Expands petroleum industry reporting requirements under the Petroleum Industry Monitoring, Analysis, and Reporting Program administered by DBEDT; Establishes the Petroleum Industry Monitoring, Analysis, and Reporting Special Fund funded by an appropriation from the Environmental Response Revolving Fund.

A BILL FOR AN ACT

SECTION 1. The legislature finds that the establishment of a vigorous state watchdog system to monitor and oversee the petroleum industry and gasoline market is a prerequisite to fully implementing gasoline price regulation. A system to monitor, analyze, and report fuel industry volumes, prices, costs, and profits will provide agencies such as the public utilities commission and the departments of the attorney general and taxation with the critical information necessary to implement and enforce gasoline price regulation. In addition, the information provided by a fuel industry watchdog system will be useful for an even more important purpose--to support the development of a long-term integrated energy strategy for Hawaii that recognizes the realities of the local and global energy market.

Current energy supplies cannot keep pace with the increasing global demand for energy. Our small state is competing with the growing economies of China and India for the same fossil fuel resources. Many oil-producing countries are politically unstable. Hawaii's deep dependency on imported fossil fuels leaves its energy security and economy vulnerable to factors it cannot control.

The legislature further finds that any energy strategy for Hawaii must take a holistic approach to ensure that improvements in one sector of Hawaii's energy market do not result in the deterioration of another. For instance, ethanol blending and replacing residual oil with liquefied natural gas in the production of electricity may be beneficial to the overall economy, but may also cause financial difficulties for existing industry participants.

A long-term integrated energy strategy based on accurate information about Hawaii's energy market will support the development of a holistic energy strategy, give policy makers a broad range of realistic planning options, improve Hawaii's investment climate, encourage the formation of strategic partnerships, and better allow the State to pursue strategies for investment and new technology.

As energy resources coordinator under chapter 196, Hawaii Revised Statutes, the director of business, economic development, and tourism is responsible for developing plans for the optimal development of Hawaii's energy resources. The director must also provide analyses and evaluations to coordinate and effectively allocate resources to existing and proposed energy resource programs. The development of a single integrated state energy strategy is consistent with these responsibilities.

The purpose of this Act is to:

SECTION 2. Chapter 486J, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

"§486J-A Informational cost reports. (a) Each refiner, at such reporting dates as the director may establish, shall file with the director on forms prescribed, prepared, and furnished by the director, a certified statement of operating and overhead costs for the refiner's Hawaii operations that shall include but not be limited to the following:

(b) Each distributor shall file with the director all Securities and Exchange Commission Forms 10-K, 10-Q, annual reports, quarterly reports, and earnings supplements published by the distributor.

(c) Each distributor, except a distributor who is so defined solely under paragraph (4) of the definition of distributor in section 486J-1, who sells liquid fuel only at retail and is not a refiner, shall file with the director by such reporting dates as the director may establish, on forms prescribed, prepared, and furnished by the director, a certified statement of operating and overhead costs that shall include the following:

(d) The director may request additional information as and when the director deems necessary to perform the director's responsibilities under this chapter.

§486J-B Petroleum industry information reporting system. The department shall develop and maintain an automated petroleum industry information reporting system that meets the requirements of government, industry, and the public while promoting sound policy making and consumer information and protection. The petroleum industry information reporting system shall facilitate the efficient reporting and analysis of information described in section 486J-5, increase market transparency, and provide useful information to those agencies that are responsible for overseeing the petroleum industry and enforcing compliance with all relevant laws.

§486J-C Petroleum industry monitoring, analysis, and reporting special fund; environmental response revolving fund. (a) There is established a petroleum industry monitoring, analysis, and reporting special fund to be administered by the department.

(b) The legislature may make appropriations from the environmental response revolving fund established pursuant to section 128D-2, not to exceed $2,000,000 in any fiscal year, to the petroleum industry monitoring, analysis, and reporting special fund.

