequestered through a localized understanding of carbon sequestration practices
and opportunities, support for local regenerative agriculture and food systems,
and a strengthening of the climate resilience, climate mitigation, adaptation,
and social-ecological-economic benefits proffered by indigenous land management
practices and applied traditional ecological knowledge.

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Accordingly, the purpose of this Act
is to:

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(1)
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Permanently establish the
Hawaii carbon smart land management assistance program originally established
as a pilot program under
Act 185, Session Laws of Hawaii 2022; and

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(2)
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Appropriate funds
to support the program.

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SECTION 2.
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Chapter 225P, Hawaii Revised Statutes, is
amended by adding a new section to be appropriately designated and to read as
follows:

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"
�225P-
�
Hawaii
carbon smart land management assistance program.
�
(a)
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There is established within
the department of land and natural resources the Hawaii carbon smart land management
assistance program to incentivize carbon
sequestration activities
through incentive contracts that provide compensation for eligible practices by
program participants
.

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(b)
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The department shall:

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(1)
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Administer or
enter into an agreement or agreements for the administration of the program;

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(2)
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Coordinate with
relevant agencies to provide financial incentive payments to owners and lessees
of eligible land for eligible practices over a designated period, with
appropriate crediting for soil health and carbon benefits as specified in an
incentive contract;

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(3)
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Establish and
implement protocols to monitor and verify compliance with the terms of
incentive contracts;

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(4)
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Make available
to the public any modeling, methodology, or protocol resources developed to
estimate the sequestration rates of potential projects;

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(5)
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Identify,
evaluate, and distribute dedicated moneys to accomplish the purposes of the
program; and

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(6)
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Coordinate
collaborations related to soil health and carbon sequestration modeling,
methods, and inventory improvements.

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(c)
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The department, with assistance from relevant
agencies, shall establish compensation rates and incentive contract terms for
phase I activities within one year of the date of receipt of a program
application.
�
An incentive contract shall
be for a term of no less than one year and no longer than thirty years, as
determined by the owner or lessee; provided that the length of the contract
term shall directly correlate with the rate of compensation paid pursuant to
the contract.

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(d)
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The department shall coordinate with relevant
agencies to assist the department in carrying out the purposes of the program,
including:

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(1)
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Estimating
sequestration rates for phase I and phase II activities;

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(2)
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Conducting
research to develop the technical underpinnings of compensation rates for phase
II activities; and

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(3)
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Conducting
community and landowner outreach activities.

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(e)
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Landowners and lessees of eligible land may
enter into an incentive contract upon approval of a program application on a
form prepared by the department.
�
An
owner or lessee of eligible land currently engaged in eligible practices shall
not:

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(1)
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Be barred from
entering into an incentive contract under this section to continue carrying out
those eligible practices;

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(2)
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Be prohibited
from participating in the program due to the owner or lessee's participation in
other federal or state conservation assistance programs; or

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(3)
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Be required to
provide conservation easements.

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(f)
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Priority shall be given to phase I and phase
II activities that:

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(1)
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Are cost
effective;

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(2)
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Provide
co-benefits to the State and the owner or lessee of eligible land;

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(3)
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Have the
potential to create jobs in the forestry or agriculture sectors and in rural
communities; and

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(4)
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Achieve
community priorities, including food security or watershed protection.

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(g)
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On an annual basis, the department shall:

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(1)
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Identify and
prioritize selected soil health and carbon-positive activities;

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(2)
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Recommend
compensation rates and contract terms for eligible phase I activities;

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(3)
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Assist in
estimating sequestration rates for carbon- positive practices;

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(4)
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Research and
develop the technical underpinnings of compensation rates for phase II
activities; and

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(5)
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Conduct
community and landowner outreach activities.

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(h)
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The department shall also identify
co-benefits that may include:

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(1)
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Job creation;

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(2)
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Food security
and agriculture for local consumption;

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(3)
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Water security;

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(4)
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Increased
biodiversity;

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(5)
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Soil health;
and

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(6)
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Invasive
species reduction and removal.

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(i)
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For the purposes of this section:

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"Department" means the
department of land and natural resources.

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"Eligible land" means
land in the State that is privately owned or public land that is leased to a
private citizen at the time of initiation of an incentive contract.

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"Eligible practices"
means practices on eligible land that increase soil health, reduce carbon
emissions, and promote carbon sequestration and storage over a designated
period.

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"Incentive contract"
means a contract that specifies the following:

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(1)
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The eligible
practices to be undertaken;

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(2)
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The acreage of
eligible land;

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(3)
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The established
rate of compensation;

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(4)
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A schedule to
verify that the terms of the contract have been fulfilled; and

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(5)
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Other terms as
the department deems necessary.

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"Phase I activities"
means activities identified as having a high likelihood of effectively
achieving durable sequestration benefits at reasonable compensation rates
across eligible land types, including:

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(1)
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One-time
establishment and yearly monitoring activities that include:

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(A)
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Reforestation;

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(B)
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Windbreaks;

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(C)
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Conservation
tillage and reduced field pass intensity;

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(D)
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Improved
forages; and

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(E)
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Control
of invasive species; and

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(2)
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Yearly
investment activities that include:

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(A)
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Efficient
nutrient management;

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(B)
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Crop
diversity through rotations and cover crops;

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(C)
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Manure
management;

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(D)
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Rotational
grazing and improved forages;

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(E)
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Waste-stream-derived
amendment application, including compost, biochar, and anaerobic digest;

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(F)
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Improved
cropping and organic systems; and

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(G)
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Feed
management.

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"Phase II activities"
means activities identified as having significant sequestration potential but
requiring additional technical work to estimate the activities' sequestration
potential or to identify appropriate eligible land types, including:

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(1)
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Perennial
biofuel feedstocks;

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(2)
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Methane
capture;

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(3)
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Improved forest
management;

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(4)
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Conservation
easements; and

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(5)
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Other renewable
energy options involving blended food and energy systems.

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"Program" means the
Hawaii carbon smart land management assistance program.
"

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SECTION 3.
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There is appropriated out of the general
revenues of the State of Hawaii the sum of $2,000,000 or so much thereof as may
be necessary for fiscal year 2025-2026 and the same sum or so much thereof as
may be necessary for fiscal year 2026-2027 for the Hawaii carbon smart land
management assistance program, including the establishment of one full-time
equivalent (1.0 FTE) permanent position.

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The sums

appropriated shall be expended by the department of land and
natural resources for the purposes of this Act.

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SECTION 4.
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New statutory material is underscored.

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SECTION 5.
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This Act shall take effect on July 1, 2025.

INTRODUCED BY:

_____________________________

Report Title:

DLNR;
Carbon Sequestration; Hawaii Carbon Smart Land Management Assistance Program;
Appropriation

Description:

Codifies and
makes permanent the Hawaii Carbon Smart Land Management Assistance Program
under the Department of Land and Natural Resources.

The summary description
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not legislation or evidence of legislative intent.