Report Title:

Consumer Gas Price Limits; Fuel Storage Tax Credit

Description:

Amends the proposed maximum pre-tax wholesale and retail price of regular unleaded gasoline by determining the baseline price according to the national spot price, and establishes maximum pre-tax wholesale and retail prices for mid-grade and premium gasoline. Provides tax credit for development of fuel storage terminal.

HOUSE OF REPRESENTATIVES

H.B. NO.

2767

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO CONSUMERS.

 

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

SECTION 1. During the regular session of 2002, the legislature found that affirmative action was necessary to address an uncompetitive market in the sale of gasoline in the State. In Act 77, Session Laws of Hawaii 2002, the legislature imposed maximum pre-tax wholesale and retail price limits on regular unleaded gasoline to be sold in the State on a self service basis. The price limits are to become effective on July 1, 2004. The legislature finds that the uncompetitive market for gasoline extends also to mid-grade and premium gasoline.

The maximum price was to be determined on a weekly basis, based on the average of spot pipeline daily prices for regular unleaded gasoline for the markets of Los Angeles, San Francisco, and the Pacific Northwest; however, the legislature now believes that the spot pipeline prices for the markets of Los Angeles, San Francisco, and the Pacific Northwest may be too volatile and may not provide an appropriate basis for determining maximum gasoline prices for Hawaii. A more appropriate basis for determining maximum gasoline prices would be the national average spot price as reported by the Oil Price Information Service or another comparable reporting service. The price limits are to apply statewide, with adjustments for the neighbor islands; however, due to the need for more information relating to barriers to competition on the neighbor islands, the price limits there will be delayed. Further, because of their small size and unusual market character, no limits should be applied on the islands of Molokai and Lanai.

The legislature further finds that the responsibility to gather and analyze information received from the petroleum industry and to perform periodic audits of the petroleum industry presently rests with the department of business, economic development, and tourism. However, the mission of the department of business, economic development, tourism should not be to collect and analyze petroleum data or perform periodic audits. That responsibility should be with the auditor.

The legislature is also of the belief that consumers and retail gasoline dealers on the neighbor islands are especially in need of assistance due to the added transportation costs and lack of adequate terminals for the off loading and storage of gasoline on the neighbor islands.

To further ensure that the special conditions and concerns with which residents on the neighbor islands are confronted are properly addressed, further study is necessary.

The purposes of this Act are to:

(1) Change the baseline for determining maximum pre-tax wholesale and retail gasoline prices by using the national average spot price reported by the Oil Price Information Service or other comparable reporting service;

(2) Extend maximum pre-tax wholesale and retail price limits to mid-grade and premium gasoline;

(3) Extend the effective dates for the imposition of the gasoline price limits on Oahu until July 1, 2005, and on the islands of Kauai, Maui, and Hawaii until July 1, 2007;

(4) Transfer the responsibility of gathering and analyzing information from the petroleum industry and the performance of periodic audits from the department of business, economic development, and tourism to the auditor;

(5) Convene a task force to investigate barriers to competition faced by persons on the neighbor islands;

(4) Provide tax credits to encourage the development of additional fuel terminal facilities on the neighbor islands; and

(5) Strengthen our laws to protect consumers.

SECTION 2. Section 486H-13, Hawaii Revised Statutes, is amended to read as follows:

"[[]§486H-13[]] Maximum pre-tax wholesale price for the sale of gasoline; civil actions. (a) Notwithstanding any law to the contrary, effective July 1, 2005, on Oahu and July 1, 2007, on the islands of Kauai, Maui, and Hawaii, no manufacturer, wholesaler, or jobber may sell regular unleaded, mid-grade, or premium gasoline to a dealer retail station, an independent retail station, or to another jobber or wholesaler at a price above the maximum pre-tax wholesale prices established pursuant to subsection (b). The commission shall publish the maximum pre-tax wholesale prices by means that shall include the [Internet] internet website for the State of Hawaii.