(c) Moneys in the special fund shall be used to:

SECTION 3. Section 128D-2, Hawaii Revised Statutes, is amended to read as follows:

"§128D-2 Environmental response revolving fund; uses. (a) There is created within the state treasury an environmental response revolving fund[, which] that shall consist of [moneys]:

provided that when the total balance of the fund exceeds $20,000,000, the department of health shall notify the department of taxation of this fact in writing within ten days. The department of taxation [then] shall then notify all distributors liable for collecting the tax imposed by section 243-3.5 of this fact in writing, and the imposition of the tax shall be discontinued beginning the first day of the second month following the month in which notice is given to the department of taxation. If the total balance of the fund thereafter declines to less than $3,000,000, the department of health shall notify the department of taxation, which [then] shall then notify all distributors liable for collecting the tax imposed by section 243-3.5 of this fact in writing, and the imposition of the tax shall be reinstated beginning the first day of the second month following the month in which notice is given to the department of taxation.

(b) Moneys from the fund shall be expended by the department for response actions and preparedness, including removal and remedial actions, consistent with this chapter; provided that the revenues generated by the ["environmental response tax"] environmental response tax and deposited into the environmental response revolving fund:

(c) Moneys from the fund not exceeding $2,000,000 in any fiscal year may be appropriated by the legislature for deposit into the petroleum industry monitoring, analysis, and reporting special fund pursuant to section 486J-C to:

SECTION 4. Chapter 486J, Hawaii Revised Statutes, is amended by amending the title of part I to read as follows:

"PART I. [GENERALLY] PETROLEUM INDUSTRY

MONITORING, ANALYSIS, AND REPORTING PROGRAM"

SECTION 5. Section 486J-1, Hawaii Revised Statutes, is amended as follows:

1. By adding four new definitions to be appropriately inserted and to read:

""Class of retail trade" means a separate subdivision or class of retail outlets, or method of selling liquid fuel at retail that is typically but not limited to gasoline and diesel for motor vehicles, and includes any:

"Corporate overhead expenses" means the expenses or costs allocated by the refiners that reflect their Hawaii business units' share of corporate staff costs, such as legal, financial, accounting, information technology, and similar costs.

"Liquid fuel" means fuel in liquid form that is commercially usable for energy needs, power generation, and fuel manufacturing, that may be manufactured or produced in, or imported into the state or exported therefrom, including petroleum and petroleum products and all fuel alcohols.

"Wholesale liquid fuel price" means the price at which liquid fuel, typically but not limited to gasoline and diesel for motor vehicles, is sold at wholesale for resale at wholesale or retail, and includes:

2. By amending the definitions of "distributor", "fuel", "person", and "refiner" to read:

""Distributor" means [and includes]:

"Fuel" means [and includes fuels whether] liquid, solid, or gaseous[,] fuel that is commercially usable for energy needs, power generation, and [fuels manufacture] fuel manufacturing, that may be manufactured, grown, or produced[,] in, or imported into the [State] state, or [that may be] exported therefrom[;], including petroleum and petroleum products and gases, coal, coal tar, vegetable ferments, and all fuel alcohols.

"Person"[,] means any person, firm, association, organization, partnership, business trust, corporation, or company. "Person" also includes any city, county, public district or agency, the State or any department or agency thereof, and the United States to the extent authorized by federal law.

"Refiner" means any person who owns, operates, or controls the operations of one or more refineries[.] in Hawaii."

3. By repealing the definition of "petroleum commissioner".

[""Petroleum commissioner" or "commissioner" means the administrator of the energy, resources, and technology division of the department of business, economic development, and tourism."]

SECTION 6. Section 486J-2, Hawaii Revised Statutes, is amended to read as follows:

"§486J-2 Distributors to register. Every distributor, and any person before becoming a distributor, shall register as such with the [commissioner] director on forms to be prescribed, prepared, and furnished by the [commissioner.] director."

SECTION 7. Section 486J-3, Hawaii Revised Statutes, is amended to read as follows:

"§486J-3 Statements. (a) Each distributor [shall], [at] by such reporting dates as the [commissioner] director may establish, shall file with the [commissioner,] director on forms prescribed, prepared, and furnished by the [commissioner,] director, a certified statement showing separately for each county and for the islands of Lanai and Molokai within which and whereon fuel is sold or used during the last preceding reporting period, the following:

[The commissioner shall prescribe by rule when the first report shall be submitted.

(b) In addition to the above reporting, each distributor shall file with the commissioner, Federal Form FEO-1000 or an equivalent state form to be prescribed, prepared, and furnished by the commissioner, showing the expected supply of fuel products for the coming month, and their intended distribution as categorized by Form FEO-1000 or the equivalent state form. The state form shall be supplied in the event that the Federal Mandatory Petroleum Allocation Regulations should expire, be revoked, or be amended to delete or substantially change the reporting requirements provided therein.

