STAND. COM. REP. NO. 1371-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2221
                                     S.D. 1
                                     H.D. 2




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Finance, to which was referred S.B. No.
2221, S.D. 1, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO ETHANOL,"

begs leave to report as follows:

     The purpose of this bill is to encourage the development of
ethanol production by providing an income tax credit of forty
cents per gallon of ethanol produced to qualifying producers of
fuel-grade ethanol.

     Your Committee circulated a proposed H.D. 2 of this bill for
the purpose of public hearing.  This draft:

     (1)  Provides an income tax credit for investors in ethanol
          production as a percentage of the total amount invested
          in a qualifying ethanol production facility, excluding
          land costs; 

     (2)  Requires that a qualifying ethanol production facility
          must annually operate at 75 percent of its nameplate
          capacity for an investor in that facility to claim the
          maximum allowable tax credit; and


 
 
 
 
                                 STAND. COM. REP. NO. 1371-00
                                 Page 2

 
     (3)  Allows for the transfer of the tax credit upon the
          acquisition of a qualifying ethanol production
          facility, or interest in that facility, during the
          allowable credit period.

     The Department of Business, Economic Development, and
Tourism, Hawaii Renewable Energy Alliance, E D and F Man Alcohol,
Inc., Life of the Land, Worldwide Energy Group, Inc., and an
individual supported the proposed H.D. 2.  Alexander and Baldwin,
Inc. supported the intent of the proposed H.D. 2.  The Department
of Taxation, Tax Foundation of Hawaii, and the Western States
Petroleum Association commented on the proposed H.D. 2.

     Your Committee has amended this bill by adopting the changes
made in the proposed version and made additional technical,
nonsubstantive changes for purposes of style and clarity.

     As affirmed by the record of votes of the members of your
Committee on Finance that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
2221, S.D. 1, H.D. 1, as amended herein, and recommends that it
pass Third Reading in the form attached hereto as S.B. No. 2221,
S.D. 1, H.D. 2.

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



                                   ______________________________
                                   DWIGHT Y. TAKAMINE, Chair