(b) On a weekly basis, the commission shall determine the maximum pre-tax wholesale price of regular unleaded, mid-grade, and premium gasoline [for each island] as follows:

[(1) For the island of Oahu,] the maximum pre-tax wholesale price of regular unleaded gasoline shall consist of the baseline price for regular unleaded gasoline, plus the location adjustment factor, and the marketing margin factor[;] and, for mid-grade and premium gasoline, plus the additional mid-grade and premium adjustment factor.

[(2) For the islands of Kauai, Molokai, Lanai, Maui, and Hawaii, the maximum pre-tax wholesale price of regular unleaded gasoline shall consist of the maximum pre-tax wholesale price of regular unleaded gasoline for Oahu, plus the neighbor island wholesale adjustment factor.]

(c) The baseline price for regular unleaded gasoline [for Oahu] referred to in subsection (b) shall be determined on a weekly basis, and shall be equal to the national average [of:

(1) The spot pipeline daily price for regular unleaded gasoline for Los Angeles;

(2) The spot pipeline daily price for regular unleaded gasoline for San Francisco; and

(3) The spot daily price for the Pacific Northwest,]

spot price for regular unleaded gasoline as reported and published by the Oil Price Information Service or other comparable service such as the Lundberg survey, as determined by the commission, for the five business days of the preceding week.

(d) The location adjustment factor referred to in subsection (b) shall be $.04 per gallon for the first year after July 1, [2004,] 2005, and shall thereafter be subject to annual adjustment pursuant to section 486H-16(a).

(e) The marketing margin factor referred to in subsection (b) shall be $.18 per gallon for the first year after July 1, [2004,] 2005, and shall thereafter be subject to annual adjustment pursuant to section 486H-16(a).

[(f) The neighbor island wholesale adjustment factor shall be the sum of the neighbor island location adjustment factor, plus the neighbor island marketing factor.

(g) The neighbor island location adjustment factor shall be $.04 per gallon for the first year after July 1, 2004, and shall thereafter be subject to annual adjustment pursuant to section 486H-16(a).

(h) The neighbor island marketing factor shall be $.04 per gallon for the first year after July 1, 2004, and shall thereafter be subject to annual adjustment pursuant to section 486H-16(a).]

(f) The mid-grade adjustment factor shall be $       per gallon for the first year after July 2005, and shall thereafter be subject to annual adjustments pursuant to section 486H-16(a).

(g) The premium adjustment factor shall be $ per gallon for the first year after July 1, 2005, and shall thereafter be subject to annual adjustment pursuant to section 486H-16(a).

[(i)] (h) Any manufacturer, wholesaler, or jobber who knowingly violates any requirement imposed or rule adopted under this section shall be subject to a civil penalty, for each [such] violation, [which penalty shall be] equal to three times the amount of the overcharge[,] or $250,000, whichever is greater, and shall be liable for the costs of the action[,] and reasonable attorney's fees as determined by the court. Within two years from the date the commission obtains actual knowledge of the violation, the commission may institute a civil action in a court of competent jurisdiction to collect the civil penalty, the costs, and attorney's fees. In the case of ongoing violation, the two-year period shall start from the date of the last violation. The commission may refer any such action to the attorney general as it deems appropriate. As used in this subsection, "overcharge" means the number of gallons of gasoline sold, times the wholesale price at which the manufacturer or jobber sold regular unleaded, mid-grade or premium gasoline to a dealer retail station, less taxes assessed, less the maximum pre-tax wholesale price established pursuant to subsection (b).

[(j)] (i) The commission shall have the power to determine the extent to which a manufacturer, wholesaler, or jobber is complying with any requirement imposed or rule adopted under this section, including the power to compel a manufacturer, [[]wholesaler,[]] or jobber to submit documents, data and information necessary and appropriate for the commission to determine such compliance. The commission may use data collected by the department of business, economic development, and tourism pursuant to chapter 486J, as well as obtain the assistance of that department in determining such compliance.

