THIRTY-FIRST LEGISLATURE, 2021
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO AGRICULTURE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that increasing extreme weather events due to climate change makes the isolated Hawaiian islands more vulnerable to being cut off from food, and to water shortages, and highlights the importance of food and water security. As such, Hawaii needs to find a way to both reduce its contribution to climate change and increase local food production. The legislature further finds that while carbon offset credits pay for carbon positive actions, certification is cost prohibitive to small landowners. Incentivizing carbon positive actions through a payment of services program would allow small farmers, ranchers, and landowners to be compensated for taking actions to help Hawaii reach its climate positive goal.
The purpose of this Act is to establish a Hawaii agriculture and forest carbon positive incentive program that will keep forests and working agriculture lands intact and sequester additional carbon on those lands and to fund the program with a portion of the revenues generated by the environmental response, energy, and food security tax.
SECTION 2. Chapter 196, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:
"Part . Hawaii agriculture and forest carbon positive incentive program
§196-A Definitions. As used in this part:
"Authority" means the Hawaii green infrastructure authority established pursuant to section 196-63.
"Carbon incentives contract" means a contract that specifies the following:
(1) The eligible practices to be undertaken;
(2) The acreage of eligible land;
(3) The agreed rate of compensation;
(4) A schedule to verify that the terms of the contract have been fulfilled; and
(5) Other terms as are determined necessary by the authority.
"Eligible land" means agricultural or forest land in the State that is privately owned or public land leased to a private citizen at the time of initiation of a carbon incentives contract.
"Eligible practices" means practices that increase carbon sequestration and storage over a designated period on eligible land.
"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. "Phase I activities" includes:
(1) Any regenerative annual cropping system that includes at least four of the following practices:
(A) Compost application;
(B) Cover crops;
(C) Crop rotation;
(D) Green manure;
(E) No-till or reduced tillage; and
(F) Organic production;
(2) Improved pasture;
(5) Protection of forests and shrublands from disturbance; and
(6) Rotational grazing and improved forage.
"Phase II activities" means activities identified as those that support significant sequestration potential but that require additional technical work to estimate sequestration potential or identify appropriate eligible land types. "Phase II activities" includes:
(1) Biofuel production;
(2) Methane capture;
(3) Improved forest management;
(4) Grazing intensity;
(5) Mixed production systems; and
(6) Efficient nutrient and waste management.
"Program" means the Hawaii agriculture and forest carbon positive incentive program established by this part.
§196-B Hawaii agriculture and forest carbon positive incentive program; established. There is established within the authority the Hawaii agriculture and forest carbon positive incentive program to incentivize carbon sequestration activities through carbon incentives contracts that provide for compensation for eligible activities by program participants. The authority shall administer the program and shall:
(1) Conduct program evaluation;
(2) Coordinate with the department of agriculture and the department of land and natural resources;
(3) Provide owners and lessees of eligible land financial incentive payments for eligible practices over a designated period, with appropriate crediting for carbon benefits as specified through a carbon incentives contract;
(4) Establish and implement protocols that provide monitoring and verification of compliance with the terms of carbon incentives contracts;
(5) Make available to the public any modeling, methodology, or protocol resources developed to estimate sequestration rates of potential projects; and
(6) Identify, evaluate, and distribute dedicated funds to accomplish the purposes of the program.
§196-C Program assistance; contract terms and compensation rates. (a) The department of agriculture and department of land and natural resources shall assist the authority in carrying out the purposes of the program, including:
(1) Establishing compensation rates and carbon incentives contract terms for phase I activities;
(2) Estimating sequestration rates for phase I and phase II activities;
(3) Conducting research to develop technical underpinning of compensation rates for phase II activities; and
(4) Conducting community and landowner outreach activities.
(b) The department of agriculture and department of land and natural resources shall establish compensation rates and carbon incentives contract terms within one year of the date of receipt of a program application. A carbon incentives contract shall be for a term of no less than one year and no more than thirty years, as determined by the owner or lessee; provided that the length of a contract term shall directly correlate with the rate of compensation paid pursuant to the contract.
