Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 1941 entitled:

begs leave to report as follows:

The purpose of this measure is to permanently exempt property carriers transporting seed corn to a processing facility from the law regulating motor carriers.

Testimony in support of this measure was received from the Department of Agriculture, Kauai County Farm Bureau, Hawaii Farm Bureau, Hawaii Crop Improvement Association, and Pioneer Hi-Bred. The Public Utilities Commission submitted comments on the measure.

Act 120, Session Laws of Hawaii 1997, exempts persons transporting seed corn to processing facilities from the State's motor carrier law until June 30, 2002. Among other things, the law regulates rates and charges for transportation, and prohibits unjust discrimination, undue preference or advantage, and unfair or destructive competitive practices. This measure makes the exemption of seed crop transporters permanent by repealing the Act's sunset date.

The value of seed production in Hawaii, including seed corn, reached $35.4 million in 2000, an increase of sixteen per cent in one year. From 1997 to 2000, out-of-state shipments of seed corn increased from 3,000,000 pounds to 4,400,000 pounds, representing a ten per cent annual growth rate. Currently, seed crops are second only to nursery crops in the State's diversified agriculture industry.

The costs of seed crop production are two to five times higher in Hawaii than on the mainland. However, the seed crop industry has been able to enjoy unprecedented growth in Hawaii due to favorable business conditions, including the current exemption from the motor carrier law. Your Committee finds that maintaining reasonable business costs is vital to the continued growth and expansion of the seed crop industry in the State and that continuing the exemption is a factor in controlling costs. Your Committee further finds that exempting seed corn transporters from the motor carrier law is consistent with the State's exemption of carriers transporting sugar cane, unprocessed pineapple, and other agricultural products.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1941, and recommends that it pass Third Reading.