[(k) The commission shall adopt rules pursuant to chapter 91 as may be necessary to implement this section.]"

SECTION 3. Section 486H-14, Hawaii Revised Statutes, is amended to read as follows:

"[[]§486H-14[]] Maximum pre-tax retail price for gasoline sold on a self-serve basis; civil actions. (a) Notwithstanding any law to the contrary, effective July 1, 2005, on Oahu and July 1, 2007, on the islands of Kauai, Maui, and Hawaii, no retail station may sell regular unleaded, mid-grade, or premium gasoline at retail, on a self-serve basis, at a price above the maximum pre-tax retail prices established pursuant to subsection (b). The commission shall publish the maximum pre-tax retail prices by means that shall include the [Internet] internet website for the State of Hawaii. The commission may also publish the retail prices inclusive of all taxes.

(b) On a weekly basis, the commission shall determine the maximum pre-tax retail price of gasoline. The maximum pre-tax retail price for regular unleaded, mid-grade, or premium gasoline shall consist of the maximum pre-tax wholesale price for regular unleaded, mid-grade, or premium gasoline established pursuant to section 486H-13(b), plus a retail marketing margin factor.

(c) The retail marketing margin factor for the island of Oahu shall be $.16 per gallon for the first year[,] and shall thereafter be subject to adjustment pursuant to section 486H-16(b).

(d) Effective July 1, 2007, the retail marketing margin factor for the islands of Kauai, Maui, and Hawaii shall be $.24 per gallon for the first year and shall thereafter be subject to adjustment pursuant to section 486H-16(b).

[(d)] (e) Any retail station that knowingly violates any requirement imposed or rule adopted under this section shall be subject to a civil penalty equal to three times the amount of the overcharge or $25,000, whichever is greater, and shall be liable for the costs of the action[,] and reasonable attorney's fees as determined by the court. Within two years from the date the commission obtains actual knowledge of the violation, the commission may institute a civil action in a court of competent jurisdiction to collect the civil penalty, the costs, and the attorney's fees. In the case of ongoing violation, the two-year period shall start from the date of the last violation. The commission may refer any such action to the attorney general as it deems appropriate. As used in this subsection, "overcharge" means the number of gallons of gasoline sold, times the retail price at which the retail station sold regular unleaded, mid-grade, or premium gasoline, less taxes assessed, less the maximum pre-tax retail price established pursuant to subsection (b).

[(e)] (f) The commission shall have the power to determine the extent to which a retail station is complying with any requirement imposed or rule adopted under this section, including the power to compel a retail station to submit documents, data, and information necessary and appropriate for the commission to determine such compliance. The commission may use data collected by the department of business, economic development, and tourism pursuant to chapter 486J, as well as obtain the assistance of such department in determining such compliance.

[(f) The commission shall adopt rules pursuant to chapter 91 as may be necessary to implement this section.]"

SECTION 4. Section 486H-15, Hawaii Revised Statutes, is amended to read as follows:

"[[]§486H-15[]] Governor's emergency powers. (a) Notwithstanding any law to the contrary, effective July 1, 2005, the governor may suspend in whole or in part, section 486H-13, section 486H-14, or any rule adopted pursuant to those sections whenever the governor issues a written determination that strict compliance with any section or a rule will cause a major adverse impact on the economy, public order, or the health, welfare, or safety of the people of Hawaii. The governor shall publish this determination in accordance with section 1-28.5. The suspension shall take effect upon issuance of the written determination by the governor.

(b) Except as provided in subsection (c), the suspension under subsection (a) shall remain in effect until the earlier of:

(1) The adjournment of the next regular or special session of the legislature; or

(2) The effective date of any legislative enactment intended to address the major adverse impact;

provided that if the legislature has enacted legislation to address the major adverse impact, and the governor vetoes the legislation, the suspension shall terminate on the date of that veto, and the pre-tax maximum wholesale [price] prices or the pre-tax maximum retail [price] prices in effect immediately prior to the issuance of the written determination by the governor shall take effect on the day after the date of the veto; and provided further that if no action is taken by the legislature during the regular or special session to address the major adverse impact, then the pre-tax maximum wholesale [price] prices or pre-tax maximum retail [price] prices in effect immediately prior to the issuance of the written determination by the governor shall take effect on the day after adjournment sine die of the regular or special session.