§196-D Reviewing committee; report. (a) The chairperson of the authority, or the chairperson's designee, shall establish and serve as the chairperson of a reviewing committee to review program applications. The chairpersons of the boards of agriculture and land and natural resources, or their respective designees, shall participate as members of the reviewing committee.
(b) The reviewing committee shall submit a report to the legislature no later than twenty days prior to the convening of the regular session of 2023 and each regular session thereafter. Each report shall contain:
(1) An estimate of annual and cumulative carbon reductions achieved as a result of the program, determined using standardized measures including measures of economic efficiency;
(2) A summary of any changes to the program made as a result of program measurement, monitoring, and verification; and
(3) The total number of acres enrolled in the program.
§196-E Eligibility. Landowners and lessees of eligible land are eligible for the program upon submission of a program application, as prepared by the authority, to enter into a carbon incentives contract. An owner of eligible land currently engaged in eligible practices shall not be barred from entering into a carbon incentives contract under this part to continue carrying out eligible practices. An owner or lessee shall not be prohibited from participating in the program based on the participation by the owner or lessee in other federal or state conservation assistance programs. Conservation easements shall not be required for eligibility in the program.
§196-F Priority of carbon positive activities; benefits. (a) Priority eligibility shall be given to phase I and phase II activities that are:
(1) Cost effective;
(2) Provide co-benefits to the State and owner or lessee of eligible land;
(3) Have the potential to create jobs in the forestry or agriculture sectors, and in rural communities; and
(4) Achieve community priorities, including food security or watershed protection.
(b) On an annual basis, the Hawaii greenhouse gas sequestration task force established by section 225P-4 shall identify and prioritize selected carbon positive activities. The task force shall also identify co-benefits, which may include:
(1) Job creation;
(2) Food security and agriculture for local consumption;
(3) Water security;
(4) Increased biodiversity;
(5) Soil health; and
(6) Invasive species reduction and removal.
§196-G Hawaii agriculture and forest carbon positive incentive program special fund. (a) There is established in the state treasury the Hawaii agriculture and forest carbon positive incentive program special fund, which shall consist of:
(1) Moneys appropriated to the fund by the legislature;
(2) All interest attributable to investment of money deposited in the fund;
(3) Moneys deposited into the fund from the environmental response, energy, and food security tax pursuant to section 243-3.5; and
(4) Moneys allotted to the fund from other sources.
(b) Moneys from the fund shall be expended by the authority for the purposes of the program including personnel salaries, inventory, and community and landowner outreach activities."
SECTION 3. Section 196-64, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) In the performance of, and with respect to the functions, powers, and duties vested in the authority by this part, the authority, as directed by the director and in accordance with a green infrastructure loan program order or orders under section 269-171 or an annual plan submitted by the authority pursuant to this section, as approved by the public utilities commission, may:
(1) Make loans and expend funds to finance the purchase or installation of green infrastructure equipment for clean energy technology, demand response technology, and energy use reduction and demand side management infrastructure, programs, and services;
(2) Hold and invest moneys in the green infrastructure special fund in investments as permitted by law and in accordance with approved investment guidelines established in one or more orders issued by the public utilities commission pursuant to section 269-171;
(3) Hire employees necessary to perform its duties, including an executive director. The executive director shall be appointed by the authority, and the employees' positions, including the executive director's position, shall be exempt from chapter 76;
(4) Enter into contracts for the service of consultants for rendering professional and technical assistance and advice, and any other contracts that are necessary and proper for the implementation of the loan program;
(5) Enter into contracts for the administration of the loan program, without the necessity of complying with chapter 103D;
(6) Establish loan program guidelines to be approved in one or more orders issued by the public utilities commission pursuant to section 269-171 to carry out the purposes of this part;
audited at least annually by a firm of independent certified public accountants
selected by the authority, and provide the results of this audit to the department
and the public utilities commission; [
(8) Administer the Hawaii agriculture and forest carbon positive incentive program established by part ; and
Perform all functions necessary to
effectuate the purposes of this part."
