STAND. COM. REP. NO.  1554


Honolulu, Hawaii

                , 2015


RE:   S.B. No. 717

      S.D. 2

      H.D. 1





Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii




     Your Committee on Transportation, to which was referred S.B. No. 717, S.D. 2, entitled:




begs leave to report as follows:


     The purpose of this measure is to repeal the requirement that gasoline sold in Hawaii for use in motor vehicles contain ten percent ethanol.


     Aloha Shell Service, Chevron, and several concerned individuals testified in support of this measure.  The Hawaii Crop Improvement Association, DuPont, Growth Energy, Bioenergy Associates LLC, Biotechnology Industry Organization, and POET Biofuel testified in opposition to this measure.  The Department of Business, Economic Development, and Tourism (DBEDT) and Grassroot Institute of Hawaii submitted comments.


     Since 2006, Hawaii has required that gasoline sold in the State include ten percent ethanol.  While the intent of this requirement was to move Hawaii towards using increased amounts of alternative fuels as well as to provide economic benefits to the State through the establishment of ethanol-producing facilities, it appears that Hawaii has yet to experience any economic benefits from the requirement of blending ethanol into Hawaii's gasoline.  According to DBEDT, ethanol production has not occurred locally despite the availability of ethanol production tax credits.


     Although it has been suggested that importing ethanol to meet Hawaii's ethanol requirement for gasoline creates an economic burden for state residents, and that eliminating Hawaii's ethanol requirement would be beneficial to the State as a whole, questions remain as to what impacts, if any, Hawaii's ethanol requirement has had on the residents of the State.  Questions also remain as to what the effects would be if the ethanol requirement were to be repealed.  Your Committee finds that a study of the impacts Hawaii's ethanol requirement has had on the State and the effects a repeal of this requirement would have would answer these questions.


     Your Committee has amended this measure by deleting its contents and replacing it with provisions that:


     (1)  Increase the membership of the Petroleum Advisory Council established within DBEDT to include a member representing the biofuel industry and a member representing the biotechonology industry;


     (2)  Require the Petroleum Advisory Council to:


          (A)  Study the impacts Hawaii's ethanol requirement has had on the State, as well as the effects of repealing this requirement; and


          (B)  Submit a report of its findings and recommendations, including any proposed legislation, to the Legislature no later than 20 days prior to the convening of the Regular Session of 2016; and


     (3)  Change its effective date to July 1, 2015.


     Technical, nonsubstantive amendments were also made for clarity, consistency, and style.


     As affirmed by the record of votes of the members of your Committee on Transportation that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 717, S.D. 2, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 717, S.D. 2, H.D. 1.


Respectfully submitted on behalf of the members of the Committee on Transportation,