(c) If the written determination is issued while the legislature is in session, the suspension under subsection (a) shall remain in effect until the earlier of:

(1) The adjournment of that session of the legislature; or

(2) The effective date of any legislative enactment intended to address the major adverse impact;

provided that if the legislature has enacted legislation to address the major adverse impact, and the governor vetoes the legislation, the suspension shall terminate on the date of that veto, and the pre-tax maximum wholesale [price] prices or the pre-tax maximum retail [price] prices in effect immediately prior to the issuance of the written determination by the governor shall take effect on the day after the date of the veto; and provided further that if no action is taken by the legislature during the regular or special session to address the major adverse impact, then the pre-tax maximum wholesale [price] prices or the pre-tax maximum retail [price] prices in effect immediately prior to the issuance of the written determination by the governor shall take effect on the day after adjournment sine die of the regular or special session."

SECTION 5. Section 486-16, Hawaii Revised Statutes, is amended to read as follows:

"[[]§486H-16[]] Adjustments. (a) [A] Effective July 1, 2005, a manufacturer, wholesaler, or jobber may petition the commission to adjust the maximum pre-tax wholesale price of regular unleaded, mid-grade, or premium gasoline in the event of a change in the value of the baseline price for regular unleaded gasoline, the location adjustment factor, the marketing margin factor, [or the neighbor island wholesale adjustment factor.] the mid-grade adjustment factor, or the premium adjustment factor. The petitioner shall bear the burden of proof to establish by clear and convincing evidence the need for and the amount of any adjustment. The adjustments shall be determined as follows:

(1) The value of the baseline price for regular unleaded gasoline shall be equal to the national average [of:

(A) The spot pipeline daily price for regular unleaded gasoline for Los Angeles;

(B) The spot pipeline daily price for regular unleaded gasoline for San Francisco; and

(C) The spot daily price for the Pacific Northwest,]

spot price for regular unleaded gasoline as reported and published by the Oil Price Information Service or other comparable service such as the Lundberg survey, as determined by the commission, for the five business days of the preceding week;

(2) The value of the location adjustment factor in effect at the time the petition is filed shall be adjusted to equal the average of the actual acquisition cost to non-refiner marketers to obtain gasoline from refiners or importers for sale on the island of Oahu over the prior twelve-month period, which cost shall be taken from arm's length transactions between non-refiner marketers, and refiners or importers, such as exchange agreements, sales agreements, or other similar agreements; provided that the location adjustment factor shall not exceed the reasonable cost of importing gasoline to the island of Oahu. As used in this paragraph, "actual acquisition cost" means the amount over the base price of regular unleaded gasoline that a non-refiner marketer pays to a third party for delivery of such gasoline into a terminal located on the island of Oahu;

(3) The value of the marketing margin factor in effect at the time the petition is filed shall be adjusted by adding to such value the difference between:

(A) The average of the difference over the prior twelve-month period between:

(i) The dealer tank wagon price for sales for resale; and

(ii) The bulk price for sales for resale, for Petroleum Administration for Defense (PAD) District V,

as reported and published by the Energy Information Administration or its successor in Table 31 - "Motor Gasoline Prices by Grade, Sales Type, PAD District, and State" or other source containing the same information; less

(B) The average of the difference over the period from 1994 until the most current year between:

(i) The dealer tank wagon price for sales for resale; and

(ii) The bulk price for sales for resale, for Petroleum Administration for Defense (PAD) District V,

as reported and published by the Energy Information Administration or its successor in Table 31 - "Motor Gasoline Prices by Grade, Sales Type, PAD District, and State" or other source containing the same information;

