STAND. COM. REP. NO. 952-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2880
                                     S.D. 2
                                     H.D. 1




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

Sir:

     Your Committee on Energy and Environmental Protection, to
which was referred S.B. No. 2880, S.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO THE ENVIRONMENTAL RESPONSE
     REVOLVING FUND,"

begs leave to report as follows:

     The purpose of this bill is to expand the use of the
Environmental Response Revolving Fund (Fund) to include:

     (1)  Supporting environmental protection and natural
          resource protection programs; and  

     (2)  Addressing concerns related to air quality, global
          warming, clean water, polluted runoff, and solid and
          hazardous waste.

     The Board of Land and Natural Resources, the Chamber of
Commerce of Hawaii, and the Hawaii Association of Conservation
Districts submitted testimony in support of the bill.  The
Department of Health and the Sierra Club, Hawaii Chapter
submitted testimony in support of this bill and urged that the
twenty-five cents per barrel tax that was deleted from an earlier
draft of the bill be restored.  The Airlines Committee of Hawaii,
Matson Navigation Company, Tesoro Hawaii Corporation, the Hawaii
Farm Bureau Federation, and the Hawaii Agricultural Research
Center submitted testimony in opposition to this bill.  Kauai
Electric and the Gas Company submitted joint testimony in

 
 
                                 STAND. COM. REP. NO. 952-00
                                 Page 2

 
opposition to the bill.   The Environmental Center of the
University of Hawaii submitted testimony concurring with the
intent of the bill.  The Tax Foundation of Hawaii submitted
comments criticizing this bill.  The Hawaiian Electric Company
and it subsidiary utilities Maui Electric Company and Hawaii
Electric Light Company submitted joint testimony requesting that
the bill be held.

     Your Committee notes that a similar bill, H.B. No. 2539,
H.D. 2, passed the House earlier this session after hearings
before your Committees on Energy and Environmental Protection and
Finance.

     Your Committee recognizes:

     (1)  The need to identify an equitable means to require the 
          polluter to pay to protect the environment.  Because
          this measure may be critical to the development of the
          supplemental biennium budget, it is your Committee's
          intent that discussion continue on this issue; and

     (2)  That taxing jet fuel unfairly and inequitably singles 
          out domestic carries since bonded fuel cannot be taxed
          due to bilateral treaties with foreign nations.  The
          bonded fuel retains its custom duty-free status while
          in the United States.

     After careful consideration, your Committee has amended this
bill by conforming its substance to that of H.B. No. 2539, H.D.
2.  Specifically, this bill has been amended by:

     (1)  Adding a findings and purpose section to address the
          relationship between petroleum, the environment, the
          Fund, and the use of the Fund; and

     (2)  Adding an amendment to section 243-3.5, Hawaii Revised 
          Statutes, that:

          (A)  Increases the State Environmental Response Tax
               from 5 cents per barrel of petroleum product to an
               unspecified amount; and  

          (B)  Deletes that portion of the subsection that
               provides an unspecified amount of the tax that
               would be used to address concerns relating to
               drinking water;

     (3)  Changing the effective date of the bill to July 1,
          2000; and 

 
                                 STAND. COM. REP. NO. 952-00
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     (4)  Making technical, nonsubstantive amendments for
          purposes of style, clarity, and consistency.   
 
     As affirmed by the record of votes of the members of your
Committee on Energy and Environmental Protection that is attached
to this report, your Committee is in accord with the intent and
purpose of S.B. No. 2880, S.D. 2, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as S.B. No. 2880, S.D. 2, H.D. 1, and be referred to the
Committee on Finance.  
                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Energy and
                                   Environmental Protection,



                                   ______________________________
                                   HERMINA M. MORITA, Chair