SECTION 4. Section 225P-4, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) The greenhouse gas sequestration task force
is established within the office of planning for administrative purposes only. The task force shall [
have the following
(1) Work with public and private stakeholders to establish a baseline for greenhouse gas emissions within Hawaii and short- and long-term benchmarks for increasing greenhouse gas sequestration in the State's agricultural and natural environment;
(2) Identify appropriate criteria to measure baseline levels and increases in greenhouse gas sequestration, improvements in soil health, increases in agricultural and aquacultural product yield and quality attributable to greenhouse gas sequestration and improvements in soil health, and other key indicators of greenhouse gas benefits from beneficial agricultural and aquacultural practices that may be used to create a certification program for promoting agricultural and aquacultural practices that generate greenhouse gas benefits and agricultural and aquacultural production benefits;
(3) Identify land and marine use policies, agricultural policies, agroforestry policies, and mitigation options that would encourage agricultural and aquacultural practices and land use practices that would promote increased greenhouse gas sequestration, build healthy soils, and provide greenhouse gas benefits;
(4) Identify ways to increase the generation and use of compost in Hawaii to build healthy soils;
(5) Identify practices
and policies that add trees or vegetation to expand the urban tree canopy in
urban areas to reduce ambient temperatures, increase climate resiliency, and improve
greenhouse gas sequestration in Hawaii; [
recommendations to the legislature and governor regarding measures that would
increase climate resiliency, build healthy soils, provide greenhouse gas
benefits, or cool urban areas[
(7) Identify and prioritize carbon positive activities eligible for the Hawaii agriculture and forest carbon positive incentive program established by part of chapter 196, on an annual basis."
SECTION 5. Section 243-3.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) In addition to any other taxes provided by law, subject to the exemptions set forth in section 243-7, there is hereby imposed a state environmental response, energy, and food security tax on each barrel or fractional part of a barrel of petroleum product sold by a distributor to any retail dealer or end user of petroleum product, other than a refiner. The tax shall be $1.05 on each barrel or fractional part of a barrel of petroleum product that is not aviation fuel; provided that of the tax collected pursuant to this subsection:
(1) 5 cents of the tax on each barrel shall be deposited into the environmental response revolving fund established under section 128D-2;
(2) 5 cents of the tax on each barrel shall be deposited into the energy security special fund established under section 201-12.8;
(3) 10 cents of the tax on each barrel shall be deposited
into the energy systems development special fund established under section
(4) 15 cents of the tax on each barrel shall be
deposited into the agricultural development and food security special fund established
under section 141-10[
(5) cents of the tax on each barrel shall be deposited into the Hawaii agriculture and forest carbon positive incentive program special fund established under section 196-G.
The tax imposed by this subsection shall be paid by the distributor of the petroleum product."
SECTION 6. 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 2021-2022 and the same sum or so much thereof as may be necessary for fiscal year 2022-2023 to be deposited into the Hawaii agriculture and forest carbon positive incentive program special fund.
SECTION 7. There is appropriated out of the Hawaii agriculture and forest carbon positive incentive program special fund the sum of $ or so much thereof as may be necessary for fiscal year 2021-2022 and the same sum or so much thereof as may be necessary for fiscal year 2022-2023 for the Hawaii agriculture and forest carbon positive incentive program, including one full-time equivalent (1.0 FTE) program management position.
The sums appropriated shall be expended by the Hawaii green infrastructure authority for the purposes of this Act.
SECTION 8. In codifying the new sections added by section 2 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 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 10. This Act shall take effect on July 1, 2050; provided that sections 6 and 7 shall take effect on July 1, 2051.
Hawaii Agriculture and Forest Carbon Positive Incentive Program; Hawaii Green Infrastructure Authority; Appropriation
Establishes the Hawaii agriculture and forest carbon positive incentive program. Effective 7/1/2050. Appropriates funds on 7/1/2051. (SD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.