[(4) The value of the neighbor island location adjustment factor in effect at the time the petition is filed shall be adjusted to equal the actual acquisition cost to non-refiner marketers to obtain gasoline from a refiner or importer for sale on the island of Kauai, Molokai, Lanai, Maui, or Hawaii, over the prior twelve-month period, which cost shall be taken from arm's length transactions between non-refiner marketers, and refiners or importers, such as exchange agreements, sales agreements, or other similar agreements; provided that the neighbor island location adjustment factor shall not exceed the reasonable cost of importing gasoline to the island of Kauai, Molokai, Lanai, Maui, or Hawaii, from any port on the island of Oahu. As used in this subsection, "actual acquisition cost" means the amount over the base price of regular unleaded gasoline that a non-refiner marketer [pays] to a third party for delivery of such gasoline into a terminal located on Kauai, Molokai, Lanai, Maui, or Hawaii; and

(5) The value of the neighbor island marketing factor in effect at the time the petition is filed shall be adjusted if there are material changes in the cost factors associated with marketing gasoline on the island of Kauai, Molokai, Lanai, Maui, or Hawaii, such as terminaling, storage, or distribution costs.]

(4) The value of the mid-grade and premium adjustment factors in effect at the time the petition is filed shall be adjusted by any increase in the mid-grade or premium adjustment factors as published by Means of Platt Singapore.

(b) [A] Effective July 1, 2005, a retail station may petition the commission to adjust the maximum pre-tax retail [price] prices of gasoline in the event of a change in the maximum pre-tax wholesale price for regular unleaded gasoline, or the value of the retail marketing margin factor. The petitioner shall bear the burden of proof to establish by clear and convincing evidence the need for and the amount of any adjustment. The adjustment shall be determined as follows:

(1) The value of the retail marketing margin factor for regular unleaded, mid-grade, or premium gasoline established in section 486H-14(c) shall be adjusted upward only if such value is less than the average of the difference over the prior twelve-month period between:

(A) The "through retail outlets" price for sales to end users for regular unleaded, mid-grade, or premium gasoline; and

(B) The dealer tank wagon price, for sales for resale for regular unleaded, mid-grade, or premium gasoline, for Petroleum Administration for Defense (PAD) District V,

as reported and published by the Energy Information Administration or its successor in Table 31 - "Motor Gasoline Prices by Grade, Sales Type, PAD District, and State" or other source containing the same information.

(c) If the commission adjusts the maximum pre-tax wholesale [price] gasoline prices, or the maximum pre-tax retail [price of regular unleaded] gasoline[,] prices, the commission shall publish its findings and the adjusted prices by means that shall include the [Internet] internet website for the State of Hawaii.

(d) [In] After July 1, 2005, in its discretion and without a petition having been filed, the commission may adjust the maximum pre-tax wholesale [price] gasoline prices or the maximum pre-tax retail [price of regular unleaded] gasoline prices if an adjustment is necessary as a result of a change in the value of the baseline price for regular unleaded gasoline, the location adjustment factor, the marketing margin factor, [the neighbor island wholesale adjustment factor,] the mid-grade or premium factor, or the retail marketing margin factor.

(e) Nothing in section 486H-13 or 486H-14 shall be construed to prohibit the filing of a petition during the first year after July 1, [2004.] 2005."

SECTION 6. Chapter 486H, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

"§486H-A Penalties for restricting supply of petroleum products. (a) Pursuant to section 486J-5, the petroleum commissioner shall immediately report any shortage or condition affecting the supply of any petroleum products to the attorney general who shall exercise all appropriate criminal and civil actions and pursue all legal and equitable remedies that may be available to the State. The attorney general shall inform the legislature of any report of shortage or condition affecting the supply of petroleum products it receives from the petroleum commissioner.