(c)] (b) Each major marketer shall submit to the [commissioner,] director, at a time and in a form as the [commissioner] director shall prescribe, information including petroleum and petroleum product receipts, exchanges, inventories, and distributions. [The commissioner shall prescribe by rule when the first report shall be submitted.

(d)] (c) The [commissioner] director may request additional information as and when [[the commissioner]] the director deems necessary to perform [[the commissioner's]] the director's responsibilities under this chapter."

SECTION 8. Section 486J-4, Hawaii Revised Statutes, is amended to read as follows:

"§486J-4 Informational reports. (a) Each major oil producer, refiner, marketer, oil transporter, and oil storer shall submit to the [commissioner,] director, in such form as the [commissioner] director shall prescribe, information [which] that includes the following:

[The commissioner shall prescribe by rule when the first report shall be submitted.]

(b) The [commissioner] director may request additional information as and when [[the commissioner]] the director deems it necessary to perform [[the commissioner's]] the director's responsibilities under this chapter."

SECTION 9. Section 486J-5, Hawaii Revised Statutes, is amended to read as follows:

"§486J-5 Analysis of information; audits and inspections; summary reports. (a) The [petroleum commissioner,] director, with the [commissioner's] director's own staff and other support staff with expertise and experience in, or with, the petroleum industry, shall gather, analyze, and interpret the information submitted to it pursuant to sections 486J-3 [and], 486J-4, and 486J-A, and other information relating to the supply and price of petroleum products, with particular emphasis on motor vehicle fuels, including[,] but not limited to[,] all of the following:

(b) The commissioner shall conduct random or periodic audits and inspections of any supplier or suppliers of oil or petroleum products to determine whether they are unnecessarily withholding supplies from the market or are violating applicable policies, laws, or rules. The commissioner may solicit assistance of the department of taxation in any such audit. The commissioner shall cooperate with other state and federal agencies to ensure that any audit or inspection conducted by the commissioner is not duplicative of the data received by any of their audits or inspections which is available to the commissioner].

[(c)] (b) The [commissioner] director shall analyze the impacts of state and federal policies, rules, and regulations upon the supply and pricing of petroleum products.

[(d)] (c) The [commissioner] director shall publish annually and submit to the governor and the legislature twenty days prior to the first day of [the current] each regular legislative session a [summary,] report of the director's activities under this chapter, including any analysis and interpretation of the information submitted to it pursuant to this chapter, and any other [activities] actions taken by the [commissioner,] director, including civil penalties imposed and referrals of violations to the attorney general under section 486J-9. Any person may submit comments in writing regarding the accuracy or sufficiency of the information submitted. At the option of the director, this report may be combined with reporting required by section 196-4(11), in the director's role as state energy resources coordinator."

SECTION 10. Section 486J-6, Hawaii Revised Statutes, is amended to read as follows:

"§486J-6 Confidential information. (a) Confidential commercial information [presented] provided to the [commissioner] director pursuant to this chapter shall be held in confidence by the [commissioner] director or aggregated to the extent necessary to assure confidentiality as governed by chapter 92F, including its penalty provisions.

[(b) No data or information submitted to the commissioner shall be deemed confidential if the person submitting the information or data has made it public.

(c)] (b) Unless otherwise provided by law, with respect to data provided pursuant to [sections] section 486J-3 [and], 486J-4, or 486J-A, neither the [commissioner,] director nor any employee of the department[,] may do any of the following:

SECTION 11. Section 486J-7, Hawaii Revised Statutes, is amended to read as follows:

"§486J-7 Confidential information obtained by another state agency. Any confidential information pertinent to the responsibilities of the [commissioner] director specified in this chapter that is obtained by another state agency, including the department of taxation, the public utilities commission, the attorney general, and the consumer advocate, shall be available to the attorney general, the attorney general's authorized representatives, and the [commissioner] director, and shall be treated in a confidential manner."

SECTION 12. Section 486J-8, Hawaii Revised Statutes, is amended to read as follows:

"§486J-8 Sharing of information obtained by the [commissioner.] director. The [commissioner] director shall make all information obtained by the [commissioner] director under this chapter, including confidential information, available to the attorney general, the department of taxation, the public utilities commission, the consumer advocate, and the authorized representative of each, who shall safeguard the confidentiality of all confidential information received."

