Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Transportation, Military Affairs and Government Operations, to which was referred H.B. No. 216, H.D. 1, entitled:

begs leave to report as follows:

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

Your Committee received testimony in support of this measure from the Department of Transportation ("Department"). The Board of Land and Natural Resources deferred to the Department's testimony. The Hawaii Audubon Society submitted testimony in opposition to this measure.

Your Committee finds that Tesoro Hawaii Corporation currently supplies all of the jet fuel needs for Lihue airport. Tesoro unloads its fuel at Nawiliwili harbor, where it is stored in fuel storage tanks owned by Shell Oil Company before it is transported to the airport.

Shell's fuel storage facility is located on public land, which Shell occupies pursuant to a month-to-month revocable permit. Your Committee finds that the best interests of the State would be served if Shell were issued a long-term lease for its fuel storage facilities, so that Lihue airport does not suffer a disruption of service if Shell is forced to abandon the property and to engage in lengthy remediation efforts.

Existing law does not allow the Department to negotiate directly with Shell for a long-term lease. Your Committee supports this measure, which will be repealed on June 30, 2002, to allow the Department to negotiate directly with Shell to ensure the continued supply of fuel for Lihue airport.

As affirmed by the record of votes of the members of your Committee on Transportation, Military Affairs and Government Operations that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 216, H.D. 1, and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.