(b) Any person, including any manufacturer, wholesaler, jobber, or retailer, who in response to the requirements of this chapter, engages in any acts that result in the limiting, control, or shortage of any petroleum products in the State shall be subject to a civil penalty that shall be three times the amount of the damages that the State has sustained as a result the acts, together with reasonable attorneys fees and court costs.

(c) For purposes of this section, "person" means, in addition to the definition contained in section 486J-1, any responsible corporate officer.

§486H-B Provisions not to be used as a defense. No requirement or provision contained in this chapter may be used by any person, including any manufacturer, wholesaler, jobber, or retail dealer of petroleum products, as a defense in any action brought pursuant to this chapter or chapter 480.

§486H-C Same price and equal supply to dealers. (a) Each refiner, wholesaler, and jobber that supplies gasoline products to a retailer shall provide any discounts, deductions, or other price reductions or other incentives uniformly and evenly to all retailers.

(b) During any periods of supply shortage, all refiners, wholesalers, and jobbers shall distribute available supplies proportionately and equitably and not discriminate among retailers, whether company owned, dealer owned, or independent."

SECTION 7. Chapter 486J, Hawaii Revised Statutes, is amended as follows:

1. By amending section 486J-1 by adding a new definition to be properly inserted and to read:

""Auditor" means the person appointed pursuant to article VII, section 10 of the state constitution."

2. By amending section 486J-1 by repealing the definition of "petroleum commissioner" or "commissioner":

[""Petroleum commissioner" or "commissioner" means the administrator of the energy, resources, and technology division of the department of business, economic development, and tourism."]

3. By amending Section 486J-5, Hawaii Revised Statutes, by amending subsection (d) to read:

"(d) The [commissioner] auditor shall publish annually and submit to the governor, the department, and the legislature twenty days prior to the first day of the current legislative session a summary, including any analysis and interpretation of the information submitted to it pursuant to this chapter, and any other activities [taken] undertaken by the [commissioner,] auditor, including civil penalties imposed and referrals of violations to the attorney general under section 486J-9. Any person may submit comments in writing regarding the accuracy or sufficiency of the information submitted. [At the option of the director, this report may be combined with reporting required by section 196-4(11), in the director's role as state energy resources coordinator.]"

4. By amending Section 486J-6, Hawaii Revised Statutes, by amending subsection (c) to read:

"(c) Unless otherwise provided by law, with respect to data provided pursuant to sections 486J-3 and 486J-4, neither the [commissioner,] auditor, nor any employee of the [department,] office of the auditor, may do any of the following:

(1) Use the information furnished under sections 486J-3 and 486J-4 for any purpose other than the statistical purposes for which it is supplied;

(2) Make any publication whereby the data furnished by any particular establishment or individual under sections 486J-3 and 486J-4 can be identified; or

(3) Permit anyone to examine the individual reports provided under sections 486J-3 and 486J-4 other than the public utilities commission, the attorney general, and the consumer advocate, and the authorized representatives and employees of each."

5. By amending Section 486J-22, Hawaii Revised Statutes, to read:

"[[]§486J-22[]] Duties of the council. The council shall:

(1) Advise the department and the auditor of trends and activities in the retail petroleum industry that may require statutory consideration; and

(2) Take such other action as may be necessary to ensure that the department [is] and the auditor are informed of all relevant developments in the retail petroleum industry affecting the health, safety, and welfare of the people of this State."

6. By amending Section 486J-10, Hawaii Revised Statutes, to read:

"§486J-10 Ethanol content requirement. (a) The [commissioner] director shall adopt rules in accordance with chapter 91 to require that gasoline sold in the State for use in motor vehicles contain ten per cent ethanol by volume. The amounts of gasoline sold in the State containing ten per cent ethanol shall be in accordance with rules as the [commissioner] director may deem appropriate. The [commissioner] director may authorize the sale of gasoline that does not meet these requirements as provided in subsection (d).

(b) Gasoline blended with an ethanol-based product, such as ethyl tertiary butyl ether, shall be considered to be in conformance with this section if the quantity of ethanol used in the manufacture of the ethanol-based product represents ten per cent, by volume, of the finished motor fuel.

