Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Water, Land, Energy and Environment, to which was referred S.B. No. 773 entitled:

begs leave to report as follows:

The purpose of this measure is to extend the ethanol investment tax credit to the construction of biodiesel production facilities.

Your Committee received testimony in support of this measure from the Department of Business, Economic Development, and Tourism. The Department of Taxation and Tax Foundation of Hawaii submitted comments.

Your Committee finds that there is currently one biodiesel production facility on Maui and one on Oahu, and interest in constructing more around the State. While the amount of biodiesel fuel produced from waste oils is small, estimated at less than one per cent of Hawaii's diesel fuel demand, it would provide additional fuel options for Hawaii's fleets.

Your Committee further finds that this would assist fleets operating in Hawaii in meeting the alternative fuel requirements of the National Energy Policy Act of 1992.

Your Committee has amended this measure to add fuel specifications for biodiesel, to allow a taxpayer to receive credits for both ethanol and biodiesel production facilities, and to add biodiesel production to the existing limits and increase the existing limits for the investment tax credit.

As affirmed by the record of votes of the members of your Committee on Water, Land, Energy and Environment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 773, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 773, S.D. 1, and be referred to the Committee on Ways and Means.