Honolulu, Hawaii



RE:    S.B. No. 3215

       S.D. 3




Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii




     Your Committee on Ways and Means, to which was referred S.B. No. 3215, S.D. 2, entitled:




begs leave to report as follows:


     The purpose of this measure is to stimulate the production of biodiesel in the State by providing various financial incentives.


     Specifically, this measure:


     (1)  Authorizes the Department of Land and Natural Resources to lease public agricultural lands for growing crops to be used in the production of biodiesel fuel;


     (2)  Provides a procurement preference in chapter 103D, Hawaii Revised Statutes, for state vehicles with diesel engines to use biodiesel blended fuels produced in the State from feedstock grown in the State;


     (3)  Establishes a state energy feedstock program to support and promote a market for biodiesel feedstock crops grown in the State; and


     (4)  Creates a tax exemption for oil seed crushing facilities.


     Testimony in support of this measure was submitted by Pacific Biodiesel, Imperium Renewables Hawaii, LLC, Sierra Club, and Hawaiian Electric Company.  Testimony in opposition to this measure was submitted by the Board of Land and Natural Resources.  Comments on this measure were submitted by the Department of Agriculture, the Department of Taxation, and the Tax Bill Service.


     Your Committee finds that financial incentives and tax incentives to develop and produce biodiesel in the State create opportunities for the development of a biodiesel industry in the State.  The increased development and availability of biodiesel resources in the State would reduce the State's dependence on imported fossil fuels.


     Upon further consideration, your Committee has amended this measure by:


     (1)  Deleting the grant of rulemaking authority to the Department of Land and Natural Resources as it relates to crops used in the production of biodiesel fuel because the department already possesses general rulemaking authority pursuant to section 171-6(4), Hawaii Revised Statutes;


     (2)  Making a clarifying amendment to section 6 by deleting an erroneous reference to an exemption from real property taxes for biodiesel feedstock croplands;


     (3)  Replacing, after consultation with the previous committee, the unspecified amount of excluded gain in section 235-7(a)(13), Hawaii Revised Statutes, with "one hundred" per cent, to correct an inadvertent drafting error;


     (4)  Changing the effective date to July 1, 2050, to facilitate further discussion on this measure; and


     (5)  Making technical nonsubstantive amendments for the purposes of clarity, consistency, and style.


     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3215, S.D. 2, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 3215, S.D. 3.


Respectfully submitted on behalf of the members of the Committee on Ways and Means,