(c) Ethanol used in the manufacture of ethanol-based gasoline additives, such as ethyl tertiary butyl ether, may be considered to contribute to the distributor's conformance with this section; provided that the total quantity of ethanol used by the distributor is an amount equal to or greater than the amount of ethanol required under this section.

(d) The [commissioner] director may authorize the sale of gasoline that does not meet the provisions of this section:

(1) To the extent that sufficient quantities of competitively-priced ethanol are not available to meet the minimum requirements of this section; or

(2) In the event of any other circumstances for which the [commissioner] director determines compliance with this section would cause undue hardship.

(e) Each distributor, at such reporting dates as the commissioner may establish, shall file with the [commissioner,] director, on forms prescribed, prepared, and furnished by the [commissioner,] director, a certified statement showing:

(1) The price and amount of ethanol available;

(2) The amount of ethanol-blended fuel sold by the distributor;

(3) The amount of non-ethanol-blended gasoline sold by the distributor; and

(4) Any other information the [commissioner] director shall require for the purposes of compliance with this section.

(f) Provisions with respect to confidentiality of information shall be the same as provided in section 486J-7.

(g) Any distributor or any other person violating the requirements of this section shall be subject to a fine of not less than $2 per gallon of nonconforming fuel, up to a maximum of $10,000 per infraction.

(h) The [commissioner,] director, in accordance with chapter 91, shall adopt rules for the administration and enforcement of this section."

7. By amending Chapter 486J, Hawaii Revised Statutes, by replacing every reference to "petroleum commissioner" or like term and "commissioner" or like term wherever found in the chapter with "auditor" or like term, as the context requires.

SECTION 8. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Fuel storage terminal construction tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, chapter 237, and chapter 243 an income tax credit, which shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter, chapter 237, and chapter 243 for the taxable year in which the credit is properly claimed.

The amount of the credit shall be one hundred per cent of the qualified expenditure incurred in the construction of a qualified fuel storage terminal but shall not include the construction costs for which another credit was claimed under this chapter for the taxable year.

In the case of a partnership, S corporation, estate, trust, or any developer of a qualified fuel storage terminal, the tax credit allowable is for construction costs incurred by the entity for the taxable year. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to section 235-110.7(a).

If a deduction is taken under section 179 (with respect to election to expense depreciable business assets) of the Internal Revenue Code, no tax credit shall be allowed for that portion of the construction cost for which the deduction is taken.

The basis of eligible property for depreciation or accelerated cost recovery system purposes for state income taxes shall be reduced by the amount of credit allowable and claimed. In the alternative, the taxpayer shall treat the amount of the credit allowable and claimed as a taxable income item for the taxable year in which it is properly recognized under the method of accounting used to compute taxable income.

(b) The credit allowed under this section shall be claimed against the net tax liability imposed by this chapter, chapter 237, and chapter 243, for the taxable year.

(c) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability shall be carried over until exhausted. All claims for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(d) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(e) The tax credit allowed under this section shall be available for taxable years beginning after December 31, 2004, and shall not be available for taxable years beginning after December 31, 2008.

(f) To qualify for the income tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations.

(g) If at the close of any taxable year in the five year period after the year of placing the qualified fuel storage terminal into service:

(1) The fuel storage terminal no longer qualifies as a qualified fuel storage terminal; or

(2) The ownership in the fuel storage terminal has been sold or exchanged in a taxable transaction by the taxpayer;

the credit claimed under this section shall be recaptured. The recapture shall be equal to one hundred per cent of the amount of the total tax credit claimed under this section for the fuel storage terminal causing the recapture described in this subsection, multiplied by the recapture per cent.

The amount of the recaptured tax credit determined under this section shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs.

(g) As used in this section:

"Development plan" means a detailed factual presentation of the plans to construct the fuel storage terminal, including but not limited to a detailed budget of qualified expenditures, architectural plans, engineering plans, and other relevant documents.

