STAND. COM. REP. NO. 760

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 1793

       S.D. 1

 

 

 

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

 

Madam:

 

     Your Committees on Energy and Environment and Economic Development and Taxation, to which was referred S.B. No. 1793 entitled:

 

"A BILL FOR AN ACT RELATING TO THE NATURAL ENERGY LABORATORY OF HAWAII AUTHORITY,"

 

beg leave to report as follows:

 

     The purpose of this measure is to clarify the method of selection of members of the Board of Directors (Board) of the Natural Energy Laboratory of Hawaii Authority (NELHA).

 

     Specifically, this measure would:

 

     (1)  Increase from eleven to thirteen, the number of members on the Board; and

 

     (2)  Increase from three to five, the number of public members, with two of them selected from tenants of NELHA and three from the general public;

 

     Your Committees received testimony in support of this measure from Kona Bay Marine Resources, Cyanotech, High Health Aquaculture Inc., and Hawaii Aquaculture Association.  The State Attorney General and NELHA submitted comments.

 

     Your Committees find that the tenants of NELHA provide much of the revenue necessary for the operation of NELHA facilities.  NELHA tenants could therefore provide useful insight in Board decisions.

 

     However, your Committees are concerned with the potential conflict of interest that may occur when adding tenants to the NELHA Board, particularly in situations where the Board is considering lease rent or water rate issues that directly impact tenants.  Allowing tenant Board members to vote on such matters would create unnecessary ethical concerns that may detract from the Board's ability to operate efficiently.

 

     In light of this concern, your Committees have amended this measure by:

 

     (1)  Recusing the tenant members from voting on lease rent or water rate issues, to avoid conflicts of interest; and

 

     (2)  Requiring a super majority vote of seven members to make decisions on lease rent or water rate issues, in recognition of the importance of these issues to the tenants.

 

     As affirmed by the records of votes of the members of your Committees on Energy and Environment and Economic Development and Taxation that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1793, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1793, S.D. 1, and be placed on the calendar for Third Reading.

 

Respectfully submitted on behalf of the members of the Committees on Energy and Environment and Economic Development and Taxation,

 

____________________________

CAROL FUKUNAGA, Chair

 

____________________________

RON MENOR, Chair