(1) Establishes petroleum industry monitoring, analysis, and reporting special fund; (2) petroleum industry information reporting system; and (3) unfair practices by petroleum industry.

A BILL FOR AN ACT

SECTION 1. The legislature finds that the establishment and allocation of adequate resources for a vigorous state watchdog system to monitor and oversee the petroleum industry and gasoline market is a prerequisite to ensure the efficient and equitable regulation of gasoline pricing. The collection, aggregation, and analyses of current data relating to Hawaii petroleum fuel prices, volumes, costs, and profits, and the subsequent reporting of this information to planning and enforcement agencies, such as the departments of the attorney general, business, economic development, and tourism, and taxation, for review and assessment, is critical in ensuring compliance with the letter and spirit of the laws and regulations aimed at promoting fair and competitive gasoline prices for Hawaii's consumers.

Most importantly, the legislature finds that current global energy supplies cannot keep pace with the increased global demands for energy. The growing energy needs of burgeoning economies, such as China and India, place Hawaii in a very vulnerable position in the global competition for the same fossil fuel resources. Further, with many oil-producing countries facing political instability and sensitive diplomatic relations, Hawaii's deep dependency on imported fossil fuels leaves it susceptible to factors it cannot control that affect its energy security and economy.

The legislature also finds that a comprehensive approach is needed to ensure the adoption of energy policies and programs that optimize the security, cost-efficiency, and environmental soundness of Hawaii's fuel resources and minimize the social and economic costs and supply dislocations to Hawaii's energy users. For example, the requirement for ethanol blending may have some adverse financial effect on existing industry participants but may provide wider, long-term benefits to the State's economy, environment, and overall energy strategy.

An integrated energy strategy will give the legislature and other policy makers a broad range of policy options, including improved planning, enhanced data collection, and monitoring to support the development of a long-term plan with realistic goals. An integrated energy strategy with long-range objectives may also lead to an improved investment climate. Such a plan will also greatly improve strategic partnerships. Additionally, developing an integrated energy strategy will allow the State to pursue meaningful investment strategies and technology options.

The purposes of this Act are 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, on a semi-annual basis, at such reporting dates as the commission may establish, shall file with the commission, on forms prescribed, prepared, and furnished by the commission, a certified statement of operating and overhead costs for the refiner's Hawaii operations, which shall include but not be limited to the following:

(b) In addition to the reporting required under subsection (a), each distributor shall file with the commission 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 by criteria in paragraph (4) of that definition in section 486J-1, who sells liquid fuel only at retail and is not a refiner, shall file with the commission, on a semi-annual basis at such reporting dates as the commission may establish, on forms prescribed, prepared, and furnished by the commission, a certified statement of operating and overhead costs, which shall include the following:

§486J-B Petroleum industry information reporting system. The commission 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 purpose of the petroleum industry information reporting system is to conduct and facilitate the efficient reporting analysis of information described in section 486J-5. The commission shall develop the petroleum industry information reporting system in a manner that will result in greater market transparency and provide useful information to those agencies that are authorized to conduct oversight of the petroleum industry and ensure compliance with all relevant laws.

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

(b) The legislature may make appropriations from the general revenues of the State of Hawaii, not to exceed $2,000,000 in any fiscal year, for the petroleum industry monitoring, analysis, and reporting special fund.

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

SECTION 3. Section 486J-1, Hawaii Revised Statutes, is amended as follows:

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

""Classes of retail trade" means the separate subdivisions, or "classes", of outlets or methods of retail sales of liquid fuels, typically but not limited to gasoline and diesel for motor vehicles, and includes any:

"Commission" means the public utilities commission.

"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, finance, accounting, information technology, and similar costs.

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

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

2. By amending the definition of "distributor" to read:

""Distributor" means [and includes]:

3. By amending the definition of "fuel" to read:

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

4. By amending the definition of "person" to read:

""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."

5. By amending the definition of "refiner" to read:

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

6. 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 4. 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] commission on forms to be prescribed, prepared, and furnished by the [commissioner.] commission."

SECTION 5. Section 486J-3, Hawaii Revised Statutes, is amended to read as follows:

"§486J-3 Statements. (a) Each distributor [shall], at [such] reporting dates as the [commissioner] commission may establish, shall file with the [commissioner,] commission, on forms prescribed, prepared, and furnished by the [commissioner,] commission, 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.] applicable standards and practices for reporting to facilitate uniformity, consistency, and comparability of the data to 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,] commission, at a time and in a form as the [commissioner] commission 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] commission may request additional information as and when [[the commissioner]] the commission deems necessary to perform [[the commissioner's]] the commission's responsibilities under this chapter."

SECTION 6. 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,] commission, in such form as the [commissioner] commission shall prescribe, information [which] that includes the following:

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

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

SECTION 7. 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,] commission, with the [commissioner's] commission'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], prices, margins, and profits 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.] price, margins, and profits.