"Fuel storage terminal" means a new fuel storage terminal located in any county with a population of three hundred thousand or less, used exclusively for the storage of petroleum fuel products with a minimum capacity of twenty-five thousand barrels; provided that the taxpayer claiming the credit under this section does not own, directly or indirectly, another fuel storage terminal on the same island. Indirect ownership means ownership by a related entity that is more than fifty per cent owned, directly or indirectly, by the taxpayer.

"Qualified expenditures" means any costs for plans, design, construction, equipment permanently affixed to a building or structure, and acquisition of land used exclusively for the qualified fuel storage terminal.

"Qualified fuel storage terminal" means a fuel storage terminal to the extent the development plans and projected qualified expenditures of the terminal have been certified by the department of business, economic development, and tourism prior to incurring any qualified expenditures in connection with the terminal. Any material changed to the development plans and projected qualified expenditures shall be recertified by the department of business, economic development, and tourism prior to a taxpayer claiming any credits under this section for qualified expenditures with respect to such material changes. Certification of a qualified fuel storage terminal by the department of business, economic development, and tourism shall result in an allocation of credits under this section for all projected qualified expenditures in connection with the terminal. Total credits that may be allocated by the department of business, economic development, and tourism under this section may not exceed $5,000,000 in any calendar year and may not exceed $20,000,000 over the four year period starting January 1, 2005 and ending December 31, 2008.

"Recapture per cent" means a fraction, the numerator of which equals the number of years remaining in the five year period after the fuel storage terminal was placed in service and the denominator of which equals ten."

SECTION 9. Section 480-1, Hawaii Revised Statutes, is amended by amending the definition of "consumer" to read as follows:

""Consumer" means a natural person who, primarily for personal, family, or household purposes, directly or indirectly, purchases, attempts to purchase, or is solicited to purchase goods or services or who commits money, property, or services in a personal investment."

SECTION 10. (a) There shall be convened a special task force comprised of sixteen members of the legislature to investigate the petroleum industry and its operations and impacts on the islands of Kauai, Maui, Molokai, Lanai, and Hawaii.

(b) Eight members of the task force shall be appointed by the speaker of the house of representatives and eight members shall be appointed by the president of the senate. Of the sixteen members, the speaker of the house of representatives and the president of the senate shall each select a co-chairperson for the task force.

(c) The duties of the task force are as follows:

(1) Obtain an inventory of petroleum facilities serving each of the neighbor islands, including, but not limited to, ships, barges, and other modes of transporting, loading and off-loading facilities, storage facilities, and pipelines and rolling stock for the movement and distribution of petroleum products;

(2) Meet with persons involved in the petroleum industry on the neighbor islands, including, but not limited to, shippers, wholesalers, jobbers, retailers, and consumers;

(3) Determine the special needs and concerns of the neighbor island petroleum suppliers and consumers; and

(4) Determine what, if any, special barriers to competition exist on the neighbor islands.

(d) The auditor shall provide necessary staff and logistical support to serve the task force.

(e) Prepare and submit a report with recommendations, including any proposed legislation, to the legislature twenty day before the convening of the regular session 2005.

SECTION 11. There is appropriated out of the general revenues of the State of Hawaii the sum of $       , or so much thereof as may be necessary for fiscal year 2004-2005, to carry out the purposes of sections 2, 3, 4, 5, and 6 of this Act, including the hiring of necessary staff. The sum appropriated shall be expended by the public utilities commission.

SECTION 12. There is appropriated out of the general revenues of the State of Hawaii the sum of $ , or so much thereof as may be necessary for the fiscal year 2004-2005, to carry out the purposes of section 7 and 10 of this Act, including the hiring of necessary staff. The sum appropriated shall be expended by the auditor.

SECTION 13. In codifying the new sections added by sections 6 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 14. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 15. This Act shall take effect on July 1, 2004.

INTRODUCED BY:

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