SECTION 13. Section 486J-9, Hawaii Revised Statutes, is amended to read as follows:

"§486J-9 Failure to timely provide information; failure to make and file statements; false statements; penalties; referral to the attorney general. (a) The [petroleum commissioner] director shall notify those persons who have failed to timely provide the information specified in section 486J-3 [or], 486J-4, or 486J-A, or requested by the [commissioner] director under section 486J-3 [or], 486J-4[.], or 486J-A. If, within five business days after being notified of the failure to provide the specified or requested information, the person fails to supply the specified or requested information, the person shall be subject to a civil penalty of not less than $50,000 per day nor more than $100,000 per day for each day the submission of information is refused or delayed[, unless the person has timely filed objections with the commissioner regarding the information and the commissioner has held a hearing and, following a ruling by the commissioner, the person has properly submitted the issue to a court of competent jurisdiction for review].

(b) Any person who wilfully makes any false statement, representation, or certification in any record, report, plan, or other document filed with the [commissioner] director shall be subject to a civil penalty not to exceed $500,000, and shall be deemed to have committed an unfair or deceptive act or practice in the conduct of a trade or commerce and subject to the penalties specified in chapter 480.

(c) The [commissioner] director shall refer any matter under [this] subsection (a) or (b) to the attorney general, who may exercise any appropriate legal or equitable remedies that may be available to the State.

[(c)] (d) For the purposes of this section, "person" means, in addition to the definition contained in section 486J-1, any responsible corporate officer."

SECTION 14. Section 486J-10, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) The [commissioner] director shall adopt rules in accordance with chapter 91 to require that gasoline sold in the [State] state for use in motor vehicles contain ten per cent ethanol by volume. The amounts of gasoline sold in the [State] state containing ten per cent ethanol shall be in accordance with rules as the [commissioner] director may deem appropriate. The [commissioner] director may authorize the sale of gasoline that does not meet these requirements as provided in subsection (d)."

2. By amending subsections (d), (e), and (f) to read:

"(d) The [commissioner] director may authorize the sale of gasoline that does not meet the [provisions] requirements of this section:

(e) Each distributor, at such reporting dates as the [commissioner] director may establish, shall file with the [commissioner,] director on forms prescribed, prepared, and furnished by the [commissioner,] director, a certified statement showing:

(f) Provisions with respect to confidentiality of information shall be the same as provided in [section] sections 486J—6 and 486J-7."

3. By amending subsection (h) to read:

"(h) The [commissioner,] director, in accordance with chapter 91, shall adopt rules for the administration and enforcement of this section."

SECTION 15. Section 486J-12, Hawaii Revised Statutes, is repealed.

["§486J-12 Rules. The commissioner shall adopt, amend, or repeal such rules as [the commissioner] may deem proper to fully effectuate this chapter."]

SECTION 16. There is appropriated out of the petroleum industry monitoring, analysis, and reporting special fund the sum of $         or so much thereof as may be necessary for fiscal year 2006-2007 to implement the petroleum industry monitoring, analysis, and reporting program established under chapter 486J, Hawaii Revised Statutes.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 17. There is appropriated out of the petroleum industry monitoring, analysis, and reporting special fund the sum of $         or so much thereof as may be necessary for fiscal year 2006-2007 for        full-time equivalent positions in the public utilities commission to implement and operate the petroleum price control program established by chapter 486H, Hawaii Revised Statutes.

The sum appropriated shall be expended by the public utilities commission for the purposes of this Act.

SECTION 18. (a) The legislature recognizes the effort of the Hawaii energy policy forum, convened by the University of Hawaii in May 2002, in working to achieve the objective of creating a single integrated energy strategy and that the forum's efforts are invaluable and should continue.

(b) There is appropriated out of the petroleum industry monitoring, analysis, and reporting special fund the sum of $100,000 or so much thereof as may be necessary for fiscal year 2006-2007 to support the Hawaii energy policy forum.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 19. There is appropriated out of the environmental response revolving fund the sum of $         or so much thereof as may be necessary for fiscal year 2006-2007 to be deposited in the petroleum industry monitoring, analysis, and reporting special fund for the purposes of this Act.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 20. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 21. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 22. This Act shall take effect on July 1, 2006.