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

[(d)] (c) The [commissioner] commission shall publish annually and submit to the governor and the legislature twenty days prior to the first day of the current legislative session a summary, including any analysis and interpretation of the information submitted to it pursuant to this chapter, and any other activities taken by the [commissioner,] commission, 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 8. Section 486J-6, Hawaii Revised Statutes, is amended to read as follows:

"§486J-6 Confidential information. (a) Confidential commercial information presented to the [commissioner] commission pursuant to this chapter shall be held in confidence by the [commissioner] commission or aggregated to the extent necessary to [assure] ensure 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,] commission, nor any employee of the [department,] commission, may do any of the following:

SECTION 9. 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] commission 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] commission and shall be treated in a confidential manner."

SECTION 10. Section 486J-8, Hawaii Revised Statutes, is amended to read as follows:

"§486J-8 Sharing of information obtained by the [commissioner.] commission. The [commissioner] commission shall make all information obtained by the [commissioner] commission 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 11. 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] commission 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] commission 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] commission 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] commission 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 12. Section 486J-10, Hawaii Revised Statutes, is amended to read as follows:

"§486J-10 Ethanol content requirement. (a) The [commissioner] director shall adopt rules in accordance with chapter 91 to require that gasoline sold in the State for use in motor vehicles contain ten per cent ethanol by volume. The amounts of gasoline sold in the 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).

(b) Gasoline blended with an ethanol-based product, such as ethyl tertiary butyl ether, shall be considered to be in conformance with this section if the quantity of ethanol used in the manufacture of the ethanol-based product represents ten per cent, by volume, of the finished motor fuel.

(c) Ethanol used in the manufacture of ethanol-based gasoline additives, such as ethyl tertiary butyl ether, may be considered to contribute to the distributor's conformance with this section; provided that the total quantity of ethanol used by the distributor is an amount equal to or greater than the amount of ethanol required under this section.

(d) The [commissioner] director may authorize the sale of gasoline that does not meet the provisions 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 [486J-7.] 486J-6.

(g) Any distributor or any other person violating the requirements of this section shall be subject to a fine of not less than $2 per gallon of nonconforming fuel, up to a maximum of $10,000 per infraction.

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

SECTION 13. 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 14. 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 establish the petroleum industry monitoring, analysis, and reporting program established under chapter 486J, Hawaii Revised Statutes. The sums appropriated shall be expended by the public utilities commission for the purposes of this Act.

SECTION 15. 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 sums appropriated shall be expended by the public utilities commission for the purposes of this Act.

Part II

SECTION 16. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

§ -A Definitions. As used in this chapter, unless the context otherwise requires:

"Advertising" includes the use of any banner, sign, placard, poster, streamer, card, or any publication in the media.

"Gasoline" means a volatile mixture of liquid hydrocarbons, generally containing small amounts of additives, suitable for use as a fuel in spark-ignition internal combustion engines.

"Person" means an individual, corporation, government, or governmental subdivision or agency, business trust, estate, trust, partnership, unincorporated association, two or more of any of the foregoing having a joint or common interest, or any other legal or commercial entity.

"Petroleum products" means gasoline, diesel fuel, liquefied petroleum gas only when used as a motor fuel, kerosene, thinner, solvent, liquefied natural gas, pressure appliance fuel, white gasoline, or any motor fuel, or any oil represented as engine lubricant, engine oil, lubricating or motor oil, or any oil used to lubricate transmissions, gears, or axles.

"Sell" or any of its variants means attempt to sell, offer for sale or assist in the sale of, permit to be sold or offered for sale or delivery, offer for delivery, trade, barter, or expose for sale.

§ -B Misrepresentations. (a) It is unlawful for any person to make any deceptive, false, or misleading statement by any means whatever regarding quality, quantity, performance, price, discount, profit, or savings used in the sale or selling of any petroleum product regulated pursuant to this chapter or chapters 486H and 486J.

(b) The following misleading, unfair, or deceptive acts or practices committed or permitted by any person offering to sell any petroleum product that is regulated by this chapter or chapters 486H and 486J are also a violation of this section:

§ -C Unlawful profiteering. Any person who sells petroleum products and who, with intent to enhance the price or restrict the supply of petroleum products:

shall commit an unlawful trade practice.

§ -D Penalty. Any person who sells petroleum products in violation of this chapter shall be fined not more than $10,000 for each violation or imprisoned for not more than five years or both.

§ -E Injunctions. Any person in violation of this chapter may be enjoined by the circuit court by mandatory or restraining order necessary or proper to effectuate the purposes of this chapter in a suit brought by the attorney general in the name of the State or by any private person in the person's own name.

§ -F Remedies cumulative. The remedies prescribed in this chapter are cumulative and in addition to any other remedies provided by law."

SECTION 17. In codifying the new sections added by section 2 and section 16 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 18. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 19. This Act shall take effect upon its approval, provided that section 16 shall take effect on January 1, 2007.