Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Transportation, to which was referred H.B. No. 216 entitled:

begs leave to report as follows:

The purpose of this bill is to temporarily exempt the leasing of Shell Oil Company's fuel storage facility at Nawiliwili Harbor on Kauai from the public notice requirements for negotiating a lease of public lands.

DOT testified in support of the intent of this measure. The Department of Land and Natural Resources commented on the bill. The Office of Hawaiian Affairs opposed this bill.

This bill is needed to ensure that Tesoro Hawaii Corporation meets all of the jet fuel requirements for Lihue Airport on Kauai. Currently, Tesoro unloads its jet fuel at Nawiliwili Harbor and stores this fuel in a fuel storage facility owned by Shell Oil Company. This facility is situated on state land that Shell leases on a month-to-month revocable permit.

The Department of Transportation (DOT) wants to provide a long-term lease for this fuel storage facility. However, chapter 171, Hawaii Revised Statutes (HRS), requires that state leases be issued through a public auction process. If an auction were held for the fuel storage facility land, and Shell was not the successful bidder, it would need to remove the fuel storage tanks and remediate the site. It is estimated that the construction of new jet fuel storage tanks would take three years, resulting in the disruption of the supply of jet fuel for Lihue Airport.

This bill, as received, temporarily authorizes the Board of Land and Natural Resources (BLNR) to negotiate the lease without regard to the limitations set forth in subsection 171-59(a), HRS, relating to disposition by negotiations, and section 171-16(c), HRS, relating to public notice by negotiation.

Your Committee has amended this bill to temporarily authorize DOT, subject to BLNR's approval, to negotiate the lease without regard to the limitations set forth in chapter 171, HRS.

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 H.B. No. 216, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 216, H.D. 1, and be referred to the Committee on Water and Land Use.